There should be a special curriculum in the business schools to cover marketing financials. It can be really complex. And to be very honest, it can also be really messy. In theory marketing financials is very simple, there is a marketing budget that covers all the costs for marketing. Very simple and straightforward, all the costs related to marketing is to be taken from the marketing budget. In reality, it is rarely this simple.
In large enterprises, for example, there is not only one marketing budget. There are local marketing budgets, per country or per region and there are also different marketing budgets for each product area or other parts of the enterprise. A local marketing activity in for example Sweden can be co-funded both by the local marketing budget and by a global product marketing budget. This is of course very good, since more investment in marketing means a bigger impact. From a financial perspective though, this can be a challenge. The traditional finance and accounting systems rarely offer sufficient functions to cover this split.
More often than not companies are working with partners, and the partners will share the funding of some marketing activities. We see two kind of partners amongst our customers. There are reseller partners, who are selling the products or services. And there are supplier partners, that deliver products or solutions to the company. Reseller partners will drive and manage their own marketing activities. Sometimes they will require that you are co-funding these activities. It also goes the other way, that your company wants to impact your resellers’ marketing, by sharing the cost of marketing activities. Co-funding will be driven from both sides of the table since there is a mutual interest of sharing the cost. When your supplier is funding your marketing it is the same thing, just different perspectives.
Resellers often gets extra marketing support based on their sales, just as an extra incentive. This extra funding can be based as a percentage of sales or as an additional sum if they sell more than planned. We have seen other models as well, based on negotiations between the local sales teams and the resellers.
Once again, this cost sharing is great, it is good for both parties and will provide a higher impact of the marketing – driving the sales. And once again, from a financial and accounting perspective this kind if co-funding of marketing activities is difficult. Marketing controllers are working with spreadsheets, trying to get things right, working intensively to allocate the correct costs to the correct cost-centers and the right budgets.
One of our international enterprise customers used all different ways to manage co-funded marketing activities. A campaign could be driven by the marketing team, funded by the local marketing budget, one of the product organizations and also co-funded by the re-seller. Obviously the marketing controllers were struggling very hard to assign the correct costs to the right budget owner. I can only guess how many different spreadsheets they were using, before implementing Musqot to support this process.
Since Marketing Planner is designed to support the marketing processes, these issues are in our genes to support. We don’t see them as outlier problems, as traditional accounting and finance systems, we see this way of working as a great way to drive marketing!