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Finance Directors failing to value brands



03/06/2013

A new survey of finance directors' attitudes to marketing has found that finance directors fail to appreciate the value of brands and many of them believe that companies have no methods of measuring marketing effectiveness. While expectations of marketing accountability have been raised since the last survey in 1996, delivery still needs attention.

The research was commissioned by CIA MediaLab in association with the Institute of Practitioners in Advertising and KPMG. A representative sample of 200 finance and marketing directors from The Times Top 1000 companies were asked how easy or difficult they found measuring the effectiveness of their companies' overall marketing effort; 43% of them found it very difficult and 39% quite difficult, while only 2% of marketing directors felt that their finance colleagues fully appreciated the difficulties involved in measuring the effectiveness of marketing spend.

Finance directors failed to see marketing as a long-term engine for growth, rating information technology (92%) and training (86%) considerably higher than marketing (57%). And 32% admitted that the marketing budget would be the first to be cut if business costs were under pressure. Only 29% of finance directors felt that, after people, brands are the most important assets which any company can enjoy. They understood the cost of advertising and direct marketing but did not understand the value of brands.

The IPA, the Marketing Council, the Marketing Society, ISBA and the Chartered Institute of Marketing joined forces today to urge chief executives of major PLCs to recognise the vital importance of the marketing function. In a joint statement, these leading organisations said: 'In far too many cases, companies measure how well they are doing in terms of cashflow and profits, but not why they're doing well in terms of key marketing measures of their brands and customers. So often when things start to go wrong in profit and loss terms, the CEO simply doesn't know why - the key metrics are missing.' Currently, only one fifth of UK companies have a marketing director on their main boards. The five trade bodies issued a challenge to the top 1000 companies to appoint a marketing director to their main boards who would be responsible for monitoring the true health of their businesses by:

  1. Measuring the key marketing metrics
  2. Reviewing them regularly at executive board level
  3. Presenting them in the annual report and accounts

'Only by taking marketing seriously, and learning how to measure its performance, will CEOs ensure that they really do have their fingers on the pulse of their customers and that they are measuring the things that actually underpin company profitability - namely the key components that build and maintain their brands.'

Rupert Howell, President of the Institute of Practitioners in Advertising, said: 'Finance directors' suspicious attitudes towards marketing are holding back the UK economy. We should all be working together. If finance directors fail to appreciate the value of brands, we in the marketing community should be trying harder to make them do so, and in a language they can understand.'

David Fletcher, Head of CIA MediaLab and author of the report, said: 'Media agencies are frequently best placed to bring more accountability to the marketing function, not least because media expenditure typically forms the largest part of client marketing budgets. Advertisers quitre rightly look to us to justify media activity, and we mst continue to invest in accountability processes and expertise to ensure that this meets both clients' marketing and finance function requirements.'

Copies of the full survey are available from Lesley Scott at the IPA.

 

Last updated 03/06/2013


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