Strategy & Operations » Business Partnering » 4 issues plaguing the CFO-CMO Relationship — and how to solve them

4 issues plaguing the CFO-CMO Relationship — and how to solve them

Bridging the relationship gap between CFO and CMO comes down to thinking transformationally about your organisation and its leadership roles

As the marketing resource paradox continues to grow ever more severe, the disconnect between the roles of the CMO and the CFO also continues to widen.

Their dynamic is perhaps best likened to the old idiom about fighting like cats and dogs: The CMO typically sees the CFO as an immovable roadblock to executing marketing strategies and receiving the resources they need, while the CFO is primarily focused on optimising financial performance—often looking to marketing as the low-hanging fruit to cut out of the budget when needed.

Research shows that, indeed, the CMO-CFO relationship is commonly rife with tension.

CMO Council found that nearly four in five CMO-CFO partnerships aren’t very willing to collaborate on investments, goals and metrics, and among CMO-CFO partnerships that are indifferent or hesitant to collaborate, only 27% are satisfied with their ability to innovate.

In addition, we’re seeing that the average tenure of the CMO is decreasing, dropping from 4.5 years in 2021 to 4.2 years in 2022 for Fortune 500 CMOs, according to Spencer Stuart. For CMOs working at the top 100 advertisers in the U.S., the average tenure is 3.3 years — the lowest levels in more than a decade.

There’s also currently a short supply of CFOs: Business Talent Group found that in 2023, demand for interim CFOs surged 46% year over year.

As these short tenures compound the already present partnership issues, it’s clear there is more strain than ever on the CMO-CFO relationship and that it needs to be alleviated for the long-term success of an organization; it demands that both marketing and financial executives get creative and think outside the box.

In fact, when business leaders have already optimized media and tech, focusing on organizational transformation may be the only way to move forward in this modern landscape.

Here are four of the most pressing issues plaguing the CMO-CFO relationship, and recommendations for bridging the gap for better harmony, longevity and financial wins.

1. Language barriers

Finance teams talk in an alphabet soup of terms like EBITDA, ROI, IRR, NRR and GMs, while marketing folks have their own practice-specific terminology such as MQLs, SQLs, impressions, click-throughs and bounce rates.

And while marketing activity metrics can demonstrate increased engagement with the brand, CFOs will often say they don’t make payroll with website visits—they make it with revenues and profits. This language barrier prevents CMOs from understanding what metrics the CFO is measuring them against, as well as what goals they’re expected to meet to create and achieve valuable impact across the business.

As the role of the CMO keeps shifting and a shortage of CFOs bring less experienced resources into the seat, it’s important to foster a culture of collaboration and create a unified set of metrics and definitions that everyone understands. A metric needs to mean the exact same thing to each person on the executive team, and the underlying data needs to be generated from a trusted single source of truth.

There must also be transparency on how each metric contributes to the overall business goals of the organization, or else they aren’t worth tracking.

2. Tangibility of outcomes

CFOs are heavily data-driven and focused on tangible financial outcomes, while CMOs have the unenviable task of attributing business success to more ambiguously defined measures like brand recognition, market share and customer experience.

The CFO, then, often sees the CMO as a black hole of inefficient spend, bringing to mind the quote from the 19th-century U.S. merchant John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

It’s a lose-lose: When there’s difficulty crediting success to spend items, the CFO becomes less likely to allocate budget, opting for more direct ROI initiatives. For CMOs, the CFO becomes an obstacle to receiving the resources needed to do their job and deliver outcomes.

 CMOs and CFOs should discuss, agree upon and document in advance what performance metrics the CFO is looking for. The CMO can then track and analyse these metrics to show contribution to the topline impact and demonstrate the value of their marketing.

Tangible non-financial metrics like influenced pipeline, which have demonstrated conversion to future revenues, can be a leading indicator of growth that justifies marketing investment. Finance teams can be a helpful partner to the CMO by helping model the conversion funnel impacts from upstream indicators through to a projection of future revenue impact.

3. Success and ROI measurements

A CFO’s world is defined by metrics, KPIs and scorecards, where quantifiable outcomes are directly connected to an action. CMOs don’t have that focus, however, and they’re ultimately tasked with the onerous job of attributing pipeline and revenue to a multitude of channels and touchpoints.

Without having predefined agreement on success, it can be difficult for CMOs to untangle the convoluted web of attribution into the tangible financial results that CFOs care about. However, an inability to clearly show value means CFOs are going to give CMOs less budget for headcount or media spend in a budget crunch.

 The success measures that CFOs care about are often aligned with how owners and investors assess the business, so calibrating marketing investment and intended outcomes to the main business targets will create a shared alignment among executive leadership.

Once the goals and targets are agreed upon, it’s imperative that CFOs are clear and intentional with CMOs—and the rest of the C-suite—on how those targets will be measured and the knock-on effects of overperformance and underperformance.  

4. Time horizons

Although they’re mindful of the long-term strategy, CFOs have quarterly and annual performance reporting, as well as boards and investors to whom they must answer on a consistently short timeline.

CMOs, in contrast, tend to take the long view on their initiatives, working on branding and campaign sequences that may not accumulate meaningful results for several months or even years. And, sometimes, the attribution dynamic compounds the problem, as it can be difficult to connect current performance to specific strategies and investments made in prior periods—creating more scepticism from CFOs on the effectiveness of the allocated budgets.

A match made

 Education and communication are key. Building a plan that threads the needle between shorter-term financial constraints and longer-term marketing objectives can bolster the relationship and lessen the conflict of time horizons: CMOs can enlighten CFOs on the nuances of marketing strategy and how they play into broader company objectives, while CFOs should inform CMOs of financial cycles and the reality of existing budget constraints.

Once each understands the other’s position, both parties can establish clear expectations and appropriate pacing through joint strategic planning sessions. Additionally, to mitigate risk and build trust, CFOs and CMOs can approach strategies and investments in phases to create shorter points for evaluation and iteration.

CMOs and CFOs can fundamentally change their relationship by aligning on transformational marketing strategies, such as integrating marketing-as-a-service solutions, thereby repositioning marketing as a valued partner in achieving long-term revenue impact and execution efficiency.

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