Why Marketing Should NEVER Be a Cost-Center

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Marketing. Can’t live with it, can’t live without it, amiright?

All jokes aside, the marketing profession which we’re considering as advertising, PR, and the larger marketing circle have some public image issues.

In a 2018 Gallup report, advertising professionals were the 4th least trusted professional. We lost the title of Least Trusted Profession to Telemarketers, Cars Salesman, and Members of Congress.

Ouch.

How did a group of intelligent, educated, passionate people, become and stay one of the least trusted professions in the states? Simple. We allowed it.

You’ve heard the saying, “This is why we can’t have nice things,” before when Facebook started to force pay-to-play and now, with data privacy laws like GDPR and CASL.

We’re not here to crap on marketers - look at us, a big part of who we are lives in the day to day of marketing, but we’re asking some tough questions and we think that you should be, too.

While the public opinion of us is one thing (no such thing as bad PR, right?... Right??), we actually see this as an indicator of a much larger problem. If the public responds to our profession with distrust - how does our company’s leadership?

One of the best indicators of the value that your marketing department is providing is to measure it as one of two things: a cost-center or a profit center.

This might be a fairly untraditional way for a marketing manager to approach a job, but we’re willing to bet that the CFO and CEO of your company certainly sees your entire department as one or the other.

The question is: How do they see you and your department?

Just another expense? Or a magnet for profit?

And if it’s the wrong one, how do we fix it?

Cost-Center

Let’s start back at the basics and really understand what a cost-center is. A pretty straight forward answer is:

“A cost center is a subunit (or a department) which takes care of the costs of the company. The primary functions of cost center are to control the costs of the company and to reduce the unwanted costs the company may incur.”

why marketing should never be a cost centerAt first, that sounds NOTHING like marketing, right? Marketing doesn’t manage the costs of the company, we actively spend money and generate leads.

But, and this is a BIG one, marketing departments are consistently viewed as a cost-center. For example:

“.... we will call the marketing department as a cost center because the company invests heavily in marketing. Because marketing functionally enables the sales division to generate profits.
So, even if the marketing department is incurring costs and doesn’t generate direct profits, it enables the sales division to generate direct profits for the company.
The marketing department also helps understand what the customer needs, as a result, the organization stops doing what doesn’t generate profits and starts doing more of what brings in the result.”

WHOA.

Go back and read that one more time: “...even if the marketing department is incurring costs and doesn’t generate direct profits.” Did you digest that? This is the perspective of the vast majority of business leadership; marketing, while a valuable asset does not generate direct profits.

Before we go any further, can we collectively agree that is not the truth? Or at least that it shouldn’t be?

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There are two major factors that have brought us here, in 2019, where marketing is still considered a cost-center:

  1. Traditionally, it was.
  2. We suck, due to poor leadership, at showing that it isn’t anymore.

Factor 1: Traditional Marketing

Pre-digital marketing was closer to a true cost-center than we are today. It’s easy to understand why the lack of data, difficult reporting, and fluffy metrics made it difficult for leadership to see marketing as anything other than an important cost. There was never a way to directly tie revenue to any marketing activity. In fact, we speak to that in our post, 3 Signs You're Doing Your Marketing All Wrong.

Factor 2: We Suck

We can’t go back and change how things used to be, but we certainly don’t have to accept them the way they are today!

This is 2019 - we have access to unprecedented amounts of the user, prospect, and customer data. Marketing today is the mecca of business intelligence opportunity, but many of us are wasting it talking to our CEO about how many blogs we need him to write each month.

(Note: this is NOT a dig on content marketing, do it, do it well, but talk to your CEO about something else...like revenue!)

Marketing has traditionally been seen as a support tool for Sales to do the ‘real business’ work and that was acceptable 30 years ago - it is not today.

p.s. we love you sales team!

Profit-Center

If we don’t want to be seen as a cost-center, what do we want to be seen as? We’re so glad that you asked!

A PROFIT-CENTER: A profit center is a business unit which generates revenues, profits, and costs.

Doesn’t that sound a little more like what we’re doing every single day? Being viewed as a profit center in your company means that your leadership recognizes not only do your actions affect the bottom line but that you have deep insights to help other departments elevate their effectiveness and efficiency.

Examples of how marketing can be a profit-center:

  • E-com sales without any sales interaction
  • Customer support data coming from chat conversations
  • B2B marketing nurturing and sales hands off
  • BI being shared with the leadership on full-funnel, closed-loop reporting
  • Early indicators of market shifts based on using and buying behavior
  • Deep reporting to show marketing-attributed revenue

Which One Are You?

It’s critical that you understand where your leadership places your department on their P&L.

While you may not have the opportunity to knock on your CFO’s door and ask him outright, consider developing relationships with your executive leadership and begin to ask the questions that will allow you to determine the most likely place your team is.

Once you understand where your company sees you, determine if you like it. Do you like that you are viewed as a cost center? If no, change it.

How?

Start here with Math for Marketers. MFM is a comprehensive guide for any marketer to get deeper into the metrics and business-level math that your CFO is really looking for from your team.

Being able to shift the perspective of your team will take time, results, and the ability to actually measure that you ARE generating revenue.

Math for Marketers Guide