Positive Outlook for Marketing Spend, Better Accountability and Analytics

Positive Outlook for Marketing Spend, Better Accountability and Analytics

CMOs are upbeat about spend levels, saying they’ll be mostly holding steady or trending upward in 2008; however, many say they are frustrated and stymied by organizational culture, senior management mindsets, and insufficient budgets, according to the CMO Council’s annual Marketing Outlook survey.

SomeĀ 825 senior marketers across all global regions responded to the CMO Council survey, which was sponsored by Deloitte Consulting LLP and Marketo.

Some 37.6% of respondents said annual budgets would not change in 2008, 33.1% said they expect to increase spend by up to 5%, and almost 10% said their budgets would grow 6-10%. Only 7.6% said they expect to see budget increases of more than 11%.

Most global marketers (52.6%) said they had budgets last year that equaled less than 4% of revenue, and 35.4% said their spend was 4-10% of revenue.

“It’s not just what they’re spending, it’s where dollars are going and how effectively they are being used,” noted Donovan Neale-May, the CMO Council’s executive director. “There’s definitely more attention to the analytics side of the business and the use of more tangible and targeted forms of personal interaction, contextual communication and online demand generation.”

When asked how they tracked and measured return on marketing spend, nearly 20% of marketers said they did not, and 34% said they were planning to introduce a formal ROI tracking system. Typical measures included revenue, profits and market share; volume, caliber and conversion of leads; and direct response metrics.

Among the key findings:

  • Improved accountability of the marketing organization and using customer data and analytics for better targeting and effectiveness were the two top accomplishments in 2007. This was followed closely by adding new internal resources, capabilities and skill sets.
  • While some 79% believe marketing is making significant or reasonable progress in improving the perceived value of the function, 21% of marketers are either still trying to gain traction or are stalled and losing credibility in their organizations.
  • Quantifying and measuring the value of marketing programs and investments remains the top challenge in the year ahead, report some 53% of respondents. Other key priorities include growing customer knowledge, insight and conversations, as well as upgrading the efficiency and effectiveness of marketing groups.
  • Important organizational and operational changes planned for 2008 include adding new competencies and capabilities, improving accountability of the marketing organization, deploying content and website management solutions, and implementing marketing ROI and/or resource allocation capabilities.
  • That focus on organizational improvement is not surprising, considering that 50% of CMOs are hired to fix broken marketing organizations, according to the CMO Council.

“Clearly, investments are being earmarked to better integrate and align marketing with sales and to leverage customer insight and intelligence to improve acquisition, conversations and relationships,” noted Dave Couture, a Deloitte Consulting LLP principal and sales and marketing specialist.

2008 Marketing Dollar Allocation

The 12 leading areas of marketing dollar allocation in 2008 are expected to be the following:

  1. Strategy and branding
  2. Events and trade shows
  3. Operations
  4. Direct marketing (including telemarketing, mailings, email)
  5. Sales support
  6. Online marketing (website, SEO, SEM, viral, podcasts/blogs, communities)
  7. Advertising
  8. Market research
  9. Systems
  10. Merchandising and promotions
  11. Public and analyst relations
  12. Customer data integration and analytics

Marketing Automation

Given the strong focus on organizational effectiveness, those surveyed by the CMO Council identified key areas of system and solution spend to automate processes, optimize lead generation, and improve measurement. The top six areas of planned investment:

  1. Email campaign management
  2. Customer relationship management (CRM)
  3. Marketing performance measurement dashboards
  4. Customer intelligence and solutions
  5. Search engine marketing (SEM)
  6. Sales and marketing integration tools

“Marketing’s relationship with sales is now more important than ever as marketers seek to improve accountability and demonstrate their impact on the bottom-line,” said Phil Fernandez, president and CEO at Marketo. “The advent of on-demand solutions finally makes this possible, while at the same time boosting campaign effectiveness and efficiency,” he adds.

Agency Relationships

Marketers reported significant agency turnover in 2007 with advertising (41%), web design (38%) and public relations (26%) firms most frequently changed in 2007. Special markets (e.g. ethnic), demand generation, hosted services/solutions and sales promotion had the lowest incidence of substitution.

The need for global scale and size did not seem to be a factor in agency switches. Rather, performance issues were the most prevalent reasons for swapping out agencies in 2007:

  • Lack of innovation
  • No value-added thinking
  • Poor creative
  • Quality of work
  • Results and deliverables

About the study: Some 825 senior marketers across all global regions responded to the CMO Council audit, which looked at a wide range of planned investments, organizational changes, process improvements, and performance indicators. eRewards was a partner in fielding the online survey worldwide. The research initiative was cosponsored by Deloitte Consulting LLP and Marketo. Both contributed perspectives on operational effectiveness and advances in marketing automation to the report, which can be downloaded from the CMO Council website (www.cmocouncil.org).