Being a CMO has always been difficult. Until recently, you couldn’t accurately measure how well your programs were performing and what kind of growth you were delivering. With the advent of digital marketing, that issue was minimized, but you had to keep up with new online channels and tactics. And now, with data privacy laws, both consumers and regulatory bodies are changing the playing field again. Are CMOs planning and spending wisely?
In their annual survey, CMO Spend Survey 2019-2020, Gartner looks at how much companies allocate to marketing spend, which channels are getting dollars, and what data CMOs are tracking to determine their strategy and path forward. According to the report, key findings include:
- Marketing expense budgets in North America and the UK have fallen to 10.5% of company revenue, down from 11.2% just one year prior. Yet, CMOs remain upbeat that their budgets will rebound as we head into 2020.
- Despite signs of future financial uncertainty, CMOs feel confident regarding future macro environmental conditions. Most CMOs surveyed believe the global economic outlook will have a positive impact on their business in the next 18-24 months.
- Analytics and insights remain as the most strategically important marketing capabilities, while the once unglamorous function of marketing operations rises in strategic prominence.
- Agency investments still commands almost a quarter of total budgets, indicating the flight to in-housing marketing capabilities is overstated. Meanwhile, marketing technology (martech) investments dropped three percentage points year-over-year.
Marketing budgets have fallen to their lowest levels in the last five years. The annual report has documented the slowdown in marketing spend, with this year showing negative spend and not just flat spending. Marketing now trails IT, human resources, and R&D as far as expected investment by CEOs. However, despite the spending decrease, CMOs remain optimistic.
The optimism shown by CMOs is a bit perplexing with the number of economists that are concerned about the chances of a global recession. Even with such concerns, nearly 90% of CMOs believe the near-term future is positive. They are looking at consumer spending as well as performance of initiatives from the prior year as their indicators. The report calls out that CMOs should broaden their view of the factors that can impact their spending ability.
For more information on CMO spend including spending on outside agencies, channel specific spending, and use of analytics, we recommend that you read the article or watch the webinar. Topline takeaways for CMOs to drive growth include:
- Build a budgetary benchmark. Look beyond current versus-prior-year comparisons, instead focusing on the budget’s overall direction and its drivers for movements over time.
- Audit the environmental indicators used to build your marketing strategy. Identify gaps in your team’s knowledge of factors that impede strategic planning, decision making and optimization.
- Prioritize analytics activities based on the value they deliver to the business and the amount of effort required to achieve that value.
- Optimize your organization’s marketing agency spend. Use Gartner’s cost optimization model to deliver efficiency without damaging relationships with strategically important partners.
And if you’re looking to hire a CMO or other members of your executive team, send us a note. Our team of executive recruiters can help you determine the right type of CMO you need for your company, and provide insight into how you can maximize your marketing spend.