Ep. 124: Andrew Warner - The Collision Between Marketing and Accounting
Andrew Warner, CEO at Marketing CFO, joins Count Me In to talk about what happens when marketing, finance, and data analytics collide. Andrew is a virtual CFO for marketing agencies and e-commerce stores. He possesses a unique mix of experience in both finance and marketing allows him to approach how he helps the companies he works with in a unique way--helping them get a better handle on their numbers while not forgetting marketing best practices. In this episode, Andrew talks about how CFOs can connect cross-functionally to be more effective and build a bridge between accounting and marketing. Download and listen now!
Contact Andrew Warner: https://legendarypodcasts.com/andrew-warner/
FULL PODCAST TRANSCRIPT
Mitch: (00:05)
Hey everyone! Welcome back to Count Me In, IMA’s podcast about all things affecting the accounting and finance world. I'm your host Mitch Roshong and this is episode 124 of our series. What happens when marketing, finance and data analytics collide? Well, in today's episode, Andrew Warner CEO at Marketing CFO uses his unique mix of experience in both finance and marketing to help explain how companies can combine these efforts to create a sustainable business. Hear him speak with Adam about bridging accounting and marketing as we head over to their conversation now.
Adam: (00:43)
Now Andrew, I've been really looking forward to speaking with you as, I been wanting to know what is a Marketing CFO and how did you get to this place?
Andrew: (00:53)
Sure. So, Marketing CFO is really something that, is something that I've kind of invented just because of the unique need that I've seen in the market. I think as you know that, there's a lot of data in finance and it's very easy to approach that from an analytical perspective and that's how a lot of accountants and finance people typically will approach most problems. But nowadays in marketing, you're getting to where you can track so much spending and the results and there's so much there that it's almost to the point where it's more of a finance type role than a creative role. And if you can kind of combine those two sides of the world, the marketing side with the finance, there's a lot of potential that gets unlocked for the companies that you work with.
Adam: (01:40)
That really makes sense how marketing and CFO kind of collide. How did you get to this role?
Andrew: (01:46)
Well to be honest, it was a bit of an accident. So I started out in the finance world and I was working in a accounting firm, probably like a lot of your listeners work at, and on the side I had some e-commerce businesses mainly focused on drop shipping products and there's a lot of digital marketing involved and so I actually had tempted to leave the finance world to go into that industry. I had a small exit with an e-commerce store that I owned and started consulting on the digital marketing side, but what kept happening was that a lot of my clients, even though it was supposed to help them with the marketing, I kept getting pulled back into the finance world. They didn't know if their advertising campaigns were profitable. They didn't know what their business goals were and what campaigns fit into those and which ones didn't. They had cashflow constraints and inventory issues. And so I kept fighting it for a while, I was trying to avoid going back into finance, but about three years ago I just accepted it and have been serving in that role as kind of being the bridge between those two worlds.
Adam: (02:52)
That's interesting how I think we all kind of fall into our profession by accident a lot of times. So many times, accountants, marketing is just another line on the income statement, but a lot happens to get it there on to the income statement. As you just mentioned, how you kind of fell into the Marketing CFO, you know, how can a CFO better connect with their company to be more effective in making sure that everything is connected?
Andrew: (03:24)
Yeah, that's a great question. And what's so cool is that 20 or 30 years ago, if you'd asked me that question, it would have been a much different answer and it would've been really tough for a finance person to understand everything that's going on in the marketing world, but nowadays there's so much data and there's so much information available and it's very, it's moving more and more to being quantitative where you still, it's still great to have that creative and qualitative and understanding of the mind of your customer, that's still really important for marketing, but you can also start measuring your metrics. And that's one of the things that I do a little different than most CFOs, is that just like you said, instead of marketing expense being an expense on the income statement, I normally start with the, before getting to the revenue, looking at how many users are you getting, how many new potential buyers, how many leads are you getting, and what's your conversion rate at closing those? And I think that that's really where the story needs to begin and that really hasn't. Traditional finance hasn't had a good system for tracking that and catching it. And so I think that's something that you can't really rely on the double entry accounting built in the 13th century to really help with that. But I think it is something that's essential for a CFO to focus on.
Adam: (04:40)
So that’s not the first time I've heard you mention like the double entry 13th century accounting, when you and I were talking before we started recording, you'd mentioned it a few times, is that still the foundation of what management accountants will face today or is, are things changing?
