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Economy Shrinking 65% of CMO Ad Budgets, Money Shifts toward Digital

Nearly two-thirds (65%) of CMOs and marketing execs say their ad budgets will decrease because of the troubled economy, but more of their money will go toward digital/interactive marketing than before, according to a survey (pdf) from Epsilon.

Roughly the same percentage (63%) of the 175 CMOs and marketing execs surveyed report that their spending on interactive/digital marketing has risen, while 59% report a decrease in traditional marketing spend.

The study also finds that though CMOs are facing tough challenges in the current economic climate, 94% of those surveyed agreed with the statement, “A tough economic period is precisely the time when marketing plays a key role.”

To offsest budget cuts, CMOs are shifting to more targeted and measurable marketing strategies. When asked how their firm determines target market for each channel, 50% said they use data-driven marketing techniques: 31% stated they use sophisticated modeling tools to analyze existing customer data (behavioral, preference and demographic) and 19% said that they analyze past purchase behavior. In contrast, 28% said they made “rough estimates based on past experience.”

CMOs have been early adopters of new media with social computing and blogs receiving the most interest, and instant messaging and interactive TV ads least popular.

Key findings:

• Social computing (including word of mouth, social networking sites, viral advertising, etc.) was the most popular emerging channel with 42% of marketing executives expressing interest in adding it to their marketing mix.
• Blogs were the second-most-popular emerging channel, with 35% of marketers expressing desire to use them and 19% already using them.
• Almost one-third of CMOs mentioned podcasting as an area of interest, with 31% interested in adding it to their marketing mix and 18% already having done so.
• 29% are interested in Mobile Devices (phones/PDAs) and 22% have added them to their marketing mix.

“In this economic climate, marketing executives are seeking accountability and measurable results,” said Mike Iaccarino, CEO of Epsilon. Data-driven marketing is an increasingly important component of corporate marketing campaigns as senior marketers employ sophisticated segmentation strategies to recruit and retain customers.”

About the survey: The survey was conducted in August 2008. Participants included 175 US CMOs and marketing executives of some of the largest brands in the nation. Some 27% of respondents work at companies with $10 billion or more in annual revenues last year.