My focus is on one thing, one thing only, simplification, and when we simplify, we streamline things. Part of the first job that I do is I look at how we connect the marketing activity to revenue, because it has to be linked.
When marketing is seen as a cost center, it’s because marketing has not been linked to revenue.
I was on a call a few months back with a founder who said something that stuck with me all weekend. He said, “I need to cut my marketing budget by 30% because revenue is down.” I asked him, obviously the right kind of questions, “what’s the return on your current marketing spend?” and things like that - I was trying to dig into the challenges. But his response was, “I don’t know the answers to these questions, but it just feels like it’s too much at the moment”,” and that’s the moment I knew we had a bigger problem than just marketing budgets.
In businesses where marketing is treated as a cost center, the first thing that gets cut when revenue dips is marketing. The logic goes, revenue’s down, costs need to come down, marketing is a cost, so let’s cut marketing, let’s even chuck AI into the mix and reduce headcount.
There’s all kinds of different things that happen, and what happens then is when revenue drops further because the one engine that was bringing in new customers got throttled. Then there’s a bigger challenge!
In businesses where marketing is treated as an investment, the conversation is completely different. When revenue dips, the question becomes, which marketing activity is producing the best return, and how can we double down on it - together with and how can we simplify and strip back the activity that isn’t producing revenue?
The difference between those two conversations is not the size of business, it’s not the industry, it’s not the budget, it’s whether the CMO has done the work to prove that marketing is an engine, not an expense. That is on us as CMOs.
If the CEO and CFO see marketing as a cost, it’s because marketing has presented itself as a cost, campaigns, creative agency fees, video studio time, platform subscriptions, headcount, all of it shown as money going out, but there’s no clear picture of money coming back in.
The modern CMO has to flip that switch. Every dollar of marketing spend needs to be tied to revenue, outcome, a pipeline, contribution, a customer lifetime, value, not as a post event report, but as a live view that the finance team can see at the same time we see it.
When marketing is an investment the CFO becomes your ally, not your enemy. This is because the CFOs job is to align capital to the highest returning activities, and if marketing is one of those, the CFO will fight for your budget harder than you will.
So if you’re a founder and you’re about to think about cutting marketing because revenue’s down, just pause for one moment ask the question…
“What’s working? What’s not? And what could happen if we doubled down on the things that were working and stripped back the things that weren’t?”
That’s a very different conversation to let’s cut 30% of the marketing budget.
If this resonates with you and you want your marketing to turn from just a cost center to an investment with measurable returns, email me cmo@anthodges.com or find me on LinkedIn.
We need to make sure that we’re stepping into the right situation, the right conversations, with the right numbers to show a return on investment, not just showing our pretty graphs and campaigns, which all just really talk about the costs that are going out.
Please share this with colleagues who also need to hear this message.