Andrew: (04:55)
Yeah, I think the cool thing for management accounting is that it really does change a lot and it really, instead of having that standard financial reporting that is, you know, gap or whatever else, when you're on the management side you're really trying to help the business grow and there's so many other pieces there. I think that the principles have stayed the same. You always want to find your constraints. You always want to try to, maximize efficiency, maximize the return on any investment that you're making. I think the big change has been that there's more data to tell you what your return is, what your investment has put forward. And I think that you have to go a little bit beyond the traditional accounting world to be able to do that. And I could probably walk you through some examples, to really show that in a different light, but the, it is really cool, that the 13th century bookkeeping system has really just with a few slight tweaks, has continued to serve our world so well. I'm not against that system by any means, but I do think you need to add some other pieces on top of that if you want to have a holistic picture of modern business.
Adam: (06:07)
Well, can you give us some of those examples to help illustrate that for the audience?
Andrew: (06:12)
Yeah, sure. So I think that, a few things you can look at, so a lot of times people will focus on the constraint of inventory, right? And so that may be something if you're in a manufacturing company and you're trying to focus on where's the constraint, and it's almost like you might have a constraint first approach to resolving that. You could also do that with the marketing side of your business. A lot of times I see people that they're really great at getting traffic to their website for example, but they do a terrible job at converting those visitors into customers, but they continue to focus on just getting more and more people when the real constraint is that conversion rate. And I think that that's something that's really a key component that a accountant could really understand well and that they can, they have that mindset to where they could really serve a marketer or just serve the business in general to better understand where is that constraint. Maybe even get more specific into specific areas, specific web pages if it's a website, specific customer targets if it's more of like a traditional Salesforce type system and then I'm starting to track that over time and seeing what the trends are and trying to determine what the levers underneath that data you can pull to really help improve that over time. I think all that's some great examples for how you can take the principles from traditional management accounting and apply them to this new digital marketing kind of data first world.
Adam: (07:38)
So it almost sounds like your data is more than just the numbers of like finances that are coming in, but you're talking about, customers and leads and all these different things. So the modern CFO needs to be able to understand all of that.
Andrew: (07:56)
Definitely, I think so. I think it would just be tough for a CFO to really understand just by looking at that one line item called marketing expense, and really understand what is it that's driving those changes in the revenue? What is it, how can you improve that spend, where are the constraints in getting to revenue? I think that it's just essential to do that.
Adam: (08:16)
Now we've talked, you and I have talked a number of times before we got to this conversation and you've mentioned to me, Ray Dalio and he has a book called Principles. And there's a quote from that that really sticks out, “principles are fundamental truths, that service foundations that get you what you want out of life. They can be applied in a similar situations to help you achieve your goals”. Now you've mentioned this quote to me, how does that kind of bring together what we've been talking about today?
Andrew: (08:44)
Yeah, so I think that Ray Dalio's book, Principles was ahead of its time, but the perfect time to implement that is now. And so what he did in the 80s and 90s, is he really solidified for his team here is what we do when the data says this. So if this changes in the market, this is what our system is going to be. And they would spend several hours for each individual little process, trying to understand that 100% what that would look like. But it was tough back in the 80s and 90s for most traditional companies to find that data and in finance, he was looking at different pieces of the market. And there was a lot of financial data there, but there wouldn't have been as much marketing data in a modern business back then. I think you can really take that same approach and say, you can almost have it to where the data runs your business for you. You can get to the point where if the data changes in certain ways and you have a predefined method to where you say, okay, going back to that example we were talking before, if our conversion rate for this particular customer segment goes down, here's the corrective actions we should take and the investigative actions we should take to immediately investigate that and really just build that feedback loop so that you can constantly improve and I think that's the direction that accounting's going to move into. I think there's so much data and it's so easy to convert. You know, a lot of times I've built dashboards for people before and I'll build these beautiful dashboards that I'm so proud of and then I'll look at the usage stats and people rarely use them, you know, they're too busy, they're, you know, it does take time to look at the dashboard and convert that into action. And a lot of times we put that on the managers to determine that and take that next step. But I think the next step for an accountant could actually be to say, if the data is changing in a certain way, and we have a predefined action step, maybe you can connect a tool like Zapier or power automate and automatically trigger a task in a task management system and that's actually some of the things I'm starting to do for my clients, but I think that's another thing that's right around the corner that's completely from the Ray Dalio's Principles mindset, but I think accounting and finance is just poised to really exploit and push that to its max now that we have all this data.
Adam: (11:07)
So does the modern accountant need to be a data scientist?
Andrew: (11:11)
I think so, but I would also say that I think the modern marketer needs to be a data scientist. I'm afraid we're getting to the point where almost anybody is going to have to be a data scientist at least to some extent.
Adam: (11:21)
So how do we get there?
Andrew: (11:23)
I think you can start out with some pretty familiar tools. I think that pivot tables and Excel can get you really, really far. And I think that's a great place to start. I think the most important thing that a lot of accountants actually miss is knowing what to do with the data. So okay, if this changes, what's the next step, and I think you can get to the point where you could connect your accounting system to some sort of management system and I think that that's really where you can almost be a data scientist that understands the accounting numbers, but then it's helping to translate that data into the next action step for a business and I think that that's maybe the most beneficial, the highest leverage point for an accountant these days and it's something that's really proactive and would set you apart from the traditional accountant for sure.
