Global top marketers report that their budgets and staffs are holding up fairly well despite the recession, but they are feeling more pressure to sharpen their focus, grow market share, show ROI and prepare their organizations to meet digital marketing and measurement challenges, according to a new report from the Chief Marketing Officer (CMO) Council.
The CMO Council’s Marketing Outlook ’09 study finds that customer anxiety and cutbacks are the biggest factors influencing marketing budget allocation in 2009. However it also reveals a somewhat alarming disconnect between management mandates for 2009 and marketing’s limited plans to invest in automation, collaboration and process improvement.
More surprising, according to study, senior marketers express limited aspirations to elevate their positions within their organizations and to forge tighter links with line-of-business executives, finance, the CIO, and IT groups.
Half Say Budgets Holding Firm
Half of marketers surveyed report they’re either holding firm on budgets or anticipating increases. Nearly one third plan at least a small budget increase, with 8.2% planning a hike of more than 10%. At the other end of the spectrum, nearly half say they will decrease spending at least somewhat, with 18.8% anticipating cuts of more than 15%.
Staff Keep Jobs but Need to be Digital
While there are some signs of retrenchment, marketers – at least for now – are committed to their personnel, which represent 42% of budgets, the annual study said. Overall, survey respondents plan to invest in retraining employees for the digital age, rather than replacing them with new ones. They also report increased efforts to milk greater efficiency from current operations by sharpening and aligning internal processes, rather than initiating broad restructuring or cutting ties with current agencies.
These responses indicate that marketers are not running scared from the economy, according to Donovan Neale-May, the CMO Council’s executive director.
“Broad concerns about the economic, stock market and credit downturn are not the leading forces shaping this year’s budget planning process,” Neale-May said. “Instead, marketers are paying close attention to their customers and responding to changes in the selling cycle. The emphasis is on building internal efficiencies and strategic cost cutting, increasing customer insight, and strengthening integration with sales to drive revenue and market share.”
Neale-May added that the study results also spell good news for agencies, since it does not appear that marketers are viewing cutting agencies as key to cost reduction.
Of the agency changes they plan to make, the most are anticipated to come in the areas of web design/development, interactive marketing, and public relations:
Marketing Must Deliver
Senior management is mandating that marketing contribute to the bottom line by retaining and growing market share and lowering costs through greater go-to-market efficiencies, the study found. In response to these demands, 81% of marketers say they are confident they can deliver by focusing on execution and having clearly defined goals, improving operational controls, and stepping up analytics to help guide resource allocation. While hunkering down, marketers are also gaining increased confidence in the effectiveness of digital marketing as it begins to comprise the majority of spending.
“Digital marketing has moved well beyond search as social media and experiential marketing continue to grow and evolve,” said Dave Couture, a principal with Deloitte Consulting LLP, one of this year’s study sponsors. “Savvy marketers are applying collaboration marketing methods as a central component of their efforts to maximize customer lifetime value in the digital economy.”
Marketers Must Up Their Digital Game
Despite marketers’ general confidence in their own success, their investment plans in simple, task-specific marketing software applications – such as email applications and online surveys – and a corresponding lack of spend in comprehensive operational and data management systems, suggest a critical disconnect in how they hope to achieve executive goals, the CMO Council said.
Additionally, despite the acknowledgement that digital marketing is growing, only 9% of CMOs say they are looking to work more closely with their CIO and IT department.
“Senior marketers clearly need to elevate their game when it comes to integrating IT and data management into their operations and insights,” said Neale-May. “At the same time, this year’s study indicates senior marketers may be failing to build line of business and executive suite relationships required to build their status and influence in their organizations. In fact, only 7.4% of respondents are even considering positions on their corporate boards.”
Additional study findings:
- Global marketers say realigning operational processes and capabilities to better support sales and drive demand generation was their top accomplishment for in 2008. This was followed by improving performance and accountability for their organizations.
- Customer anxiety and cutbacks are the number one force impacting budget allocations in 2009, followed by slower selling cycles and reduced consumer spending. Only 14.9% cite financial market disarray as a determining factor.
- Retraining and developing existing staff is the leading strategy for acquiring or sharpening expertise in digital marketing competencies, with 62.9% of respondents electing training over recruiting new talent (28.6%) or outsourcing (17.1%).
- Tactical capabilities are the most prevalent planned investments in marketing automation. The top two target areas of investment for 2009 are email marketing (44.9%) and online surveys and research (33.2%). Only 10.1% are investing in master data, 12.8% in marketing operational systems, and 9.3% in marketing resource or process management solutions.
- Growing or retaining market share is the leading executive mandate for marketers (47.6%), followed by lowering costs and improving go-to-market efficiencies (43.5%),? and improving customer insight and retention (32.5%).
- 8.2% respondents plan to build new linkages with line of business executives and just 7.4% are seeking a board member position, suggesting limited aspirations to rise within the corporate hierarchy.
Digital Media Measurement Slowly Improving
Online media and digital channels of engagement are taking center stage like never before, according to the research, which finds that marketers overall are universally looking to enhance talent, expand competencies and sharpen measures and metrics for performance, according to the study.
“This year’s survey shows increased spending in online and digital at the expense of traditional media budgets will continue in 2009,” said C. Lee Smith, president and CEO of Ad-ology, another of this year’s study sponsors. “Digital marketing metrics such as page views and click-through rates give at least the perception of accountability, making online marketing increasingly attractive as the industry focuses on performance measurement.”
The majority of marketers are sticking to old online measures like page views and registrations (64.6%), site traffic and volume (58.4%) and search prominence (45.2%). However, a growing number are measuring customer engagements including translating online traction to the acquisition of new accounts and customers, tracking content consumption transactions or subscriptions and measuring word-of-mouth advocacy.
- Digital marketing and new media dominates demand generation and advertising spend allocation priorities for the coming year, with budgets aimed at online and Web 2.0 initiatives almost 50% higher than spend earmarked for traditional media.
- A very small percentage (9.3%) of marketers rate their e-metrics and measurement capabilities as excellent, while 35.6% of marketers are questioning spend, struggling to quantify value or report they are not doing a good job of converting visitors to leads or to customers.
“Marketers are continuing to struggle with applying business metrics to online media and digital marketing, with such limited measures as page views and site traffic sources dominating the mix,” said Kevin Akeroyd of Jigsaw, the third of this year’s study sponsors.
About the study: The survey was conducted among more than 650 marketing executives worldwide across a wide range of industries. Respondents were asked 28 questions. This year’s report was sponsored by the sales and marketing practice of Deloitte Consulting LLC, the Jigsaw business community, and Ad-ology. It is available for download through the CMO Council.