Who “owns” marketing?

Video Transcription

All right, let’s talk about marketing leadership and some of the places that companies try to address this and why. Ultimately, you know, I believe, and of course I’m biased because I own a fractional CMO firm, but I created this firm because I saw such a need in the market to have the wisdom of marketing leadership at the leadership table. Now there’s a time and a place for that and there’s a way to go about it. So let’s talk about who owns marketing. 

This is one of the biggest conversations in small entrepreneurial businesses because usually you start out with a leadership team that’s a founder and may include an operating leader, perhaps with a COO title and then a Head of Sales. And eventually you have a CFO. If you’ve had a controller, you have a CFO. 

And that’s kind of the beginning of the makeup of a leadership team for a growth business. But once you get past that stage of being founder-led, sales-driven, critical mass, you really need to be able to grow into places you’re not already known and accelerate that swim lane that you’re growing in. And that’s when you need strategic marketing. And sales and marketing are two sides of the same coin. They’re both part of the revenue organization, but they have very different approaches, incentives and agendas into what they’re accomplishing in the business. And so sometimes we come into a client situation and marketing has been owned by the founder or the CEO. 

And what happens in this situation that you see on this page is that the CEO and founder, they may have been the original visionary for the business, the catalyst of the brand. Like that they love that story is their passion. Nobody can tell it better than them. It’s their B. All real and true. But as a business scales, a CEO has so much responsibility in the CEO seat that being the owner of all things marketing and overseeing all that orchestration just doesn’t make sense. And it’s a real roadblock to growth. 

So eventually they need to peel that out of their responsibility in terms of owning marketing. Often, we see marketing tucked under sales because there’s a lot of businesses that are trying to consolidate revenue into one leader, whether it’s a CRO title or a VP of Sales and Marketing title. 

But the reality is that 99.9% of the time that leader is a sales manager, they’re a sales leader. And even if they’ve had some marketing experience in the past, their incentives and their motivation and their most real experience right now is to fill and close the pipeline. It’s the near term where a marketing leader is focused on long term value creation and brand and experience and all those things need to work together. So usually when you have marketing reporting to sales, they end up being a sales enablement facet really focused on the right now activity levels rather than long term strategic thinking. Sometimes marketing lives in ops. 

And I see this most often when it’s a marketing agency or digital agency or a company that has some kind of marketing DNA, then they’re like, well, we just borrow from our client services team for the creative or the digital or we kind of borrow from our own team from the ops side. And that of course is a Peter versus Paul scenario because when client work is picking up, of course clients come first. And so then your marketing is always happening in little fits and bursts and starts and stops and it never gains strategic momentum. So some of the most, you know, shoemaker son syndrome organizations are marketing companies themselves. And that’s an irony, but it’s the truth and I’ve lived it. 

And finally there’s a philosophy of like, well, we don’t have a marketing leader and we don’t have a marketing team, but we’re just going to have a marketing agency and they’re like our one stop shop. Or at least that’s what they’re telling us they can be. And there’s a couple reasons that that doesn’t work out well. First, because nobody can own your brand except your own business. I mean the brand is the experience, it’s the culture, it’s the experience your employees have, the experience that your clients have, all of your stakeholders. It’s the promise your business makes to the world and how the world experiences that promise. And you cannot outsource your brand. You need someone internally who owns it, is policing it and championing it and building it and overseeing all of that. 

And, and you also, there’s no such thing anymore as a one stop shop for agencies. We’re going to talk a little bit about that. But you know, when I was first starting in my marketing career 25 years ago, there was the idea of an agency of record because there were really only like five playbooks and an agency could do all of those things. But with the digital revolution and the micro discipline of marketing, that’s not the case anymore. So smart agencies who are good at their craft know what they’re good at and they’re going to be good at two or three things out of the many hundreds of disciplines in marketing. So it’s really very difficult to outsource marketing and expect that you’re going to get a strategic, well integrated program that really is the best fit for your business. 

So real alignment and real strategic growth means that you really need to have that brand and marketing ownership at the leadership table. And, but the fact is that not every business needs that role to be full time. In fact, most companies won’t need a full time CMO until they’re about 100 million in revenue. But with modern marketing and all of the facets of it, you need somebody who is close to that constant change and knows how to pull the levers, turn the knobs and orchestrate that. And not just to tactically execute, but to advise the entire leadership team on going to market and bring that voice of wisdom to the table and help manage expectations. So of course all of these things in marketing cost money. 

