CMOs: Marketing Budget Growth Expected; ROI Problems Persist

August 27, 2015

This article is included in these additional categories:

B2B | Brand Metrics | Business of Marketing | Marketing Budgets | Return on Investment | Spending & Spenders

DukeCMOSurvey-Expected-Budget-Changes-Aug2015CMOs in the US expect marketing budgets to rise by 5.5% in the next 12 months, according to the latest edition of the biannual CMO Survey [pdf] from Duke University’s Fuqua School of Business. While CMOs’ level of budget optimism is weaker than in the February edition of the study (+8.7%), it’s stronger than in August 2014 (+5.1%) and 2013 (+4.3%).

The results strike a familiar tone when breaking out planned spending on digital marketing versus traditional media advertising. In this latest study CMOs said they expect digital marketing spending to grow by 12.2%, while traditional advertising spend is predicted to contract by 2.1%. That marks the 8th consecutive edition of the study in which slight declines have been predicted for traditional spend. For most of that period, digital marketing spending growth has been expected to be in the double digits.

B2C companies appear to be setting the tone for increased digital marketing budgets, led by CMOs from services companies who expect a 20% hike in their digital spending. B2C product companies are predicting a 14% increase, while B2B services (+11%) and product (+8%) companies have slightly more moderate growth outlooks. [For more on B2B digital marketing budgets, see MarketingCharts’ recently released 2015 B2B Digital Marketing Insights Report, a comprehensive 125-page study detailing budget trends and drivers as well as commonly-used and effective tools and techniques.]

These spending predictions are being made alongside continuing uncertainty about their impact. In this latest survey, just 36% of CMOs overall reported being able to quantitatively prove the short-term impact of their marketing spending on the business. Even fewer (29%) said they could quantitative prove the long-term impact of their spending. Neither figure has changed much over the past couple years.

DukeCMOSurvey-Measuring-Biz-Impact-Mktg-Spend-Aug2015

Despite not being able to adequately measure ROI, CMOs do feel that they’re making modest gains, reporting a 2.8% increase in ROI over the prior 12 months. Of the various firm types, B2B services firms reported the largest gains in marketing ROI (3.7%), profits (3.4%), customer retention (2.5%) and brand value (4%). B2C product companies, however, registered the largest increases in customer acquisition (3.4%) and sales (4.5%).

Overall, CMOs haven’t changed their views of their teams’ marketing excellence. Asked how they would rate their companies’ marketing excellence on a 7-point scale (where 1 is “very weak” and 7 is a “leader”), respondents averaged a 4.5 rating, consistent with the 4.5-4.7 range from the past couple of years. The more things change, the more they stay the same?

About the Data: The CMO Survey is administered twice a year via an Internet survey. The August 2015 survey was the 14th administration of The CMO Survey. The results are based on responses from 255 top US marketers at Fortune 1000 and Forbes Top 200 companies as well as top marketers who are AMA members or Duke University Alumni and Friends. The survey was fielded from July 14-August 2, 2015.

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