How can CMOs find common ground with CFOs for B2B brand building in 2024?

According to the ‘godfathers of effectiveness’ Binet and Field, it’s recommended that the ideal split for balancing short-term sales with long-term brand building should be approximately 54% budget on demand generation and 46% on brand marketing. However, fears, doubts and uncertainties about brand’s role in business appear to be holding B2B organizations back from building out high-performing brand marketing programs; an average $1-2m spent on them.

The growing opportunity in B2B brand

In times of economic instability, there’s often an urge to prioritize short-term performance drivers like lead generation – despite the Institute of Practitioners in Advertising (IPA) finding that investing more in brand marketing during a downturn is proven to set businesses up for better future success.

Encouragingly, senior marketers are taking note of this, with 64% of CMOs surveyed by Transmission feeling that in times of fiscal uncertainty, brand marketing should be given a higher level of importance. On the flip side of that, only 26% of CFOs agree with that statement.

During a downturn, when senior finance leaders play a larger role in budget decision making, marketing budgets – particularly those for brand – come under scrutiny. Half (50%) of CFOs say they are only ‘fairly’ confident in their CMO’s ability to make effective commercial decisions relating to how and where marketing budgets are spent.

As a result, CMOs risk getting stuck in a continuous cycle of underinvestment in brand. The research shows that 60% of CMOs want to invest more in brand marketing over the next few years – in comparison to just 31% of their finance counterparts. Whereas, when the tables are turned to investment in lead generation, 62% of CFOs want to place their focus there, versus 34% of CMOs.

Stuck in a continuous cycle

A driving force behind this reluctance from CFOs to increase brand-building budgets lies in the difficulties with measuring the effectiveness and commercial value of brand marketing activity – 72% of them saying that their CMO struggles to do so. This same view extends to the boardroom – with only 22% of CFOs believing that their CMO demonstrates ‘excellent’ value to the business’ bottom line (the majority stating ‘good’ or ‘average’).

With this context, it comes as no surprise that CFOs are unwilling to invest more in brand. And it makes the job of the CMO to prove the effectiveness and commercial value of brand more difficult, say a majority 67% of CMOs. Brand marketing isn’t something that can be measured within a fiscal year (52% of CMOs say an ideal timeframe is 12-18 months) – yet CFOs and the board insist on demonstrating ROI on brand activity; the report finding that 81% of CFOs believe the optimum period to measure the effectiveness and ROI of brand programs is under 12 months (which, alarmingly, 44% of CMOs agree with).

This push to provide reports on the returns of their brand marketing activity leaves senior marketers turning to imperfect metrics that fit within a shorter timeframe. Unlike their B2C neighbours, measuring share of voice against share of market can be challenging – annual brand tracking exercises proving expensive, time-consuming and beyond the reach of many B2B organizations.

As a result, CMOs end up falling back on what they can measure – often short-term activities – rather than what they should.

The two functions also have differing opinions of which metrics matter most when assessing the health of their brand. CFOs see financial and commercial metrics like customer acquisition rate, revenue growth and profit as the top three metrics for measuring this, whereas CMOs cite brand awareness levels, brand consideration and customer acquisition.

Impatience for results

This impatience for results isn’t the only thing spreading from the finance department to marketing. The adage ‘targeting the right person, with the right message at the right time, on the right channel’ has been behind the shift in B2B marketing to an ‘account-based’ mindset, allowing for tailored and personalized customer journeys that directly address an account’s specific challenges.

However, this approach doesn’t translate to the world of B2B brand marketing. When questioned on whether brands grow through relevancy or reach, 68% of B2B CFOs believe it’s through audience relevancy, not reach. Surprisingly and more importantly, so do more than half (54%) of CMOs.

The view that buyers need to be dealt the right content or message at the right time to come across an organization that can address their needs isn’t wrong in any way – but to get to that point, buyers need to know the brand exists. As marketing research and effectiveness company System1 puts it: “It’s actually the perceived ‘wastage’ from broadly targeted ads that grows brands in the long term.”

Looking ahead, despite big changes needed to fix these issues, CMOs maintain a buoyant prediction of the board’s future support for brand – 88% of CMOs confident (at some level) that they can convince the board to invest a greater share of budget in brand marketing in 2024.

To find out more about the toughest alignment challenges between CMOs and CFOs and how to remedy them, download Transmission’s ‘Closing the CMO-CFO brand value gap in B2B’ report here.