Closing: (12:14)
This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.
FULL PODCAST TRANSCRIPT
Mitch: (00:05)
Hey everyone! Welcome back to Count Me In, IMA’s podcast about all things affecting the accounting and finance world. I'm your host Mitch Roshong and this is episode 124 of our series. What happens when marketing, finance and data analytics collide? Well, in today's episode, Andrew Warner CEO at Marketing CFO uses his unique mix of experience in both finance and marketing to help explain how companies can combine these efforts to create a sustainable business. Hear him speak with Adam about bridging accounting and marketing as we head over to their conversation now.
Adam: (00:43)
Now Andrew, I've been really looking forward to speaking with you as, I been wanting to know what is a Marketing CFO and how did you get to this place?
Andrew: (00:53)
Sure. So, Marketing CFO is really something that, is something that I've kind of invented just because of the unique need that I've seen in the market. I think as you know that, there's a lot of data in finance and it's very easy to approach that from an analytical perspective and that's how a lot of accountants and finance people typically will approach most problems. But nowadays in marketing, you're getting to where you can track so much spending and the results and there's so much there that it's almost to the point where it's more of a finance type role than a creative role. And if you can kind of combine those two sides of the world, the marketing side with the finance, there's a lot of potential that gets unlocked for the companies that you work with.
Adam: (01:40)
That really makes sense how marketing and CFO kind of collide. How did you get to this role?
Andrew: (01:46)
Well to be honest, it was a bit of an accident. So I started out in the finance world and I was working in a accounting firm, probably like a lot of your listeners work at, and on the side I had some e-commerce businesses mainly focused on drop shipping products and there's a lot of digital marketing involved and so I actually had tempted to leave the finance world to go into that industry. I had a small exit with an e-commerce store that I owned and started consulting on the digital marketing side, but what kept happening was that a lot of my clients, even though it was supposed to help them with the marketing, I kept getting pulled back into the finance world. They didn't know if their advertising campaigns were profitable. They didn't know what their business goals were and what campaigns fit into those and which ones didn't. They had cashflow constraints and inventory issues. And so I kept fighting it for a while, I was trying to avoid going back into finance, but about three years ago I just accepted it and have been serving in that role as kind of being the bridge between those two worlds.
Adam: (02:52)
That's interesting how I think we all kind of fall into our profession by accident a lot of times. So many times, accountants, marketing is just another line on the income statement, but a lot happens to get it there on to the income statement. As you just mentioned, how you kind of fell into the Marketing CFO, you know, how can a CFO better connect with their company to be more effective in making sure that everything is connected?
Andrew: (03:24)
Yeah, that's a great question. And what's so cool is that 20 or 30 years ago, if you'd asked me that question, it would have been a much different answer and it would've been really tough for a finance person to understand everything that's going on in the marketing world, but nowadays there's so much data and there's so much information available and it's very, it's moving more and more to being quantitative where you still, it's still great to have that creative and qualitative and understanding of the mind of your customer, that's still really important for marketing, but you can also start measuring your metrics. And that's one of the things that I do a little different than most CFOs, is that just like you said, instead of marketing expense being an expense on the income statement, I normally start with the, before getting to the revenue, looking at how many users are you getting, how many new potential buyers, how many leads are you getting, and what's your conversion rate at closing those? And I think that that's really where the story needs to begin and that really hasn't. Traditional finance hasn't had a good system for tracking that and catching it. And so I think that's something that you can't really rely on the double entry accounting built in the 13th century to really help with that. But I think it is something that's essential for a CFO to focus on.
Adam: (04:40)
So that’s not the first time I've heard you mention like the double entry 13th century accounting, when you and I were talking before we started recording, you'd mentioned it a few times, is that still the foundation of what management accountants will face today or is, are things changing?
Andrew: (04:55)
Yeah, I think the cool thing for management accounting is that it really does change a lot and it really, instead of having that standard financial reporting that is, you know, gap or whatever else, when you're on the management side you're really trying to help the business grow and there's so many other pieces there. I think that the principles have stayed the same. You always want to find your constraints. You always want to try to, maximize efficiency, maximize the return on any investment that you're making. I think the big change has been that there's more data to tell you what your return is, what your investment has put forward. And I think that you have to go a little bit beyond the traditional accounting world to be able to do that. And I could probably walk you through some examples, to really show that in a different light, but the, it is really cool, that the 13th century bookkeeping system has really just with a few slight tweaks, has continued to serve our world so well. I'm not against that system by any means, but I do think you need to add some other pieces on top of that if you want to have a holistic picture of modern business.
