What you need to know

• The marketing profession is still wrestling with how it proves its impact on business and growth. Marketing and brand lingo rarely cuts it at board level, and in times of uncertainty it’s often the marketing department that first feels the pressure on budgets.
• Brodie Arnhold, Chairman of iSelect, Endota and private equity leader, says many marketers get stuck on vanity metrics like clicks and engagement. As the person who often signs off on budgets, the single most important metric is measuring the dollars spent and the return on investment – both to get the right mix, and to establish appropriate ways to allocate budget across short and long term views.
• Founder and global CEO of TrinityP3, Darren Woolley, says that when dealing with procurement teams, many marketers struggle to connect the investment in marketing and media with return on investment. Whilst some can connect the two, many struggle to prove it and bid for their budgets based on ‘what they will do’ with it, rather than what the results will be.
• If you want money to invest in media, marketing, Woolley says, you’ve got to be able to justify budgets in financial terms. The rest of the C suite is talking about the IRR, while marketers are often busy doing marketing. It’s a gap that procurement models can help close, but that would require flipping the relationship from a cost controller into a commercial advisor.
• The only reason procurement cut costs in marketing is because they see it as a cost. If it's actually a proven investment, then they've got a very good mandate to then help to invest in it to drive that growth.

As many businesses move into the budget planning phase of the year, Mi3’s Executive Editor Paul McIntyre sat down with Brodie Arnhold – Chairman of iSelect, Endota and a private equity leader, Darren Woolley – Founder and Global CEO of Trinity P3, and Henry Innis – Co-Founder and Partner of Mutiny Group, to discuss some of the common challenges marketers have at board-level and with procurement when it comes to protecting and growing marketing budgets.

The full podcast can be listened to here

Is the party officially over?

Even in industries that boomed through the pandemic, the rising cost of capital, soaring labor costs and a whole lot of uncertainty as we adapt to life post-pandemic and make sense of the changing behaviors of our customers and their media habits, has seen even the most bullish of marketers look for ways to deflect and delay the inevitable conversation around budgets going into 2023.

Brodie Arnold summarises the challenges for marketers: “Typically, you would have the marketing team reporting on eyeballs (or reach), you have the sales team telling you how much sales they drove, you’ve got some interesting brand metrics that are not tied to commercial outcomes, and when you add together what the sales team is doing, what the PR and marketing side of the business says they are doing, the company is about eight times the size of what it really is – and this is where, historically, the mistrust at the C-level and with boards in particular has come from.

“You have a considerable amount of spend in the marketing department with little accountability around it.”

Boards are increasingly valuing robust MROI as the crucial measurement metric. They want to understand return on capital invested and, crucially, dump the vanity metrics that have become pervasive across marketing in general.

“It really comes down to your ability for boards to understand the return on the investment both in the short term and the long term and try to bring predictability to that. And if you can get your finance department and your marketing department to understand left and right hand and how the money is spent, you'll end up with this really good conversation at the board level where everyone's on the same page,” said Brodie.

“If the marketing guys try to show that, ‘hey, this is the latest and greatest fuzzy thing and we invest X in TikTok, but I don't have the predictability to it just yet’ – once again, the finance team loses interest. So it's getting that balance right as the cost of capital goes up, it's going to be really critical to the next two to three years.” 

Capital allocation is always a hot topic, but even more so now. The finance teams are running the budgets, and often the marketers who succeed are doing so through robust MROI measurement models, instead of falling back to lightweight media metrics.

A robust measurement model leverages marketing investment analytics and moves away from ‘media-mix modelling’ and towards ‘market-mix modelling’, to ensure a robust real-world view. Mutiny’s WarChest platform is fast becoming the solution of choice among Australia’s top marketers because it provides a real time way to have a strong conversation around the impact and returns of marketing investment.

“When you are allocating capital, you really want to know the depth of knowledge and information around the modelling and the predictions,” Brodie said.

“If you've got an independent source that can show and predict how the performance of your marketing is going to go, your ability to then come back with a mix that is believable and credible at a board level is going to greatly help you as a CMO. And it's also going to help the CFOs or the finance team understand what you mean because they're looking at numbers.”

Trinity P3 Founder and CEO Darren Woolley agreed. “To Brodie's point, it's interesting how many marketers bid for their budget based on what they're going to do rather than necessarily what the results will be. The only reason [procurement] cut costs is because it was a cost. If it's actually a proven investment, then they've got a very good mandate to actually then help to invest in it to drive that growth.”

In other words, if you want money from the business for marketing, you’ve got to be able to show that you’re going to multiply that more than the cost.

What’s the future? Mutiny’s marketing investment analytics platform, WarChest delivers market-mix modeling in a platform experience, meaning it becomes a tool much like Google Analytics in the marketer’s toolkit. As software, WarChest has enabled marketers to embed financial reporting into their measurement stack and prove effectiveness time and again to Boardrooms.

Mutiny Group’s Henry Innis said: “This is why one of the first things we support our customers with is to drive monthly finance reports around marketing, shifting the language from reach to revenue and to revenue delivered.”

It’s a priority to build and maintain that association really tightly, as it establishes some predictability around marketing reporting and focuses the conversation on results.

The rising cost of capital is going to create pain across the industry as the pressure on investment in marketing is fully felt. To win, marketers need platforms that deliver marketing investment analytics over and above what’s currently in market.

To find out more about marketing investment analytics or request a demo visit https://mutiny.group

To find out more about how Trinity P3 can support your business in improving productivity, media and advertising, visit; https://www.trinityp3.com/