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.
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.
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.
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.
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.
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:
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.
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.
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.