It’s not just about the numbers: why advertising needs a narrative in the boardroom
Ian Whittaker
Twice City AM Analyst of the Year. Chair. Board Advisor in Media, Tech and Sport. Author 'The Bigger Picture'. Runs 'How to speak the language of the CFO (TM)' course. International speaker, podcaster and contributor
One of the more heartening stories happening in the industry now is a growing confidence that advertising has a vital role to play in boosting both companies’ financial and share price performance.
As many of you know, I have very boringly preached the message that “advertising is intangible capex” ? for a long time, and that firms need to recognise that it is an investment, not a cost.
Fortunately, the results of the past two years — where consumer-facing goods companies realised the strength of their brands enabled them to push through price increases – has demonstrated that fact.?
However, while this is a very welcome and important first step, there is a lot more that needs to be done to make sure marketers can fully persuade the boardroom of both advertising’s worth and the value a strong marketing team can add to an advertiser.
Here would be some of my suggestions, having dealt with company CEOs and CFOs for the past 20-plus years:
Quality of inputs
The first is that CEOs and CFOs are very familiar with the concept that any model can be manipulated enough to produce a desired outcome.
So, bizarre though it sounds, the outcome is not the most important part of the modelling process, it is often the least important part.
What management teams are really looking for is the quality and strength of the assumptions and input data that is used to reach those conclusions.
If they think both are flabby, then the recommendations will be ignored. However, if they are impressed by the work, then it makes it more likely the arguments will be accepted.?
Building trust between finance and marketing
This leads to my second point, namely that trust is vital. Remember that these CEOs and CFOs must answer to Boards and investors for their actions.
If they are not confident in what they are hearing, it is very unlikely they will take the leap to commit to something which could reflect negatively on them.
The ex-CFO of Unilever, Graeme Pitkethly, made this point at the recent Campaign Live conference when talking alongside Keith Weed, its former CMO and his former colleague, about how the finance and marketing teams working together was such a vital step in establishing this trust.
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Don’t get lost in the data — focus on metrics that matter
The third point is not to get lost in the data trees and forget to see the woods of the bigger picture. It can be very easy to retreat into a world of marketing acronyms and endless KPI and metrics because, for many people, it is very comfortable to do so, especially when dealing with senior people.
My own view is that the marketing world has become more like the medieval theologians who would spend endless years – never mind hours – arguing about increasingly arcane metrics that have little relevance to a companies’ real-life needs.??
No BS
That is important because of point four: senior managements do not like BS or concepts that they can grasp intuitively or quickly. They have not got time to go through the meanings of what “metric X” or “KPI Y” and nor have they the inclination.
Their view is that (a) they have more important things to do and (b) that is what they pay you for.
Remembering this, keeping the message to the point, clear and yet backed up by evidence will win you endless brownie points.
The importance of a strong narrative
This leads onto the fifth, and final, point: You need a strong narrative.
My recent War Studies Masters course has reinforced what I learned training as a historian. When you make a case, it should be the narrative that leads and the data should be robust but should be in a supporting, not leading, role.
CEOs and CFOs are people, and people like stories that both resonate and make sense. Those marketing teams that understand their companies’ priorities and messaging to investors stand a much better chance of getting their message across.?
It’s not just about the numbers. You need to tell a good story in the boardroom.
As usual, this is not investment advice.
Transformative Leader | Building Teams To Drive Success | Passionate about the Advertising & Media Space
1 周Some great points here!
Chief Marketing Officer ? Non-Executive Director ? Trustee ? Board Committee Chair
2 周Couldn't agree more Ian, both as an exec and non-exec. With my NED hat on - the quality of data and input is definitely key, and as you say, counter-intuitively matters more than the outcome. I completely agree that less is more when it comes to data, and to focus on the right metrics; as execs build the narrative, it's important though not to cherrypick and manipulate the data you present, and to keep the narrative backed by relevant and robust assumptions, facts and metrics. Great article once again Ian, thanks for sharing!
Launching AI tech company Sqreem in the UK and working with TAU Marketing Solutions
2 周Financial data is held to a consistent independent derived standard making the data comparible across companies and even industries. Which for larger companies is verified through an audit. Creating an expectation that the data the CMO presents as financial is to the same level. CMO's need to truly understand their numbers and how they feed into the company performance, but also educate the CFO on the strengths and limitations of these numbers. The hardest piece, is justifying the spend that is not attributable to in year revenue. But this is often the budget that delivers the boards ultimate goal, long term growth, barriers to entry etc As new industries emerge, I have repeatedly seen the pack chase short term performance, but the winner is often the one who invests in brand, defining their product positioning, resulting in customer going to them direct, rather than via Google. Brands like the MailOnline, Airbnb, and more niche, Mindful Chef. The key is as the new market evolves, and competition grows, thes brands don't rely on the rising cost of search. Brand spend is hard to measure and as Ian raises, can't be capitalised, the absence of data, requires the CMO to deliver a narrative, which can ultimately make the CEO famous
Serving up strategic cold-cuts in a world of lukewarm hot-takes / Strategy @ Quality Meats Creative:
2 周Mate your content is always great and this piece is particularly good. To your point about BS metrics - one thing I see consistently is a paradoxical veneration of anything quantitative and a lack of critical engagement with anything quantitative. Again and again adland drifts away from more rounded narratives that - yes - offer less ‘precision’ but that actually link marketing to real business effects (revenue, profit, etc) and instead the focus is on the things that are most precisely measurable but distant from business effect - media metrics like impressions and, god help us, “earned media” The glaring lack of the most basic skills around data analysis, knowledge of intuitively obvious things like causality, goodharts law, ecological fallacy, etc - if we want to be taken seriously we can’t keep behaving in such a BS way
Global strategy leader | Growth | Sustainability + Impact | DEI Ambassador | Board member
2 周Great point of view.