by Peter Young
Zero-Based Budgeting is a weight on the marketer’s shoulders. But it just might be a ticket to the C-Suite
Jim Meier, of the Marketing Accountability Standards Board, has written a lot on the Kraft Heinz brand disaster underlining an eternal truth: “Without innovation and investment, a brand will wither and die.” A healthy brand demands ongoing investment – of time, creativity, love, and money. But he went on to say that Zero-Based Budgeting is bad because it eviscerates brand investment.
That is undoubtedly the face it shows to marketers.
But to dismiss Zero-Based Budgeting as an unwelcome financial imposition which “eviscerates a brand” – understandable as it is – would be fundamentally an error. It has another face towards the C-Suite
The paradox of Zero-Based Budgeting
Zero-Based Budgeting is a discipline that defines responsible, private-sector asset management. For the CFO, it is a tool to maximize profits and tie spending tightly to income projections and asset growth. Investors love it as much as marketers have come to hate it.
CFOs are going to demand it. CFOs are going to get it. And they are the people we must convince if marketing is to gain permanent entry to the C-suite.
Rejection of Zero-Based Budgeting would almost certainly perpetuate the very standoff we valiantly seek to end. It risks keeping marketers outside the C-suite door, hoping for a train that will never arrive.
Paradoxical as it may seem, we marketers would be wise to learn to love Zero-Based Budgeting. Better to embrace Zero-Based Budgeting as a friend – as a key to one of the boardroom door’s many locks – than excoriate it as an enemy.
In marketers’ failure to build brand in a disciplined fashion as financial asset lies our greatest opportunity
Marketers’ antipathy to Zero-Based Budgeting is just a symptom of a deeper disease: we are neither financially literate nor financially articulate. Marketers do not understand the language of finance, and we certainly do not speak it. It is not clear that we even try. But until we do so we stay outside.
The failure to scramble through that boardroom door is ours and ours alone. As Shakespeare put it, the fault is “in ourselves, not in our stars.” Convincing the financial guardians – and their investor masters – is our job, and we are to blame for failing – as practitioners, as scholars and as educators. But the solution too is in our hands.
A new approach to marketing education
Our inability to advocate for our strengths and articulate our value comes down to a fundamental deficiency: we do not speak the financial language of power. We are neither financially literate nor financially articulate, and this knowledge is not being taught in our universities or business schools.
This is an educational crisis – and an educational opportunity.
Arguably, we need a whole new field of study, research, and education – let’s call it the field of “Markconomics”.
Whatever we brand it, we eventually need a field that knits marketing skills with financial skills, to create managers who are financially literate and articulate and financial managers with marketing skills. Eventually scholarship must learn – and education must teach – to look at marketing through the lens of finance and/or finance through the lens of marketing.
The tools exist for linking marketing to finance. And the key tool is brand management for shareholders. Experts have developed ever more sophisticated brand valuation models and methodologies, now speeded up by AI. The only issue is that marketers are afraid of them, and that has to change.
Once marketers can overcome their fears and use the simple tools that exist to measure brand financial value, we can make a convincing business case for marketing strategies and budgets that will be accepted by the financial guardians in the C-suite.
Bring Zero-Based Budgeting in from the cold!
The challenge lies not in abandoning rigor – the core concept behind Zero-Based Budgeting is sound – but in reframing the inputs. It is not all bad news; Zero-Based Budgeting does not have to mean starting from a blank sheet of paper and justifying every dollar in a vacuum. Instead, it can be approached by saying, “It took this marketing investment to achieve that specific, brand financial outcome last year. Therefore, the marketing budget we propose for next year just takes that proven ROI into account.”
This shifts the focus from cost-cutting to results.
For this pragmatic approach to work, however, three elements are non-negotiable:
- A system of proper brand accounting that quantifies marketing assets and their returns
- A brand champion within the C-suite to protect long-term value
- Numeracy, the commitment to connect budgets to tangible financial metrics
- Treating brand as discrete business pulling all these elements together.
Adopting these principles will ensure that financial stewardship and brand stewardship are two sides of the same coin, not enemies in a budget war.
And take us a step further to getting marketing in the C-Suite – where it belongs.