Marketing is Finance is Business: How CMO, CFO and CEO co-create iconic brands with sustainable pricing power in the Galactic Age

By Chris Burggraeve

Are (global) brands dead? Does marketing still matter? Is there still a "secret sauce” companies can apply to build winning brands in the future? Chris will show why great marketing is so much more than pretty pictures and Silicon snake oil. In his first book: ”MARKETING is FINANCE is BUSINESS” (published Dec 18), you will discover the rocket science behind the creation of marketing miracle$ in the galactic age upon us, in 4 stages

1) Look up: how to change our mindset from Thinking and Accting "Local/Global" to "Galactic"

2) Get your basic wings to fly: Understand the key historical models used in marketing and finance - the ones BOTH the CMO and CFO should know

3) (Re)Discover Burggraeve's 8 Marketing Fundamentals

4) Speak Better Wall Street - discover Alpha M - the world's first ever marketing model

• Language: English
• Publisher: Gatekeeper Press
• Release date: Jun 8, 2019
• ISBN: 9781642376821

Book preview

Marketing is Finance is Business: How CMO, CFO and CEO co-create iconic brands with sustainable pricing power in the Galactic Age

Published by Gatekeeper Press

2167 Stringtown Rd, Suite 109

Columbus, OH 43123-2989

www.GatekeeperPress.com

Copyright © 2019 by Chris Burggraeve

All rights reserved. Neither this book, nor any parts within it may be sold or reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems without permission in writing from the author. The only exception is by a reviewer, who may quote short excerpts in a review.

The cover design, typesetting, and editorial work for this book are entirely the product of the author. Gatekeeper Press did not participate in and is not responsible for any aspect of these elements.

eISBN: 9781642376821

Printed in the United States of America

Investment in business-aligned marketing capability is critical to build local and global brands... and indispensable to building galactic ones!

– Rebecca Messina, Global CMO Uber

By integrating Chris’ eight marketing fundamentals with finance, sales and operations from the start, portfolio company CEOs build a truly sustainable business model.

– Frederic de Mevius, Chairman, Verlinvest

(AB InBev – related Belgian family fund)

Chris inspired us to always reinvent our marketing mindset and machine ahead of new generations. This is his next must-read provocation.

– Frank Abenante, former VP Global Brands and Marketing Capability AB InBev,

Founder Brand Tuning

A timely reminder: brands can only be sustainable if they keep earning their social license to operate, all while becoming the most effective and efficient business marketer they can be.

– Stephan Loerke, CEO, World Federation of Advertisers (WFA)

Hard to put down, Chris’ book has already helped me think through marketing issues at two companies I follow. I’ll want to return to this book again and again to remind myself of the importance of pricing and purpose, and the power of looking up to the stars, rather than down at our feet.

– Robert Ottenstein, Senior Sell-Side Analyst (CPG)

Chris is the most finance-driven marketer I know. CMO is CFO is CEO!

– Marc de Swaan Arons, CMO Kantar Consulting, author of

The Global Brand CEO and Marketing 2020: Organizing for Growth

A page-turner blend of history and future of how marketing plus finance can impact business, painted against the backdrop of humankind’s intensifying race to space. Fascinating.

– Penny McIntyre, Board Director

Chris merges Main Street and Wall Street into actionable advice for all students of business. Galactic inspiration for the curriculum of the future.

– Oliver Gottschalg, Academic Dean, TRIUM Global EMBA -

NYU Stern / LSE / HEC

A very different, fresh and audacious playbook for gravity-defying business marketing. Modern CMOs should try this MC-Rocket ride!

– Rudy Moenaert, Professor of Strategic Marketing at TIAS School

of Business & Society (The Netherlands)

As a fast growth scale up we learned a lot from Chris. Marketing is strategy, and needs to be integrated in all aspects of business from the start.

– Mark Ramadan & Scott Norton,

Co-founders of sir Kensington’s (now Unilever)

Avoid Silicon snake oil tools. Focus on real tools that build on Burggraeve’s 8 fundamentals.

– Louis Jonckheere, co-CEO Showpad

Take it from a business marketer with a serious global track record and the battle scars that go with it. We have lift off!

– Joe Jaffe, CEO of Start-Up for Brands,

Bestseller author of Beyond the 30 spot and Flip the Funnel"

To Nadine and Clio:

Thank you for a life rocket ride so far

To Bambou, our loyal Eurasian:

Thanks for keeping me Zen throughout the writing

Foreword

Marketing isn’t rocket science. You do it every day in your connections with family, friends and business colleagues. It comes naturally in how you connect, communicate and influence others, every day.

