Against a backdrop of economic volatility and uncertainty, some CMOs are reporting a growing sense of pessimism about the economy as well as cuts to their budgets, according to the latest edition [pdf] of The CMO Survey. Roughly 4 in 10 have become less optimistic about the US economy compared to the last quarter, outweighing the 3 in 10 who are looking on the brighter side.
While pessimism isn’t affecting all the CMOs surveyed, inflationary pressures are impacting budgets for most of them. Some 52% – surveyed in January – said that current inflationary pressures have led to decreased marketing spending levels at their company. That’s up almost 10% points from the last edition of the survey 6 months ago (42.3%). The share (around one-sixth) who said that inflation has led to increased marketing spending levels has remained the same, suggesting that for about 1 in 10 CMOs, inflationary pressures had previously not had an impact, but they’re now having a negative one.
B2B Product companies appear to be the most affected by inflationary pressures, as close to 6 in 10 (58.3%) report decreasing marketing levels as a result. Interestingly, pure-play Internet brands (those for whom the internet is 100% of sales) appear to be more shielded from inflationary pressures than others: about 7 in 10 said their marketing spending levels have either increased (23.5%) or not been impacted (47.1%), compared to just 48% of CMOs overall.
Marketing may not be the only function suffering cuts, though. Despite a slim majority reporting decreases in marketing spending, marketing budgets remained at relatively common levels when measured as a percentage of overall company budget. Sitting at 12.3% share in this survey, that figure is down from 13.8% in the previous edition, but remains on the higher end of the range over the 2 years prior.
Still, the results do paint a picture of budgets under threat. In this survey, CMOs reported that their budgets had increased by just 2.9% over the previous year. In the most recent survey to this one, that figure had been a lofty 10.4%.
The outlook doesn’t look much brighter. Compared to a year ago, CMOs are forecasting only half the rate of growth they had for customer relationship management (+4.9%, versus a +9.5% forecast in February 2022), brand building (5.5% and 11.8%, respectively), and the customer experience (+4.1%, down from +8.6%).
As such, easily the biggest external challenge that CMOs believe faces their organization over the next year is financial/marketing instability/inflation, chosen by a majority (53.6%) of CMOs over the 9 other options listed. So while a labor/skills shortage (14.5%) and supply chain disruption (11.1%) are somewhat concerning, CMOs believe the biggest challenge ahead of them is navigating the economic environment, likely with budgets under threat.
For more, check out the report here [pdf].
About the Data: The results are based on a January 2023 survey of 314 marketing leaders at for-profit US companies, 97% of whom are VP-level and above.