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TheCMOSurvey-Projected-Digital-Traditional-Budget-Changes-Feb2014The latest installment of The CMO Survey from Duke University’s Fuqua School of Business has been released, and while it strikes a familiar tone with regards to the direction of digital marketing spend (hint: it’s going up), there are some interesting patterns taking shape. Namely, forecast levels of digital marketing spending increases have dropped to their lowest level in at least a couple of years, while the pessimism surrounding traditional media advertising spend seems to have fallen off.

Here’s how those numbers shake out. In this latest February 2014 survey, CMOs on average predicted an 8.2% increase in digital marketing spend over the coming 12 months. That’s down from projected 10% increases during the two 2013 surveys, which were in turn down from predicted increases of 11.5% in August 2012 and 12.8% in February 2012. Sense a pattern?

By contrast, projected decreases in traditional advertising spend have eased. From August 2011 through February 2013, CMOs went from forecasting a 1.3% increase in traditional ad spend to a 2.7% decrease. Since then, things have changed: in the last survey, the projected decreases were down to 2.1%, while in this survey, projected spending on traditional advertising (all media advertising that doesn’t use the web) is largely flat (-0.1%).

What does it all mean? Well, for one, double-digit spending increases on digital *probably* can’t last forever (although this chart is impressive). And with TV and radio maintaining significant reach (see here and here), CMOs are unlikely to abandon them as viable advertising media. Instead, as CMOs align their media spending to evolving consumer pattern, some sort of equilibrium is likely to be reached. (Which will likely then be disrupted all over again, if ever reached…) It’s also worth noting that digital still accounts for somewhere around one-quarter of marketing budgets, at least according to one estimate.

What will be interesting to track is how CMOs forecast their media spending to change once they display some pessimism regarding their overall budgets. And that hasn’t been the case for some time: as of this latest survey, CMOs are expecting a 6.7% increase in their marketing budgets over the next year, and that figure has remained over 4% since August 2009.

Meanwhile, breaking down the responses by company type, the study finds that B2B product firms will pull back on traditional advertising the most (-1.6%), with B2C service companies (-1.3%) also curtailing spending at a higher-than-average rate. B2B services (+0.2%) companies see their traditional ad spend remaining mostly flat over the next year, while B2C product companies are actually forecasting an increase in their traditional media ad budgets, of 2.8%. There is less variety in projected digital spending increases, which range from a low of 7.4% (B2B service) to a high of 9% (B2B product).

CMOs are also projecting increased budgets across a number of other areas, though their expectations have softened in some. They remain bullish regarding spending on new product introductions (7.8%, up from 7.1% in August 2013), but are less so regarding new service introductions (4%, down from 4.9%). Projected increases in customer relationship management spending have fallen back to earth, at 5.1% in this survey, all the way down from 9% in August 2012. But projected spending on brand building has rebounded a little to an average 4.9% increase, after dropping during the previous two surveys.

Currently, marketing budgets are reported to account for an average of 10.9% of firm-wide budgets, up from 9.4% in August. Those levels have fluctuated around the 10% mark for at least a couple of years.

As a percentage of overall firm budgets, B2C product companies continue to devote the largest share to marketing (14.9%).

About the Data: The CMO Survey is conducted online twice a year. The latest survey was fielded from January 14 to February 4, 2014. The survey had 408 respondents, of whom 88% were VP level or above.

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