Where it gets complicated is when you don’t know the other person personally. When you’re trying to influence, build trust, connect and communicate, simply and quickly, with more than one person, potentially across multiple cultures. To convince them to buy your product or service. This is where marketing gets really interesting—where it requires a lot more art, science and discipline to deliver sustainable pricing power.

Marketing should be fun, and not feared. CEOs and general managers should not treat marketing as a black hole, where you feel out of your depth with the verbal gymnastics of marketing speak. You have your CFO to explain the P&L balance sheet and cashflow to you in simple terms. You find it easy to understand, because it’s all grounded in income, expense, assets and liabilities—all tangible items. You can actually do the same with your CMO. Marketing is common sense. Just like finance is. Both have rational and emotional components.

CEOs often miss the point that marketing drives the key part of your business that builds relationships and trust with others. Great marketing requires the right structure to think through this. This book really helps with a framework of 8 fundamentals to be discussed and considered with your leadership team when building brands. The checklists and models in the book are extremely useful as a self-analysis and conversation starter. It takes something that can be seen as subjective, to something that is built on principle, fact, insight and market realities. It helps to discuss on a very strategic level, internally and externally with investors and stakeholders. It also works on a more tactical level. You discuss a piece of work, but keep an eye on the broader brand business context. The idea is your marketing dialogue becomes a more structured discussion, versus a subjective like or dislike control game.

During my time together with Chris at The Coca-Cola Company in Europe, we successfully built brand businesses together. I proudly remember our design and launch of the original Coke Zero, first in the UK and then rapidly across Europe. It started a long-lasting transformation of the full Coke Trademark portfolio, and became a major success for the company worldwide. It is great to see his broader thinking and experience, clearly crystallized in this book, years later—provocatively painted against the galactic backdrop of Space Race 2.0.

This is a book that you will pick up, read and use more than once!

Michael A. Clarke

CEO, Treasury Wines Estates

TWE (tweglobal.com) is one of the world's largest wine companies, listed on the Australian Securities Exchange (ASX). Through world-class winemaking and brand marketing, TWE is focused on meeting evolving consumer interests across the globe, and on delivering sustainable growth. Everything we do is dedicated to realizing our vision of becoming the world's most celebrated wine company.

Table of Contents

Preface:     Why this book, and how to best navigate it?

Stage 1     Look Up:

Adopt a New Galactic Mindset

Chapter 1     Marketing and Finance are both Mars and Venus

Chapter 2     Mars is the new Moon

Chapter 3     The new Galactic Age: open for business

Chapter 4     Think Galactic, Act Galactic

Stage 2     Prepare For Launch:

Basics Before You Fly

Chapter 5     The Daedalus Paradox: why preparation matters

Test: Get Your Business Marketing Wings

Chapter 6     Key marketing models the CEO/CFO should know

Chapter 7     The one finance model the CMO should know

Chapter 8     Models work, but buyer beware

Chapter 9     From Marketing Dreams to Miracle$

Certification: Congrats, business marketing wings

Stage 3     Lift-off:

Successful Marketing in the Galactic Age

Chapter 10   A new galactic marketing model

Marketing is not rocket science

Chapter 11   Fundamental 1 (why) – Pricing Power

Chapter 12   Fundamental 2 (why) – Purpose

Balancing Sin & Soul

Chapter 13   Fundamental 3 (what) – Brand Health

Chapter 14   Fundamental 4 (what) – Value Proposition

Chapter 15   Fundamental 5 (who) – Business Marketers

Let Earth go

Chapter 16   Fundamental 6 (how) – The Power Toolbox

Chapter 17   Fundamental 5 (how) – Insights

Chapter 18   Fundamental 8 (how) – Excellence

Chapter 19   No shortcuts to marketing miracle$

Stage 4     Escape Velocity:

Successful investing in a galactic age

Chapter 20   Beyond financial ratings

Rating models: buyer beware

Chapter 21   A new galactic marketing rating

Chapter 22   The new Alpha M Audit for CEOs

Chapter 23   Where the galactic money will go

Epilogue      Marketing in the Cyborg Age

Once you

have tasted

flight, you

will forever

walk the earth

with your

eyes turned

skyward, for

there you have

been, and there

you will always

long to return.

