Will your client’s CFO say ‘yes’ to your proposal?
Your marketing client has to get the approval of their CFO for the agency budget. CFOs want to know what the business impact will be for their budget.
The agency world is changing in so many ways.
Working with many agencies, one trend that I’m seeing very clearly is the growing need for agencies to demonstrate accountability, measurability, demonstrability….
If you think I’m worrying unnecessarily about this, think again. Nearly every week I come across an agency that assumed everything was ok with their client. The client then starts to question how much value and impact the agency is having on the client’s business. By this stage the damage has been done, trust in the agency is reduced and it may be too late to reverse.
This has been increasingly happening over several years. The big corporate clients are demanding it. Examples being Zero Based Budgeting (ZBB) and the need to demonstrate the ROI and business impact of marketing budgets and therefore the agency’s work. Another example is major clients instructing their senior marketers to ‘think like a start-up, be more entrepreneurial’. I suspect this means smaller budgets and every penny having to be justified. Another example is certain clients covering an agency’s basic team costs, but the agency can only make a profit if they help the client hit specific KPIs. These examples indicate a worrying direction of travel that means increasing pressure on agencies to deliver tangible business results.
Rightly so, clients are having to be more accountable with their marketing budgets.
There is increasing focus on marketing to deliver business results and business impact. There is a shift from only measuring time spent to value measurement when considering agency remuneration. Interestingly this may be an opportunity for agencies which are charging primarily using value-based fees. That could be great – a move away from efficiency to effectiveness. To me effectiveness is far more important than efficiency. If I need a medical doctor, do I want the most efficient one or the most effective one?
This is relevant to all agency disciplines regardless of your ability to measure outputs. What does this mean for agencies? Firstly, when the marketing client is briefing you make sure to ask what success looks like and how that success will be measured. If the marketing client is unsure as to the answer to these questions, be very concerned. You could then ask them what their CFO will want achieved and how the CFO will measure success? How will the CFO see this project as an investment for their business? At some stage your marketing client will need to go to the CFO to request the budget or get sign off. The CFO is likely to ask, “what will this do for our business?” and then “how certain is that?” Your marketing client had better have a compelling and convincing answer.
Some clients may try to pass complete responsibility to the agency for developing the business case.
I think this should be a joint effort between the agency and the client and only achievable if the client shares their critical metrics and KPIs with the agency.
Even if your marketing client currently doesn’t need to provide a business case, measure or track results I suggest it’s worth starting now so that in a year’s time when you and the client want to repeat/do a similar project you are better able to anticipate the question “What did it do last time? How effective was it? What was the ROI? What’s the justification for doing it again?