When the CMO sees growth and the CFO sees a problem
Should you increase media spend, hold steady, or pull back? Look at who's buying, what's driving sales, and how much value they add.
Strong sales growth doesn’t always justify more media spending, especially when rising costs and promotions eat into profits. Before approving a bigger budget, CMOs and CFOs need to understand what’s driving growth and how much value it adds.
Consider a quarterly review. The CMO wants more media money. Sales are up, the brand gained more first-time buyers, and the campaign reached more prospects. Search and retail media both beat their targets.
The CFO doesn’t dispute any of that, but media costs went up, the company used more promotions, and margin barely moved. Why spend more when the extra sales aren’t producing much additional profit? Neither executive has enough information to make the next budget decision.
What kind of growth was there?
Resolving the standoff between the CMO and CFO requires breaking down the sales increase by customer group.
- How many buyers were new to the brand?
- How many were returning occasional customers?
- How many were regular customers purchasing their usual products?
- Did anyone buy a second product, trade up, or spend more without a discount?
Suppose the breakdown shows that while first-time buyers increased, most of the sales growth came from regular customers buying their usual products at a deeper discount. The CMO still has a prospecting case. The CFO now knows where much of the margin went.
The breakdown still won’t prove what the media caused. But it shows what the growth consisted of, which is a better place to start than arguing over return on ad spend across three different platforms.
A first-time buyer acquired with a steep offer may be worth the investment if they return and buy at a healthy margin. Customer lifetime value can help make that case, but look at what happened to earlier groups acquired under similar conditions. A forecast built on customers who never returned isn’t much comfort to a CFO asked to approve more spending.
An occasional buyer might now buy more frequently. Or the promotion might have persuaded them to make next month’s purchase early. A regular buyer might purchase the same product on the same schedule, regardless of whether an ad appeared. A repeat buyer isn’t necessarily a loyal buyer. Habit and convenience can look like loyalty until a competitor gives that customer a reason to leave.
The CMO should care about those differences as much as the CFO does. A platform can report a sale, but the business still needs to know whether customers did something they wouldn’t otherwise have done and whether that change added value.
Where will the next customer come from?
The CFO could look at flat margin and move more money into channels with the clearest immediate sales. That might improve the next quarterly report while making it harder to bring in new customers.
- In the market where the company wants to grow, are enough prospective buyers hearing from the brand?
- Is it showing up alongside competitors?
- Is customer penetration moving, even if the first purchase isn’t profitable?
If the company stops reaching people who don’t currently buy, it could temporarily enjoy a better-looking return by concentrating on customers it already has.
The CMO has to make that case without hiding behind reach and share of voice. Those measures can indicate whether the brand is present with potential buyers. They can’t determine whether the investment will pay off. Finance should ask when those buyers are projected to purchase again and what their expected value is. Marketing should ask whether a demand for immediate profit would cause the company to stop building its next customer base.
Both the CMO and CFO need to understand why channel reports won’t settle the standoff. Someone may see a video ad, hear about the product from a creator, search on a phone, and then buy through a retailer. Privacy protections and separate platform data limit which touchpoints can be connected to actual sales. The platform that sees the purchase may have the cleanest report without having done all the work.
Resolving the standoff between the CMO and CFO
The best course of action is to keep prospecting at its current level in the priority market but hold the proposed increase. The CMO has evidence that the brand is reaching more potential buyers. The CFO needs better evidence that those buyers will generate enough value to justify additional spending.
Separate the promotion decision from the media decision. Test a less generous offer without automatically reducing prospect reach. If first-time buying holds and margin improves, the company gains insights it would’ve missed by reducing media spending and promotional discounts simultaneously.
Use a geo holdout to test prospecting where markets are comparable and there’s enough data. Before it starts, the CMO and CFO should agree on what increases in new buyers and contribution margin would justify a measured increase in spending. The holdout results can also inform marketing mix modeling when they revisit the broader media plan.
The holdout can help establish whether prospecting added buyers. The offer test can show whether a smaller discount protects margin without sacrificing first-time sales. As the company tracks those buyers over time, the CMO and CFO can determine whether the return on investment justifies increasing spending, holding steady, or pulling back.
Tests and analyses cost money. So does shifting a large media budget because one set of channel reports looked good or one quarter’s margin disappointed.
Sales grew. Good. Now determine what kind of growth it was, what it was worth, and how much the media actually added. That’s the conversation to have before anyone approves the next media dollar.