Leonardo Da Vinci

[1]

Preface

Why this book, and how to best navigate it?

CEOs of marketing-driven companies today need their teams to master an ever more complex consumer information and decision funnel, from awareness to final sale. They need to constantly rethink what customer service was/is/will be about, in a world where decisions are increasingly driven by bots and algorithms. The path and storyline from first contact to conversion is more challenging than ever. As things stand, it will only get even faster and more complex, until AI possibly takes over completely.

By virtue of my marketing consultancy, teaching, and continued active portfolio investing and operating roles in startups and scale-ups around the world, I remain reasonably in tune with most of the latest (digital) tool developments in the marketing field. However, what worries me deeply is that these new digital marketing tools are starting to reframe the beliefs of many CMOs and CEOs around the fundamentals of marketing. Even top marketers say they have no more time to do the right long-term things. Under the pretext of social listening, they are busy reacting to the next tweet, the next post, the next like. Many investors, boards, company leaders and their ever younger marketing teams start confusing the use of the fast-changing tools with mastery of the fundamentals of marketing discipline. Tools are tools. Marketing is much more than mastery of digital skills and m-e-commerce, especially as people increasingly lose trust in whatever lives on fake social media.

Silicon snake oil starts to undermine CEOs’ and boards’

deep understanding of marketing fundamentals.

The above insight got me slightly frustrated. And curious. Why and how did we as marketers let things get this far out of hand? We can never forget what purpose great marketing truly serves. So, as a positive reaction, my ambition is to offer CEOs and their top teams a simple yet modernized set of blueprints to (re)discover the fundamentals of modern marketing, all while helping to progress their thinking beyond the frameworks of the last decades. Let’s create what I will call renaissance brands for the new Galactic Age, balancing understanding of the latest digital tools with respect for all the fundamentals of the art, science and discipline of marketing.

The CMO leads the marketing function. The CFO leads the finance function. They both technically lead their respective functions. However, in the end, it is the CEO who sets the overall tone. The everyday priority of CEOs is creating sustainable business growth. Focus on the bottom line—and on the top line. To make that happen, structurally connecting marketing better with finance is proving one of the biggest challenges.

How can I support my CMO and CFO to build a world-class marketing capability using scalable, repeatable models generating sustainable pricing power on my key brands?

How to keep my brand (portfolio) and corporate brand relevant to ever new generations?

Everybody tells me be digital. How can I avoid Silicon snake oil tools clouding my company’s focus on the fundamentals of marketing art, science and discipline? What are those fundamentals anyway?

Last but not least, how to sell my current and future level of marketing excellence to my board, to investors, and to stakeholders, while everything around me exponentially changes?

Success in marketing is often referred to as "marketing miracles." I deliberately put miracles between inverted columns. Miracles are great. People want to believe in miracles. They crave them. However, there is much more rocket science behind marketing than CEOs and investors are aware of. If you follow the right marketing playbook, the probability to create alpha—miraculous extraordinary returns in finance speak—is much higher. Not guaranteed, but much higher. Think of marketing miracle$, with a $ sign at the end.

I am not a rocket scientist, nor an alchemist promising to turn lead into gold. I am an experienced consumer scientist with a passion for aviation, for space and for the future. As I found out, there is a fascinating world at the crossing of marketing, finance and space. A story not yet told, and relevant to help solve the dilemmas outlined above. I started to share and test new thinking in my post-corporate professional life over the last six years, and finally put it all together in this book. I owe a great deal to fellow senior marketers, business partners and consultancy clients, and especially to my (executive) students and fellow faculty at the TRIUM Global EMBA for having encouraged me to do so.

There are a handful of marketing core concepts, and a bit of jargon, that every protagonist touching brands should really understand, starting with the board and the CEO. They are necessary to truly appreciate the power of marketing, regardless of the times we live in. This book is all about helping business to (re)appreciate the core components of a powerful marketing capability, packaged in some simple, fresh and future-centric language. It will also introduce language and models that should help finance-oriented people and investors to make better bets on marketing or brand-driven companies. Capital will be more smartly used by the most deserving brands.

In July 2019, humankind celebrates 50 years since the first Moon landing. Driven by Branson, Bezos and Musk, and other new rock(et) star billionaires, Space Race 2.0 is generating a massive new investment and consumer change cycle no business marketer can afford to miss out on. To benefit from its transformative impact over the next 50 years, companies need to urgently upgrade all prevailing marketing and finance mindsets and models. Most date back 50+ years, to the Space Race 1.0 of the Sixties.

