The new digital dilemma: Proving marketing’s value in a profit-driven world

Author: Jaco Lintvelt, managing director at Incubeta

Digital marketing is now a core, strategic part of the marketing mix, not just an experimental channel. The fun years of being the new kid on the block, where digital departments were left to their devices, are over. Digital marketing efforts are being monitored more closely, procured more directly, and viewed as a strategic growth driver in the business.

What’s more, measurement is key for smarter media use. According to Think with Google, marketers that invest over 10% of their total budget in measurement are more likely to beat their sales targets by 25% or more. In addition, the same report highlights that even though 83% of CEOs see marketing as a growth driver, 45% of CFOs have rejected a marketing budget because it didn't demonstrate a clear line to value.

This heightened scrutiny means marketers can no longer rely on vanity metrics or brand-building alone – they must forge a clear, data-driven connection between their activities and profitability.

Aligning marketing and finance

At the heart of this transformation is the need to bridge the historical divide between marketing and finance. Traditionally, the CFO and CMO have operated in silos, speaking different languages and prioritising conflicting objectives. But to turn marketing into a profit centre, this dynamic must change.

Marketers must find ways to make their impact quantifiable and tie it directly to the financial priorities of the business. This requires establishing a common framework for measuring marketing's contribution. Metrics like revenue, profit, incremental sales and customer lifetime value can help translate marketing performance into financial terms the CFO can understand.

Don’t sacrifice your brand for short-term profits

One powerful way for marketers to demonstrate their profit-driving potential is by leveraging the strength of their brand. Strong brand equity can provide pricing flexibility, allowing companies to command premium prices and maintain margins even in turbulent economic conditions.

However, if marketers are relentlessly pursuing a profit-before-all approach, they may risk their long-term brand equity. Overemphasising short-term sales and profits can lead to underinvesting in brand awareness, positioning, and equity. This can erode the brand's long-term value and pricing power, making it vulnerable to competition.

When marketing is viewed solely as a cost centre focused on short-term sales, it can diminish its perceived value and strategic importance within the organisation. This can make it harder for marketing to secure the resources and buy-in needed to drive sustainable, profitable growth.

The key is finding the right balance between short-term sales activation and long-term brand-building. Overemphasising one at the expense of the other can lead to a myopic, unsustainable approach that ultimately undermines the business's growth potential.

Partnering with agencies for profit-driven expertise

To navigate this complex landscape, many brands are turning to experienced agency partners. These marketing partners can provide the data integration, measurement frameworks, and strategic guidance needed to transform marketing into a profit centre.

External partners have the skills and tools to build an integrated view of a brand's measurement, identify the current baseline, and then develop the models and strategies needed to grow these proof points.

Experienced agency partners can also help bridge the gap between marketing and finance, translating insights and aligning on shared goals.

It’s not going to get any easier

As the role of marketing continues to evolve, the pressure to deliver profitable results will only intensify. By aligning marketing and finance, leveraging brand equity, and partnering with experienced agencies, marketers can prove their worth and secure the resources needed to fuel sustainable, profitable growth. It's a challenging transition, but one that is essential for marketing to maintain its strategic relevance in the modern business landscape.

Marketing professionals interested in learning how to navigate the complexity of elevating marketing’s role as a strategic growth driver are invited to Incubeta’s Profit-Driven Marketer webinar on 18 March.