The Interdependency Of Advertising And Finance
It’s tempting to think of marketing and finance as completely separate business disciplines. Marketing is about subjective, nervous, creative things like brands and television advertising. Finance focuses on hard, cold numbers. As most seasoned business leaders know, in reality the two disciplines are closely related to successfully managing a company. While it’s not the only factor, marketing is one of the most important factors in business profitability and high ratings. Marketing is about revenue generation and growth, which drives the financial side of the business.
Because of this, marketing and finance are two sides of the same topic and answer the same basic questions every business needs to answer: Who is buying our product at the best price? How do we get as many profitable customers as possible? How do we keep customers loyal and keep coming back to buying?
By developing an appreciation for the way marketing drives finances and vice versa.
Combine marketing and finance
It is a mistake to say that marketing and finance are separate disciplines. In reality, they are closely related. They often overlap and inform each other about the company’s current and future health. This is also the case when the people running the finance and marketing functions either don’t know or believe that they are interdependent.
Every business leader should strive to look at marketing from a financial perspective and finance from a marketing perspective. When a business leader can work with this insight, good things tend to happen in a company and other types of organizations too.
Appearances can be deceptive. Finance seems like a numbers game, a cold, fact-based area of business where money speaks and everything else works. In contrast, marketing is often viewed as subjective, a venue for creative, artistic types who love to talk about edgy concepts like brand aura and emotional customer loyalty. However, finance is not all about money, and marketing is about a lot more than image. In truth, both disciplines are about the same thing: How a company earns, grows and gains in value over the long term.
Marketing is one of the main drivers of earnings, growth and valuation. Finance is about measuring the impact of marketing – from making decisions about how to operate in specific markets and serve specific customers, to pricing, basic advertising and messaging, product design, and the scope of product lines.
Great marketers understand finances
You will only be great at marketing if you understand the impact of finance and marketing on financial results. Conversely, you will only be good at finance if you understand marketing and how it affects the financial performance and valuation of companies.
These skills are essential to steer a company toward strong growth and robust cash flow. Knowing how to use marketing and financial discipline in the process can help the company add value for shareholders and likely make you more valuable too.
ContriBranding Strategy Insider: David Stewart, Professor of Marketing and Business Law at the President of Loyola Marymount University, Author, Financial Dimensions of Marketing Decisions.
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