The models and blueprints contained in this book will help all protagonists in the business of building brands today and tomorrow:

CEOs, their boards, and their CXO colleagues, regardless whether they run MainStreet brands interested in becoming galactic, or Space Brands interested to connect better with main street.

Wall Street and investors at large, including government agencies investing our tax dollars, on how to successfully pick the sustainable brand winners of the galactic age.

Business students of all ages, from undergrad to grad school to EMBAs, interested in a galactic career (and ditto life).

Strap yourself in, as you will go for a rocket ride, organized in 4 stages:

This book is not for people with a fear of heights, for people afraid of testing new limits, or for those just not interested at all in anything related to space discovery. For all you bold people, may this book become your hitchhiker guide through a new marketing and finance galaxy. I will not talk about the marketing jungle or black box here. I will use space language. I will try to help light escape from the black hole of marketing finance (thank you, Stephen Hawking).

The MC-Rocket© and Alpha M™, will increase the probability

of more marketing miracle$ in the new galactic age.

Miracle$ as such are never guaranteed. The thinking in this book helped yield results both at big global companies and at some new scale-ups. The blueprints are built on a mix of personal practice and theory (see About the Author).

The writing of this book is not intended to win awards for brilliant prose. The narrative is kept simple, presented in snackable formats, with tables and side bars, and spiced up with a touch of edutainment. To accommodate how you prefer to read, there will be a print and an e-book version. Where possible, broadly accessible English-language sources have been used. The key visuals and schematics are copyrighted and trademarked, yet downloadable for free on your mobile or laptop from my website. You are welcome to play with them. We intended to service the busy experiential mind in search of some new learning and practical, customizable, personal application. I share both general as well as personal stories and examples. I apologize in advance if you think I am losing myself in a few musings and personal opinions. In true renaissance spirit, you are welcome to wholeheartedly (dis)agree with them, and reach out to me for a constructive debate (see below how).

Last, as a marketer, I believe in the emotional appeal and beauty of a product. This book has been craftily designed by chef Christian Loos from KitchenNYC (see: About the designer). Also, learning can be multisensorial. If you want to get in the right mood while you read this book, connect on Spotify to my specially curated free list covering Rockets, Space and the Universe.

Welcome aboard the incredible business and societal opportunities generated by the new Galactic Age. A big thank you for being here. Fasten your seatbelts, please. Let’s make marketing miracle$ happen.

Chris R. Burggraeve

New York, Q4 2018

vicomte.com/galactic

@ChrisBurggraeve

Stage 1

LOOK UP:

ADOPT A NEW

GALACTIC MINDSET

Jargon seems

to be the place

where left and

right brain

meet.

Wendy Kaminer

Chapter 1

Marketing and Finance are both Mars and Venus.

The roles of the CEO and CFO are generally well understood. When it comes to the CMO, many investors and business leaders tend to be much more vague. Finance tends to be perceived as rational, and marketing as emotional. If a CEO wants to succeed in the galactic age, start with debunking the old perceptions. Marketing and finance are both Mars and Venus.

What is marketing? What do marketers do? What should they do? These days, anybody can just ask: Siri or Alexa.

Alexa’s answer: Marketing is the study and management of exchanged relationships.

Siri’s answer: The same first sentence as Alexa. However, on the mobile she elaborates on the definition, and refers you to Wikipedia. Hmmmm. Time to update Wikipedia?

I always ask students in class, or participants in a workshop, that same basic question. Based on the typical answers, and based on who is in the room, two groups always emerge: those that are in marketing, and those who would identify as non-marketers (almost everybody else).

Marketing people tend to place themselves on Venus, the planet that stands for emotional connections. The other group places themselves on Mars, the planet for people that drive a cool and fact-based bargain. They tend to see marketing as a black box, a jungle. In planetary terms, marketing is perceived as a black hole, a place in space, according to NASA, where gravity pulls so strong even light cannot get out. In CFO language, a place where people or things, like money, disappear without a trace.

As this book will demonstrate, nothing is further from the truth. It is high time to debunk this persistent myth. Marketing is both Venus and Mars. Vice versa, the ugly truth is there is as much emotion in finance as there is in marketing, if not more. Finance is both Mars and Venus too, while marketing can be much more fact- and process-driven than finance leaders know or believe. There is plenty of method in the best marketer’s perceived madness. And as we will see later in the book, some madness is actually strategically necessary to make miracle$ possible.