And I would love to say, because I get asked this question all the time, well, how much should we budget for marketing? Which includes a lot of things. Marketing can include leadership and staff and agency partners and dollars to execute. There’s a lot of things that come into play in answering that question. Different companies have different owners with different philosophies and appetites for how much they want to invest or that they even believe in marketing. Some companies desire a really high level of growth year over year and marketing is critical for that. And some companies are not expecting that speed of growth and so their investment has to calibrate to that. Different industries have different profit margins and ability to reinvest in growth. 

I already mentioned, if the leaders and the owners don’t believe in marketing, you’re going to have a hard time getting a rationale behind a budget and a program and leadership and any kind of strategic marketing. To be honest, a lot of businesses, like I said, have. Marketing has become a four letter word. They’ve historically just not had great experiences with it and they’re shy about revisiting it and they’re going to have to crawl before they walk, before they run. Another important consideration is that these founder-led sales driven companies are often so heavily weighted on the sales side. They have so much of their growth investment in sales people and programs that they have no dollars left over to allocate to marketing. And it won’t make sense to come in and just put another budget to marketing. 

You have to kind of tip the teeter totter a little bit at a time and justify and rationalize those transfers of percent of investment and then realistically, how many dollars can you deploy in a year and do a quality job? If you’ve never done marketing in your organization, it doesn’t make sense to put a three million dollar budget against it because you’re not going to be able to thoughtfully, strategically create the assets, the programs, the channels, and develop them thoughtfully quickly enough to justify that kind of spend. And then of course, you need confidence in whoever is the fiscal manager of that budget and those investments and those decisions. You need to have confidence in that leadership and the fact that they’re aligned with the business strategy. 

So I just, even though there’s no one size fits all answer to marketing budget, it is one of the biggest questions we get asked, especially because we work with small businesses who maybe have never had a marketing budget. They’ve been reactive, they get invited to sponsor something and they decide they’re going to do it or whatever the case, they’ve just never even thought about budgeting for marketing. So I do want to offer a little bit of context. This is from a study that was done between QuickBooks and LinkedIn of small businesses. And when you boil it down, the majority of businesses are investing anywhere from, you know, 5 to 15% of annual revenue in marketing. There’s a big wide range there. If you’re a B2B business, you need to invest in sales also. But there’s a big wide range there. 

But I would say, you know, at Authentic, we run our total cost of sales and marketing annually at about 14%. And at authentic, that’s about half of that investment is going to sales and about half of that is going to marketing. And so in this example that I put in the yellow box, if you’re a $5 million business and you’re going to run your business like authentic does, 14% of total revenue goes into sales and marketing, and half of that’s going to be a marketing investment. So 7% of annual revenue, that would look like a marketing budget of 350k per year. And some small businesses think that’s a huge number and others are like, that seems really reasonable. Again, that goes back to all the factors that weigh into decision making about investment in marketing. 

But with the $350,000 budget, it pretty quickly can get leveraged in terms of staff and payroll for marketing potential agency and contract partners, and then program activation, where you’re actually spending the dollars for whether it’s creative or advertising or development, whatever that might be. So ultimately, when it comes to marketing budgeting as a business, starting with ownership and then leadership. You really have to be intentional because if you’re just marketing by default, you’re gambling. That is just a hope and luck strategy. And you can tell the businesses that are gambling with marketing when they talk about they want to find the quick wins, the low hanging fruits. We just need more at bats. They’re only thinking about lead gen. They’re not thinking about experience and value creation. They’re making impulse decisions. 

They’re trying a lot of things, but everything is a 90 day experiment which means it never goes far enough to give you really strategic intel and results. So that’s what it means and looks like to gamble with your marketing spend. If you’re being intentional and strategic, you’re spending the time to do strategy and planning. You have a long term thoughtful value creating mindset. That doesn’t mean you’re not paying attention to right now and growth. But you care more about experience and brand and trust than you do about low hanging fruit. You’re making market and data driven decisions, not just shooting from the hip. You are building up insights to help you make rational decisions. 

And instead of trying all the things and changing quickly, you’re committing with rationale and strategic thought to doing a few things and doing them very well and doing them long enough so that you can measure and iterate.