Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / Why CMOs Are Pulling Budget From Brand Marketing
Transcript
- Lucas: A Fortune 500 CPG company — I'm not naming names because the CMO told me this off the record — moved 30 percent of its brand marketing budget into performance channels last quarter. Direct response, programmatic, the whole playbook. Luna: Thirty percent is huge. That's not a trim, that's a pivot. Lucas: It is a pivot. And the rationale was straightforward: the CFO saw two quarters of flat revenue and asked the CMO to 'prove' that brand spend drives sales. The CMO couldn't show a clean attribution model, so the money moved. Luna: And six months later? Lucas: Six months later, the brand's unaided awareness dropped by 12 points. Their direct-response numbers ticked up temporarily, but the cost per acquisition actually rose because the top of funnel had shrunk. They're now trying to rebuild awareness at a higher cost than if they'd stayed the course. Luna: So they panicked, pulled the lever, and now they're paying more to get back to where they were. That's the classic short-termism trap. Lucas: Exactly. And it's not an isolated case. I've been hearing from CMOs across consumer goods, retail, even B2B software — the pressure to attribute every dollar to a click or a lead is intensifying. The CFO wants a number. Luna: But brand marketing doesn't produce a clean number in the quarter you spend it. That's the whole point. Lucas: Right. And there's good data on this. A Nielsen study from last year looked at 500 brands over three years and found that brand advertising drives about 60 percent of long-term revenue growth for established products. Performance marketing drives the remaining 40 percent. But the brand effect takes six to eighteen months to show up. Luna: So if you pull brand dollars today, you might not feel the pain for a year. By then, the CMO who made the cut might be gone — or promoted — and someone else inherits the problem. Lucas: That's the perverse incentive. Quarterly earnings cycles incentivize the opposite of what builds durable value. And I think this is getting worse, not better. With ai driven attribution tools promising to 'optimize' every dollar in real time, there's a growing illusion that marketing can be a science with immediate feedback loops. Luna: But the science is incomplete. Those tools measure last-click or multi-touch attribution within a narrow window. They don't capture the halo effect of a TV spot or a podcast sponsorship on search volume or in-store traffic. Lucas: Exactly. And that's the frustration I hear from CMOs: they know brand works, but they can't prove it in the boardroom language that CFOs speak — which is quarterly ROI. Luna: So what are the smart ones doing? How do they protect their brand budgets? Lucas: A few things. First, they're investing in what I'd call 'brand econometrics' — building statistical models that correlate brand spend with downstream metrics like organic search, direct traffic, and even store footfall. It's not perfect, but it's better than nothing. Luna: I've seen some of those models. They require at least two years of clean historical data to be reliable. That's a high bar for a lot of companies. Lucas: It is. And that's why the CMO I mentioned earlier lost that argument — they didn't have the data infrastructure. So a second strategy I'm seeing is 'incremental testing': running matched-market experiments where one region gets brand spend, another doesn't, and measuring the difference over six months. Luna: That takes discipline. And a CFO who's willing to wait. Lucas: Right. But the CMOs who are succeeding at protecting their budgets are the ones who reframe the conversation. They don't argue that brand is 'unmeasurable.' They argue that the right measurement horizon is 12 to 24 months, not one quarter. And they align with the CFO on a set of leading indicators — like share of search, brand sentiment, and repeat purchase rate — that are tracked quarterly but evaluated over a longer arc. Luna: So they're basically building a shared language. The CFO gets numbers; the CMO gets time. Lucas: Exactly. And it works. I talked to a CMO at a mid-size beverage company who did exactly that. They agreed on three metrics: aided awareness, net promoter score, and repeat rate. The CFO bought in because those are numbers. And they kept 85 percent of their brand budget intact through a tough year. Luna: That's a good example. But I wonder how replicable it is. Most companies don't have a CFO who's that patient. Lucas: No, they don't. And I think that's the real challenge. The structural pressure from public markets — or from private equity — is relentless. The average CMO tenure is still around 40 months. You don't have much time to prove your approach. Luna: So the ones who survive are the ones who can both speak the language of the CFO and show early wins from performance channels while protecting the long-term brand investment. Lucas: That's the balancing act. And honestly, I think the best CMOs are becoming bilingual — they know how to run a performance campaign that generates quick revenue, and they use that credibility to defend the brand budget that will pay off later. Luna: It's almost like they have to earn the right to do brand marketing. Lucas: Exactly. You prove you can deliver short-term results, and then you earn the trust to invest for the long term. Luna: That's a tough position to be in. Especially when the CFO is looking at the same dashboard every month. Lucas: And the CEO is looking at the stock price every day. Look, I don't think this tension is going away. But I do think the CMOs who frame brand as a long-term investment with measurable leading indicators — rather than a leap of faith — have a fighting chance. Luna: I want to circle back to that Nielsen data, the 60-40 split. That's been cited a lot. But I've also seen research suggesting that the split varies hugely by category and brand maturity. Lucas: Absolutely. For a new brand entering a crowded market, the split might be 80-20 in favor of brand, because nobody knows who you are. For a mature brand with 90 percent awareness, performance might drive a higher share. The principle holds, but the ratios are context-dependent. Luna: So the CMO's job is really about diagnosing where the brand is in its lifecycle and building the right mix for that stage. Lucas: And defending that mix against the quarterly pressure. It's genuinely hard. But the ones who do it well — they tend to stay in their roles longer. And they build brands that survive the inevitable downturns. Luna: Speaking of staying power — we've been doing these episodes for a while now, and I think a lot of what we talk about comes down to discipline. The discipline to invest when it's uncomfortable. Lucas: Yeah, and it's funny — we're in a similar position with this show. We keep it ad-free, which means we rely on a small group of listeners who support us directly. It's a different kind of discipline, but it's the same principle: invest in the relationship, not just the immediate return. Luna: Exactly. And that's what allows us to have conversations like this one — without worrying about pleasing an advertiser or hitting a download target for a sponsor. Lucas: So if these marketing conversations have sparked something you've actually used — or if you just want to help keep the show independent — a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo. That's literally what funds making this many episodes. Luna: And we're grateful for every one of them. It's what keeps this going. Lucas: Alright, back to the tension between brand and performance. I think the key takeaway for any CMO listening is: don't let the quarterly cycle dictate your strategy. Build the data infrastructure, find your leading indicators, and earn the right to invest for the long term. Luna: And if you're a CFO listening — give your CMO the runway. The data shows it pays off. Lucas: On that note, I'll leave you with a question: what's the one metric you'd use to convince your CFO that brand spend works? We'd love to hear it. Until next time.