IAPI Publishes Myth-Busting Study of Marketing and Finance Leaders

Recent research has uncovered much greater alignment between chief financial officers and chief marketing officers than is currently perceived by the industry. The comprehensive study was conducted by Amárach in May/June 2024 on behalf of IAPI (Institute of Advertising Practitioners in Ireland), with 205 CMOs and 219 CFOs taking part.  

The topic of CMO-CFO relations is a recurring theme in business commentaries and IAPI commissioned research to understand the critical aspects of the CMO-CFO relationship, their collaboration, challenges and future outlook.  The purpose of the research is to provide valuable insights into how these key executive roles can work together more effectively to drive organisational success.  Themes covered include alignment in terms of growth priorities, measurement (KPIs), investment in terms of marketing expenditure, value added by external partners and future investment priorities.

While there is a perception among marketing and agency practitioners that finance presents a barrier or could even be hostile to the practice of marketing, the findings dispel this particular myth. It shows that a cordial relationship, in general, exists between the two functional heads and they have a good working relationship with one another.  It shows that financial leaders are open to persuasion and marketers and their agency partners can be reassured that the practice of marketing is valued and respected by the finance departments in Ireland today.

The results reveal exceptionally strong alignment between CMOs and CFOs regarding the importance of marketing strategy, with 80% acknowledging it as either ‘very’ or ‘quite important’ and about a third of both groups rate it as ‘very important’. In addition, about 80% of both CMOs and CFOs believe they have a very good or good understanding of each other’s KPIs which suggests a strong level of cross-functional knowledge. In addition, two-thirds of respondents in both financial and marketing roles possess a solid understanding of each other's priorities and objectives.  

The real misalignment is in relation to what CMOs and CFOs pay attention to. Unsurprisingly, the latter is focused exclusively on financial variables (turnover, profit, cashflow, investment); while the former has a mix of financial and non-financial KPIs (e.g.: brand awareness, customer engagement etc). All of this is perfectly normal except that a majority of both CMOs and CFOs agree that differences in understanding KPIs currently impacts the decision-making processes in their organisations. In addition, only 28% of CFOs believe that their organisation’s marketing strategy is ‘completely aligned’ with its financial goals, while 37% of CMOs believe it to be so.

“Our research for IAPI shows that the vast majority of CMOs and CFOs are ‘growth partners’, working together to grow the topline and the bottom line in businesses throughout Ireland”, says Gerard O’Neill, chairperson, Amárach Research. “But like all partnerships there are sources of tension, especially when it comes to choices and trade-offs. The good news is that they are keen to better understand how they can drive future success together, with the same number of CFOs and CMOs - 8 in 10 - agreeing that marketing is important to achieving their business goals.”

A reality check for IAPI members is that on average only about 20% of CMOs see external agencies (of any type including digital, advertising, creative, media, market research, PR etc) as essential for success, and this falls to 15% on average for CFOs. Interestingly, Consulting Firms are considered even less so with only 9% of CMOs rating them as essential and 14% of CFOs. This does present an opportunity for agencies to close this gap and establish a stronger position for themselves within the client organisation.  Agencies that help CMOs show a clear connection between marketing expenditure and measurable outcomes that matter to CFO and the wider business, will naturally become more essential to the business.

"IAPI initiated this important research to gauge how much the marketing and financial departments have aligned over the past few years," says Abi Moran, CEO of Folk VML and president of IAPI. "It's incredibly positive to see the level of understanding and respect for each other’s functions, which is a testament to the work the marketing and advertising industry has done to incorporate metrics and commercial accountability into everything we do.

That said, we can do more to support our clients in building the commercial case for effective brand advertising. This will be a core focus for the IAPI Board over the next couple of years, using the Effie Awards Ireland programme as a vehicle to build a comprehensive bank of effectiveness cases."

Future marketing investment priorities were very strongly aligned across the functions, with Personalisation and Customer Experience, Data & Insights, Strategic Partnerships and Digital Transformation coming in the top 5 by both CMOs and CFOs as high priorities. However, there is a gap in prioritising investment in Brand Advertising with 41% CMOs awarding it a high priority, and only 28% of CFOs.  For IAPI members and client marketers, again this represents an opportunity to provide financial leaders with a commercially robust case for brand advertising.

When it comes to AI, one third of CMOs report that their organisation is leveraging AI (fully/some aspects) to enhance marketing efforts. Nearly a quarter are currently exploring its potential, while 18% plan to invest in it in the future. Surprisingly, given the current hype in the industry, one in five CMOs have no plans to invest in AI for marketing purposes.  Amongst those CMOs who are leveraging AI/intend to/looking into it, half anticipate that their organisation’s use of AI will primarily enhance output and overall effectiveness.  Encouragingly for IAPI member agencies, only 15% of CMOs regard AI as a means of cost saving with external agencies.

Full Report on IAPI website Guides & Reports section here.

Executive Summary on IAPI website Guides & Reports section here.