The previous post discusses some problems that make transparency of marketing spending becomes complicated. Defining, budgeting, tracking, and accounting for marketing spend have been even more difficult due to more varied marketing mixes. This is certainly a growing challenge for both marketing department and finance department.
Because of the pressure upon the CMOs to count for the impacts of marketing impacts upon sales, more investments are required to build a performance measurement system. The problem is that this technique mostly measures only short-term results. It does not represent the financial contribution of marketing efforts to the organization.
How to Realize Transparency in Marketing Spending
In addition, the current systems mostly focus on the returns of specific media, for instance, social media marketing, rather than on the comprehensive efforts. Given the problems discussed before, there are actually some keys to creating transparency in marketing spending. They include better understanding and communication between relevant departments, particularly marketing, finance, and procurement departments.
The following are some steps that the organization can take to solve the problems related to marketing spending transparency:
Classifying and Tracking the Marketing Investment Mix
The mechanism must be based upon an agreement between all related parties. As discussed before, the options of marketing mix has been exploding in the last few years. There are more than 20 primary categories available now. The subcategories also grow. They include digital, content, owned, and technology sub-categories.
To overcome the problems related to the failure to break out orders, expense codes, and payments into the primary categories, a strategic action is necessary. It may include instituting common charts of accounts for marketing with finance and procurement. This is a strong foundation for any measurement program.
Making an Agreement on How to Determine Investment Growth
There is a general misunderstanding that cutting the marketing spending can help the organization to make the operation more effective. In fact, marketing has a broad scope, which includes physical assets like technology and investment, such as branding efforts. They contribute much to the true financial values of any firm.
Therefore, the finance and marketing departments can begin from these two categories of marketing assets. They need to figure out digital technology infrastructures, investments that contribute much to build and protect brands, and investments that have no contribution and only lead to waste.
Streamlining the Process
The process coding, classifying, and consolidating spending in marketing efforts can be costly. The finance and marketing executives need to find an agreed way to streamline the process. For instance, they can build and develop a marketing performance dashboard, which are accessible for both parties. This is certainly more streamlined and efficient compared to separate software and apps in every department.
Then, the departments can consolidate spending data from different department and identify spending that promotes growth. The data can be found in different business units and departments across the organizations. Then, streamlining the entire process of coding, classifying, and consolidating marketing spend will provide the organization with huge benefits. These can be done by using big data analytics and machine learning technology.