As a proof point of how emotional Finance can be, just look how mergers & acquisitions tend to play out. If there ever was an emotional game of chicken, this is it. The practice is covered in a veil of constantly changing numbers and charts. It is a drama in secret offices, led by high-powered world of investment bankers and corporate lawyers. There are press leaks and boardroom brawls. Analysts who smell blood have a shark fest. The eventual financial decisions get wrapped up in a mythical aura of fact-based, rational decision making, superbly spun towards stakeholders on why it all makes so much strategic sense. The seller will celebrate why the price was the best one ever. The buyer will show why the deal made supreme sense: how the sum of the parts works so magically—and look at these synergies... Yet here is the sobering and well proven statistic every finance major gets taught at university:

>80% of M&A fails to create lasting value[1].

So who is emotional, and who is rational?

The facts are indisputable. M&A is a financial minefield. Still, the M&A train rolls on. Why? Because the CEO and CFO love this area naturally. It is their comfort zone. It can build careers faster. It is tempting as a shortcut to success, under intense pressure. Investors value and reward the behavior—until the party ends and they move on. It is usually much easier for CEOs and for CFOs to buy a brand and show some form of ROI, than for the CMO to show the value of building a real brand organically over time. The people who truly build brands over time are often referred to as a 10- to 20-year overnight sensation. Few people have stamina and patience for that. Just ask founders and entrepreneurs. They know how hard it is to Finish Big[2]. A sale transforms their lives. They deserve the premium—if they can get it.

Don’t get me wrong. I actually believe, and have lived many times, how selective M&A has its place in the CEO toolbox. It can transform a company or industry. Still, no major company can rely on M&A only to be successful over a long time. Organic growth capabilities matter over time. Yes, it is much harder, but it is doable, if done in the right way. Organic growth is so much harder than inorganic growth. However, despite the evidence on the corporate side, hunting is still perceived as easier and more effective and efficient than farming, and rewarded more short term.

Hunters versus Farmers

The above planet table shows an issue I would like to explore a little further. Korn Ferry’s CMO Pulse (2018) illustrates the disconnect between CMO and CXO, stating nearly 30% of CEOs don’t understand the CMO role[3]. If one does the same exercise for other functions, asking about the role of leaders in finance or manufacturing or sales, the answers are much closer. The planets seem to be aligned much more. Whoever or whatever is to blame for this discrepancy does not matter. What matters is to understand where the perception gap in marketing comes from, and how we might close it again. If marketers claim their role is to impact brand health (behavior and perception) to create ever stronger pricing power, it is time to bridge the perception gap for the function overall.

Marketing has to acknowledge that as a function, it may have lost a clear definition and positioning itself. I started to see it during my later years as a senior corporate marketer. It really became apparent after I started my consultancy, serving mostly non-CPG firms, and during my teaching to both marketers and non-marketers. Marketers deserve a lot of the responsibility for having let this disconnect happen. Especially since the advent of everything digital, and since the rise of social media, there seems to be collective confusion as to what marketing is really about. We allowed marketing to be reframed and narrowed to a programmatic social media black box, filled with jargon nobody understands anymore. Silicon snake oil pushed out (marketing) leadership’s understanding and focus on marketing fundamentals.

The anecdotal and survey evidence above seems to translate in tenure. The most popular proxy for the issue may be the average CMO career longevity. Mind you, longer tenure does not necessarily automatically equate to adding more value, nor to real legacy creation. But it is a good starting point. In senior marketing roles, little structural work can be done if you are only 2 years in the role. You can score some campaign hits and start big capability moves, yet 3-4 years is a minimum to start anchoring real potential legacy moves. In my view, one can see a CMO’s true track record appear only after 4-5 years, especially if we are talking bigger companies. That is where you can start to see the tangible impact of marketing excellence driving sustainable pricing power.

Few CMOs get this far. Since 2004, executive search consultant Spencer Stuart has been tracking CMO tenure[4]. It went up from just shy of 2 years (23.6 months) in 2004, to a peak of 4 years (48 months, 2014), to the end of 44 months in 2017. The survey covers only about 100 of the top US most advertised brands as the of end December 2017. Despite being a narrow sample, it created a clear perception around the role. And perception is reality, rule number one in marketing.

Oscar Wilde already taught us beauty is in the eye of the beholder. The survey results are always amplified and exacerbated in the business press, not in the least by the advertising industry. They hope to either defend their incumbent