Bridging the finance--marketing divide: the two disciplines have often worked at cross-purposes or have simply failed to understand each other's needs. Now, best practices find the two departments collaborating on meaningful metrics and driving accountability.

• Author: See, Ed
• Position: Measurement

When it comes to financial accountability, marketing has long had an infamous reputation--from being thought of as a little loose in measuring impact to being called "the last bastion of uncontrolled spend."

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So, how bad is it? A 2005 study of senior-level marketers by Forrester Research, Marketing Management Analytics and the Association of National Advertisers (ANA) found that only one of three marketers surveyed said they build marketing budgets based on knowledge of the spending required to meet corporate goals. And, if faced with a 10 percent budget cut, only two in five marketers felt they could predict the impact of the cut on sales.

And, it may only get worse. The last few years of proliferating media options have shaken marketers' safety net and made marketing much riskier. Nowadays, there are no "fender benders;" marketers either win big or suffer huge losses.

Suddenly, what was a basic black-or-white decision--Do I advertise on TV or in print?--has become far more complicated. Marketers now confront a dizzying array of choices from digital, to product placement to sponsorship to cable to network TV and wireless, among other new media. And with so many options, failure is that much easier.

An old adage says finance measures for the short term and marketing manages for the long term by building brands. There is some truth in that. But, it is also a part of the problem. Brand-building is important. It allows a company to charge a premium, gives a company some marketplace standing and differentiation, and it builds credence for a company's innovations. However, it may be used as a shield against having to use hard measures.

Until recently, many marketing and finance organizations existed uncomfortably in a hands-off relationship where marketing did the brand creative work while finance wrote the checks. However, marketing spending is too material a part of any company's cost structure to continue to be managed without clear accountability for its effectiveness.

Marketing dollars that truly build the brand and increase sales represent a clear investment--directly contributing to the growth of the business--while marketing dollars that don't drive sales are merely lost costs.

Given the risk accumulating in marketing, it's time to better align marketing and finance.

How are companies getting it right? For some, marketing accountability is no longer the Holy Grail. While the very tight alignment of marketing and finance is still...