I posted this question recently on several bulletin boards, but instead of focusing only on our marketing kinfolk, I also went to the ‘dark side’ and posted this question in CFO boards.

I am compiling responses to understand how both sides of the house plan to handle the challenges ahead, but here are some highlights:

WHAT CFOs ARE SAYING:

• “A great question and one I that I believe is on the minds of many at the moment. One approach to consider is to rightsource certain types of functions to a specialist contingent fee results based services supplier. This will allow the permanent reduction in fixed costs while keeping certain existing functions (e.g. key account management) in house. Therefore, I believe rightsourcing is the way forward particularly in these challenging and uncertain economic times. Once we demonstrate that we are considering these sorts of options, the FD is usually pleased to see sensible progress is being made. Offshoring is particularly sensitive at the moment as global economic leaders are not encouraging to send jobs overseas. Outsourcing with fixed fees can also prove to be an expensive alternative with it’s own associated risks. Rightsourcing allows you to maintain balance and productivity across the board. I would be interested to learn about your outcome and hope this helps. Good luck!”

• “During recession every CFO and the SBU Head always would like to preserve Cash; therefore the first axe falls on Marketing expenses such as advertising budgets.

If you belong to the school of individuals who treats the brands as Brandentrepreneurs; you should never settle for hacking the ad budget; instead offer close to similar savings in terms of; Mobile Phone Bills, entertainment expenses, travel by Business Class, pooling resources rather than repetitive marketing expenses, increasing investments into your brand from current customers, reward based referral programs using current customer base, etc.

In fact, if you succumb to your CFO cutting advertising budget during recession; the brand future during good times will become bleak. Since every other CFO will look at this measure; if you ensure a different approach is followed, your negotiating power with the media increases leading to higher exposure; which itself is big added value to stay in Media during recession.

Am sure a sensible CFO will accept the proposal if you show 50% to 60% savings in marketing expenses detailed earlier without touching the advertising budget.”

WHAT MARKETING FOLKS ARE SAYING:

• “A CMO may even need to talk to the CFO in terms she understands. Such as IRR (Internal Rate of Return) , NPV (Net Present Value), or any other financial term that one can legitimately use to show the company is getting a return on the ad dollars or eCommerce activities. Most marketing managers don’t take meetings with the CFO to that level”

• “It is common practice in many organisations to challenge marketing people for 80/120 scenario. 80% of your last year expenses and 120% efficiency. I have to say that in our practice it has been doable for the 2 last years. Next year could be really challenging since some channels simply need better financing and more activities there i.e. e-commerce.”

• “…and these days given the importance of Google everyone is doing some direct marketing, have an easier time measuring / optimizing. What has worked for me in the past is looking for the 80/20 across product lines, marketing and sales channels and customers. Identify the biggest levers and leverage them. For example, using predictive modeling I’ve increased sales significantly with flat budgets by modeling and reallocating budgets.”

• “We are going to dramatically expand our corporate blogging initiatives”

• “Hmmm… by proving that there’s more ROI from money invested via online advertising (done right) than time and money spent making and printing CFO financial reports… “