Widespread budget cuts in 2009 and demands from top management to do more with less have forced corporate marketers to step up their accountability/measurement efforts and improve collaboration with other organizational departments, according to a recent survey from Marketing Management Analytics (MMA) and the Association of National Advertisers (ANA).
The study also found that cost-saving measures are causing marketers to shift campaigns away from traditional media toward digital formats, away from brand-building activities toward promotional tactics, and into lower-cost media in general.
Pared Budgets Force Collaboration
The study found that fully 75% of respondents reported a decrease in their marketing budget in 2009, while 67% agreed that marketers are now being expected to drive more sales with the same or lower budget.
As a result, this is bringing about more collaborative partnerships between marketing and finance functions and a greater level of emphasis on marketing accountability best practices.
Specific study findings:
- Nearly one-third (32%) of respondents say their teams now include representation from marketing, finance and research. This is up significantly from 2008 (22%).
- 38% agree that marketing and finance share common metrics (up significantly from 27% last year), while 20% say strategy is developed jointly (up significantly from 9%).
- 17% say they use “what if” scenarios at different budget levels to determine sales and profits – more than double the response from the 2008 survey (8%).
- 43% of respondents use customer lifetime value models as an accountability technique, up from 27%.
- Nearly twice as many as last year (19% vs.10%) say they are confident that if they had to cut marketing spend by 10%, they could use metrics and analysis to forecast the impact on sales
“With the economy still struggling to find its way out of the doldrums, marketing accountability has moved from the category of ‘nice to have’ to ‘must have,’ ” said Douglas Brooks, SVP and marketing officer for MMA. “Management and finance are getting on board in increasing numbers, and becoming enthusiastic champions of marketing accountability as they see the results in black and white.”
Improving Effectiveness Without Spending
Nearly all the firms in the survey (92%) say they are taking steps to improve marketing effectiveness without spending more in 2009. To do so, they are employing significant tactical changes:
- Shifting investments from traditional to digital media (70% of respondents).
- Shifting advertising investment from brand-building initiatives to promotional marketing (53).
- Shifting into lower-cost media, i.e. local vs. national TV spots, 15-second vs. 30-second, etc (38% of respondents).
Overall, respondents report a higher level of satisfaction with their marketing accountability efforts as compared with 2008 year. The survey also identified a greater appreciation by senior management. Nearly half (46%) of respondents say they are? satisfied with marketing’s impact on sales/ROI, twice as high a response as last year.
Other indicators of increased satisfaction:
- 34% say they are satisfied with their agency’s metrics (brand health, copy testing, reach, frequency), up from 31% in 2008.
39% are satisfied with marketing’s impact on sales and brand equity, up significantly from 19 percent in 2008.
- 28% say there are extremely satisfied or very satisfied with their company’s ability to change established marketing strategies and budgets when ROI reports demonstrated they were not effective. This is up from 21% in 2008.
- While 39% of senior management views marketing as an expense, 43% view marketing costs as an investment in brand equity.
- 20%percent of senior management feels confident in forecasts of how marketing activities will impact sales.
“With marketers, CFOs and CEOs paying more attention to each dollar spent, marketing accountability processes have become strategic imperatives”, said Bob Liodice, president and CEO, ANA. “Such programs have had a positive impact on sales and marketing ROI – and will continue to do so with senior-level buy-in and, importantly, cross-functional representation”.
Despite many perceived improvements in marketing accountability, the research suggested that challenges remain, especially when it comes to using marketing analytics tools and programs.? The highest number of respondents (27%) see training staff as the greatest challenge to making analytics easy to use, although this was down from 34% in 2008. Similarly, 20% say the ability to manage disparate analytics tools and outputs is their greatest challenge, more than double the 8% who cited this issue last year.
Next Year Mostly Positive
Looking ahead, most marketers expect static or slightly increased budgets next year. While 33% of survey respondents say their marketing budget will remain the same in 2010, 36% expect it to increase, and 12% say it will go up by more than 10%. Only 14% percent say their marketing outlay will decrease by more than 10% in 2010.
About the study: The 2009 ANA/MMA Marketing Accountability Survey, fielded by ‘mktg’, surveyed 95 senior-level marketers in June 2009 as an annual follow-up to similar studies conducted since 2005.