Risky Performance Indicators

This is a crazy and frankly untenable situation, but the blame for it can’t just be heaped at the feet of the CMO and the marketing department. Rather, it’s indicative of a problem with corporate culture itself, where KPIs defined by the CFO to measure performance distort what the department should be trying to achieve—effective, verifiable advertising—and instead actually push it towards risky activities.

The marketing department’s Q4 budget splurge is not only throwing good money after bad, but at its worst, could be funding activities that are utterly antithetical to the values of both the company and its customers. It’s damaging enough when a brand’s promotional message is served next to inappropriate content, but just imagine the stock market and reputational fall-out if it’s discovered that corporate money is responsible for bankrolling criminal and terrorist acts.

Where does this pressure to spend come from? Surely a department should be rewarded for using its budget wisely and effectively rather than being forced to blow it all at the end of Q4? Yet time and again, this is what happens when a CFO imposes purely financial metrics on a department. In the ‘old world’ of less than twenty years ago, this pressure to spend meant that marketing merely wasted money on buying display ads in physical media—now, as their potential audience has migrated online, they squander money in a much more dangerous space where the evidence of what’s been bought is far harder to verify, with only traffic reports and ad impressions to show for their outlay. Yet CFOs just see budget being spent and KPIs being met, and are happy.

But they shouldn’t be, because these figures potentially mask a huge and damaging risk for the company. While risk officers are integrated into companies’ legal, compliance, financial and security teams, marketing continues to be overlooked, even though this is where a major source of risk for companies now exists. And if that wasn’t bad enough, the financial KPIs that CFOs impose actually incentivize this risk.

Easing financial pressure

It is vital that brands recognize this new threat to their corporate reputation and business operations, and not just treat ad fraud as an internal problem for the marketing department to deal with. At the same time, CFOs need to take the pressure off teams to spend their budget come what may for fear of losing it, otherwise it won’t be long until the Q4 bonanza leaves a company exposed to accusations of funding crime by proxy.