Valuable brands have often been deprived of investment because the case for investment was often badly articulated. But as CMOs become more financially savvy, that is now changing, writes David Haigh, Chief Executive Officer at Brand Finance.

When I set up Brand Finance in 1996, I did so in response to what I saw as the endemic problem that CFOs and CMOs did not communicate with each other, leading to dysfunctional decisions being made about investment in marketing and brands. Several reports and articles produced at the time about the relationship between the two functions suggested that there was little mutual trust or respect between them and that they didn’t even speak the same language.

The cliched view was that CFOs were all myopic bean counters focused on short-term profit, cost reduction, lack of imagination or vision, and were greedy, asset-stripping killjoys. By contrast, the cliched view of marketers was that they were creative, fun, and visionary, but also subjective, extravagant, unable to analyse returns, and precious fashion victims with their heads in the clouds. CFO’s heads were full of terms like revenues, costs, assets, liabilities, balance sheets, discount rates, profit and loss, cash flows, and net present values. CMO’s heads were full of terms like awareness, perception, preference, loyalty, reputation, identity, products, promotion, price, advertising, media, and digital.

In truth, neither cliche is or ever was true. I have met many extremely imaginative and forward-looking CFOs with a natural flair for marketing and an understanding of how brands create value for shareholders.

A perfect example of the enlightened CFO was Graham Howe, the founding CFO of Orange. I remember back in 1996 visiting Orange’s first office following its launch as the UK's fourth mobile network in 1994. Graham was busy harassing the marketing team at Orange to spend more and more money on advertising because his econometric and business modelling demonstrated an ROI several multiples the amounts being spent. He also preached to City Equity Analysts that the Orange brand would drive market share and rapid financial growth. He succeeded in driving the share price higher and higher on the Orange promise that ‘The Future’s Bright, the Future’s Orange’. Orange ended up being taken over for £21bn.

Another perfect example of a CMO who understood finance is Frazer Thompson, until recently CEO of Chapel Down plc, which was near-bankrupt back in 2004 when he joined after a five-year stint as global CMO of Heineken. It is now the number-one English sparkling wine company and is giving Champagne houses a run for their money. He spent a large part of his 20 years at Chapel Down convincing individual investors, private equity funds, EIS investors, and Institutional Investors that the Chapel Down brand was a good long-term investment. From near bankruptcy in 2004, the company now has a market cap of £126m.

How can the perceived barriers and gaps be bridged?

One study indicated that while CFOs tend to see the CEO most days, advising them on most aspects of the business, CMOs tend to see the CEO once a week or less, and then only briefly. Very few CMOs sit on boards of directors, particularly of publicly quoted companies. Very few CEOs came from a marketing background, except for FMCG businesses like P&G, Unilever, Mars, etc.

For the last four years, Brand Finance has been tracking the performance of Global CEOs as Guardians of Brand and Reputation. We take our sample of CEOs from the Brand Finance Global 500, an annual list of the most valuable brands in the world. We have profiled what backgrounds these CEOs come from. As the following chart shows, only about 10% of the 500 most valuable brands in the world have a CEO with a background in marketing or the arts. Over 90% are from science, engineering, economics, or finance backgrounds. So, it is no real surprise that CMOs are often on the back foot.

Source: Brand Finance plc, Brand Guardianship Index reports 2021-2023

Source: Brand Finance plc, Brand Guardianship Index reports 2021-2023


Another study conducted in 2017 by the Marketing Accountability Standards Board – which Brand Finance actively supports because it attempts to bring finance-related thinking and communication to the marketing function – indicates the perceived barriers to the relationship between the CMO on one hand and the CFO/CEO on the other:

Source: Marketing Accountability Standards Board: CFO survey 2017

Source: Marketing Accountability Standards Board: CFO survey 2017


How can the average CMO overcome these challenges? The B2B Institute at LinkedIn argues that CMOs need to adopt the following framework:

V = Understand how VALUE is created, within the organisation and how it is created for its customers and prospects. This requires understanding of the value of long-term brand building and the communication of its commercial benefits to the financial team.

A = Accept ACCOUNTABILITY to the organisation and for the metrics of value creation. Greater transparency is needed to generate respect and trust and support.

L = Use the LANGUAGE of business and of value creation. Move away from marketing jargon to empower more convincing discussions. Marketers should use their insight skills to communicate more effectively with the CFO and all internal stakeholders. This is about building a relationship. It is more than producing a set of useful spreadsheets and knowing what EBITDA stands for.

U = Scale the UNDERSTANDING of value creation across the organisation. This means promoting a company-wide understanding of how an effective marketing function, working with finance and the rest of the leadership team, is central to commercial objectives. The ability to collaborate and partner effectively with finance is also essential, so the marketing team must demonstrate improved financial literacy to enable stronger strategic debate.

E = Create an EVIDENCE-based mindset by using empirical evidence and value-based metrics, agreed upon with finance, that drive the commercial objectives of your organisation. These will include non-digital metrics and those measuring the strength and health of the brand as well as short-term datasets.

In my experience what really turns CFOs and CEOs on is clear and demonstrable financial evidence that any marketing activity will add not just revenue, profit, or cash flow, but will increase the share price. This is why Warren Buffett loves brands. He refers to brands as moats keeping out the competition. That is why he invests in Coca Cola, Kraft, Goldman Sachs, and many other very strongly branded companies.

In 2023, he said “the single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10% then you’ve got terrible business”. He is the most successful financial investor in the world. But his mantra is ‘Keep it simple and show me the financial return and share price growth!’