CMOs in the US estimate that their marketing budgets have grown on average by 7.1% over the past year, and they expect that budgets will grow by another 8.9% in the coming 12 months. That’s according to the latest biannual CMO Survey [pdf], which found that services companies had hiked their budgets the most in the past year, while product companies are the most bullish about the year to come.
Here are 5 budget-related takeaways from the report.
1. One in Every 9 Budget Dollars Goes to Marketing
The share of firm budgets spent on marketing has remained remarkably steady over the past 5-6 years, according to the research. The latest estimate from CMOs puts marketing budgets at an average of 11.1% of company-wide budgets. That sits well within the 9.4-12.1% range observed in the past 6-odd years.
Marketing spending appears to be far higher at B2C than B2B companies, per the report. B2C Product companies allocate 16% of their firm-wide budgets to marketing, compared to 9.2% for B2B Product companies. And on the services side, B2C companies likewise allocate almost twice as much of their budgets to marketing as B2B companies (14.9% and 8.9%, respectively).
Overall, CMOs responding to the report said that marketing spending averages 7.9% of overall company revenues. That’s up from 6.9% in the previous study, but the long-term trend line here shows a small decrease over time.
For context, last year Gartner found that companies in North America and the UK with at least $250 million in annual revenues dedicated a larger 11.3% of those revenues to marketing budgets.
2. Budgets Continue to Shift to Digital Marketing
No surprises here. The forecasts continue to call for double-digit increases in digital marketing spending, concurrent with small decreases in traditional advertising spending.
Specifically, CMOs forecast a 15.1% increase in digital marketing spending over the coming year. If there is something noteworthy to be found here, it’s that this is the largest expected increase in at least 6-and-a-half years.
In the 14 editions of this survey dating back to August 2011, expected increases in digital marketing spending have failed to hit double-digits only twice. It’s the opposite story for traditional advertising spending, which has been forecast for an increase (albeit a very slight one) just twice during that timespan.
This most recent study calls for a 1.7% decrease in traditional advertising spending in the coming year.
3. Analytics Budgets Rebounding, to See Further Growth
Marketing analytics has traditionally not hogged a large share of marketing budgets in the CMO Survey, peaking at 7.1% in 2014. There was a large drop-off in the percentage of budgets allocated to analytics between late 2016 and early 2017, per the report, but since then analytics budgets have been recovering.
This most recent edition pegs marketing analytics at 5.8% share of marketing budgets. But there’s plenty of enthusiasm about future analytics budgets: CMOs estimate that in the next 3 years, analytics’ share of the marketing budget will triple to 17.3%.
Now those estimates should probably be taken with a grain of salt. After all, 3 years ago, CMOs predicted that by this time analytics would capture 11.7% of marketing budgets. They’re currently getting half of that amount.
Nonetheless, it seems that CMOs are beginning to use analytics more in their decision-making, so it’s likely that at the least, analytics might rise to new budget highs.
It’s also worth noting that in Gartner’s aforementioned study last year, analytics took the single largest slice of the pie, at 9.2% share of budgets. Obviously it’s a different sample (that includes marketers in other countries), but the size of the respondent may play a role. Gartner’s survey was limited to top marketers at companies with at least $250 million in revenues, and there’s evidence in the CMO Survey that larger companies spend more on analytics.
Indeed, companies with $1-10B in revenues allocate a leading 7.5% of their budgets to analytics, while those with $10+ billion in revenues also dedicate an above-average 6.5% of their budgets to analytics. No other company size spent more than 5.8% of their budgets on analytics.
Before moving on, one other point: this is an area in which B2B companies lead the way. Both B2B Product (6.4%) and B2B Services (5.9%) companies spend more of their budgets on analytics than their B2C counterparts.
4. Mobile Budgets Get A Boost
Unlike analytics, which have yet to recover to their peak share of spending, mobile seems to be hitting its stride.
Though it still commands only a small portion of marketing budgets, mobile’s 7% share is the highest since the CMO Survey began asking this question in February 2015. It also means that CMOs are now spending more than twice the proportion of their budgets on mobile now than they were 3 years ago (3.2%).
Interestingly enough, while mobile spending is rising (and currently represents a greater share of budgets than analytics), the outlook isn’t quite as buoyant as for analytics. In three years’ time, CMOs expect to allocate 13.5% of their marketing budgets to mobile. That would be roughly twice the current share of budgets, but wouldn’t be as much as analytics, whose budget share is forecast to triple.
That may be due to mobile still having relatively little perceived impact. On a 7-point scale, CMOs rated mobile marketing’s contribution to company performance just a 2.7. That’s below the midpoint on that scale (4), indicating that mobile’s contribution is closer to poor than to excellent. And that low contribution is true across a range of marketing goals, including customer engagement (3.7), retention (3.3), sales (3.0) and acquisition (2.9).
Those numbers will likely need to change in order for companies to devote more money to mobile. Or perhaps more investment will need to be made in mobile marketing for its contribution to improve…
One aspect that will need to change if mobile marketing is going to get more spending: B2B enthusiasm. Currently, among product companies, B2C firms allocate twice as much of their share of budgets to mobile as do B2B firms (10.9% and 5.6% respectively). Among services companies, the disparity is even greater, with B2C companies spending about 4 times more of their budgets as B2B companies (13.6% and 3.6%, respectively). Looking ahead 3 years, and there doesn’t seem to be much narrowing of the gap in order, despite forecast increases in spending across company types.
5. Social Media Hits A New Budget High
One area that has seen a relatively consistently rising share of marketing budgets is social media. From its humble beginnings occupying an estimated 3.5% share of budgets in the August 2009 survey, social has risen to capture an average of 12% of marketing budgets in this latest study, representing a new peak.
CMOs are also bullish about social media, though once again they don’t forecast it to rise with quite the speed as analytics budgets. In the next 12 months, they expect to see a ~25% increase in social’s share of marketing budgets, to 15.3%. And in the next 5 years, they expect a ~70% increase in social’s share, to 20.5%.
Unlike mobile, social doesn’t seem to need to prove itself quite as much, as its contributions to company performance also are relatively low. On a 7-point scale, CMOs rated social media’s overall contribution a 3.3. While that’s better than mobile’s 2.7, it’s still below the mid-point of 4, indicating a performance closer to poor than to excellent.
Social’s rising share of budgets may have more to do with B2B companies putting more of their money into the channel. In fact, B2B Services companies (13.2% share) spend as much as B2C Product and Services (13.5% each) companies on social. It’s only B2B Product companies lagging slightly, though they’re not far behind at 9.3% of company budgets.
And while expectations for future social media spending are higher among B2C than B2B companies, the disparities are not nearly as great as they are for mobile marketing.
Coupled with the fact that CMOs seem to be finally getting a better handle on social media ROI proof, and these budget expectations may prove closer to reality than, say, analytics budgets.
The full report can be accessed here.
About the Data: The CMO Survey is fielded biennially and is sponsored by Duke University’s Fuqua School of Business, the American Marketing Association, and Deloitte. This latest edition – the 20th – is based on 362 top US marketers at for-profit companies, 98% of whom are VP-level and above. The survey was fielded from January 9-30, 2018.