When
you’re calling all the shots, sometimes it’s hard to tell whether
you’re making the right decisions about your marketing spend year after
year. It’s much easier to get complacent and make incremental
adjustments that result in incremental gains, rather than risk failure.
Historical data helps, but it won’t warn you of disruptive forces on
the horizon — like changing business models — so you can adjust your
marketing budget accordingly.
That’s why benchmarking data is so important.
The 2019 CMO Survey
by Deloitte, Duke University and the American Marketing Association
offers many valuable insights to consider as you think about your sales
and marketing activities. Here are a few of the biggest takeaways.
1. The Customer Experience Is a Top Priority
At a time when global internet sales have reached their lowest level
since 2014 and marketing executives are less optimistic about the
economy, they are focusing on growing sales by improving customer
relationships.
Executives are still increasing their investment in marketing, but
those increases are at their lowest level in three years.
Meanwhile, they are focusing more of their attention on price and
customer relationships, while product quality has taken somewhat of a
backseat.
It may sound obvious, but having a company that truly prioritizes the customer experience pays off.
A Forrester study of
1,269 global business leaders showed those that “invest in the customer
experience across people, processes and technology” have higher brand
awareness, higher order value, higher customer retention and
satisfaction and higher returns on their investment.
Yet only 31 percent of the companies Forrester studied met the criteria of being customer-centric.
While every department contributes to the customer experience,
marketing plays a key role in designing the customer journey. Working
closely with the sales team to make this journey as frictionless as
possible pays off in a big way. In fact, research by the Aberdeen Group
found customer journey mapping can make the sales cycle
18 times faster and increase revenue by 56 percent.
2. Companies Are Focusing On Market Penetration
The survey shows more companies are shifting away from new product development in favor of stronger market penetration.
In the past 12 months, market penetration represented more than half
of all companies’ investment in growth strategies. Market penetration
increased from 52 percent to 55 percent over the year, while
product/service development hovered at around 22 percent or just below
that.
Market development and diversification followed behind, ending the year at 13.5 percent and 9.6 percent, respectively.
Drilling down further into marketing budgets, marketers are expected
to increase brand spending the most, compared to spending on CRM,
introducing new services and introducing new products.
3. Companies Are Rethinking Social Media Strategies
Marketing spend on organic social media tumbled in the past year,
declining from 14 percent of marketing budgets to just 11 percent.
Interestingly, the smallest companies — those with less than $25 million
in annual revenue — spend the most, possibly because they are looking
for low-cost ways to compete.
However, this decline is likely more indicative of a shift in social media marketing strategy
rather than a sign of abandoning it altogether. As more social media
channels shift toward a “pay to play” model, CMOs are already
anticipating an increase in social media marketing spend over the next
five years.
Social
media is projected to account for nearly 20 percent of companies’
marketing budgets by 2024, an increase of nearly 73 percent.
To make better use of their social media dollars, more companies are also turning to marketing agencies.
CMOs rely on agencies for nearly one-fourth of all their social media activities, according to the survey.
4. Marketing Analytics Will Gain A Greater Share Of Budgets
Spending on marketing analytics dipped slightly from 2018 to 2019,
but it’s expected to surge over the next three years — accounting for 11
percent of the average marketing budget.
Marketing spend on analytics varies by industry. It’s most widely
used within the energy, communications and healthcare industries, and
less prevalent in consumer goods and manufacturing.
Overall, however, marketing analytics are playing a more important role than ever before. On average,
CMOs said they use analytics in 43 percent of their decisions.
5. CMOs Expect To Make Better Use Of Artificial Intelligence
Most companies surveyed reported being on the low end of artificial
intelligence adoption. Even the largest companies rated themselves a 2.5
on a scale of 1-7, with seven being the highest level of AI adoption.
However, most companies expect to significantly increase their use of artificial intelligence over the next three years, as this chart below shows.
According to the survey, the most common uses of AI in marketing are currently:
- Content personalization
- Predictive analytics for customer insights
- Targeting decisions
- Programmatic advertising and media buying
- Improving marketing ROI by optimizing content and timing
Most marketers are just beginning to tap into the potential of
artificial intelligence, but the survey makes it clear they plan to ramp
up their efforts.
6. CMOs Still Struggle To Demonstrate Marketing ROI
They may be making more data-driven decisions, but most marketers
still have a hard time showing the return on investment in their
efforts.
Of the CMOs surveyed, only 36 percent said they could prove the
impact of marketing spend using quantitative metrics. Fifty-one percent
said they could demonstrate an impact using qualitative metrics — such
as engagement and brand recognition. And nearly 13 percent of marketers
said they weren’t able to show any impact last year. The problem is
especially an issue within B2B marketing, with nearly 19 percent
of all B2B marketers reporting they were unable to show how their
marketing impacted the company’s bottom line.
This
issue isn’t going away anytime soon. Almost 64 percent of marketers
cited “demonstrating the impact of marketing actions on financial
outcomes” as their No. 1 challenge when it comes to communicating with
the C-suite.
Marketing technologies play an important role in demonstrating ROI, but technology alone won’t cut it. Marketing
executives need to have regular conversations with their sales teams to
discuss goals, identify meaningful metrics and make adjustments as
needed.
Aligning Marketing Spend With A Changing Economy
The 2019 CMO Survey shows the business landscape is shifting, making
it more difficult for marketers to succeed by maintaining the status
quo.
Today, having a strong digital marketing strategy
is essential to entering the arena, but it may no longer be enough. In
some ways, the foundational elements of digital marketing — an
easy-to-navigate website, a content marketing plan and a good CRM — have
become the minimum standard to survive. Strong sales
or an uncertain outlook might invite discussions of marketing budget
cuts, but marketers can’t afford to let these factors inform their
spending decisions.
To thrive in the coming years, marketers need innovative strategies
that prioritize the customer experience and eliminate the silos between
sales, marketing and customer service.
Informative post ! They are focusing more of their attention on price and customer relationships, while product quality has taken somewhat of a backseat.
ReplyDeleteGreat! It’s most widely used within the energy, communications and healthcare industries, and less prevalent in consumer goods and manufacturing.
ReplyDeleteAs more social media channels shift toward a “pay to play” model, CMOs are already anticipating an increase in social media marketing spend over the next five years.
ReplyDeleteWhile every department contributes to the customer experience, marketing plays a key role in designing the customer journey.
ReplyDeleteInformative article!! It helps me a lot.
ReplyDelete