Adam: (06:07)
Well, can you give us some of those examples to help illustrate that for the audience?
Andrew: (06:12)
Yeah, sure. So I think that, a few things you can look at, so a lot of times people will focus on the constraint of inventory, right? And so that may be something if you're in a manufacturing company and you're trying to focus on where's the constraint, and it's almost like you might have a constraint first approach to resolving that. You could also do that with the marketing side of your business. A lot of times I see people that they're really great at getting traffic to their website for example, but they do a terrible job at converting those visitors into customers, but they continue to focus on just getting more and more people when the real constraint is that conversion rate. And I think that that's something that's really a key component that a accountant could really understand well and that they can, they have that mindset to where they could really serve a marketer or just serve the business in general to better understand where is that constraint. Maybe even get more specific into specific areas, specific web pages if it's a website, specific customer targets if it's more of like a traditional Salesforce type system and then I'm starting to track that over time and seeing what the trends are and trying to determine what the levers underneath that data you can pull to really help improve that over time. I think all that's some great examples for how you can take the principles from traditional management accounting and apply them to this new digital marketing kind of data first world.
Adam: (07:38)
So it almost sounds like your data is more than just the numbers of like finances that are coming in, but you're talking about, customers and leads and all these different things. So the modern CFO needs to be able to understand all of that.
Andrew: (07:56)
Definitely, I think so. I think it would just be tough for a CFO to really understand just by looking at that one line item called marketing expense, and really understand what is it that's driving those changes in the revenue? What is it, how can you improve that spend, where are the constraints in getting to revenue? I think that it's just essential to do that.
Adam: (08:16)
Now we've talked, you and I have talked a number of times before we got to this conversation and you've mentioned to me, Ray Dalio and he has a book called Principles. And there's a quote from that that really sticks out, “principles are fundamental truths, that service foundations that get you what you want out of life. They can be applied in a similar situations to help you achieve your goals”. Now you've mentioned this quote to me, how does that kind of bring together what we've been talking about today?
Andrew: (08:44)
Yeah, so I think that Ray Dalio's book, Principles was ahead of its time, but the perfect time to implement that is now. And so what he did in the 80s and 90s, is he really solidified for his team here is what we do when the data says this. So if this changes in the market, this is what our system is going to be. And they would spend several hours for each individual little process, trying to understand that 100% what that would look like. But it was tough back in the 80s and 90s for most traditional companies to find that data and in finance, he was looking at different pieces of the market. And there was a lot of financial data there, but there wouldn't have been as much marketing data in a modern business back then. I think you can really take that same approach and say, you can almost have it to where the data runs your business for you. You can get to the point where if the data changes in certain ways and you have a predefined method to where you say, okay, going back to that example we were talking before, if our conversion rate for this particular customer segment goes down, here's the corrective actions we should take and the investigative actions we should take to immediately investigate that and really just build that feedback loop so that you can constantly improve and I think that's the direction that accounting's going to move into. I think there's so much data and it's so easy to convert. You know, a lot of times I've built dashboards for people before and I'll build these beautiful dashboards that I'm so proud of and then I'll look at the usage stats and people rarely use them, you know, they're too busy, they're, you know, it does take time to look at the dashboard and convert that into action. And a lot of times we put that on the managers to determine that and take that next step. But I think the next step for an accountant could actually be to say, if the data is changing in a certain way, and we have a predefined action step, maybe you can connect a tool like Zapier or power automate and automatically trigger a task in a task management system and that's actually some of the things I'm starting to do for my clients, but I think that's another thing that's right around the corner that's completely from the Ray Dalio's Principles mindset, but I think accounting and finance is just poised to really exploit and push that to its max now that we have all this data.
Adam: (11:07)
So does the modern accountant need to be a data scientist?
Andrew: (11:11)
I think so, but I would also say that I think the modern marketer needs to be a data scientist. I'm afraid we're getting to the point where almost anybody is going to have to be a data scientist at least to some extent.
Adam: (11:21)
So how do we get there?
Andrew: (11:23)
I think you can start out with some pretty familiar tools. I think that pivot tables and Excel can get you really, really far. And I think that's a great place to start. I think the most important thing that a lot of accountants actually miss is knowing what to do with the data. So okay, if this changes, what's the next step, and I think you can get to the point where you could connect your accounting system to some sort of management system and I think that that's really where you can almost be a data scientist that understands the accounting numbers, but then it's helping to translate that data into the next action step for a business and I think that that's maybe the most beneficial, the highest leverage point for an accountant these days and it's something that's really proactive and would set you apart from the traditional accountant for sure.
Closing: (12:14)
This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.
