Marketing budgets are generally trending in the right direction, according to recent survey results from the American Marketing Association and Kantar Vermeer, as the proportion of marketers expecting spending growth in the short-term increased between Q2 and Q4 2016. So how are budgets being distributed – and which areas are least likely to be reduced in favor of others?
Which Budget Areas Are Safe?
Analytics is the area which seems to be the most safe from budget cuts, as just 4% share of the more than 300 US marketers surveyed said a reduction in marketing budget would be made in analytics. That makes sense given the growing influence of analytics; research released earlier this year indicated that enterprise CMOs see marketing analytics as an area in which they have high hopes for budget hikes.
Likewise, innovation/new product development and market research/insights budgets will likely be spared from significant cuts, as just 8% share of respondents would choose these areas to reduce spending. CMOs are taking a greater role in innovation, while market research spending seems to be registering an uptick around the globe.
Compared to those areas, there’s more likelihood of media placement spending decreasing: almost one-quarter (24%) of respondents said that a reduction in marketing budgets would result in this area seeing a decrease. Close behind, 21% said that a cut in budgets would be made in sponsoring. That doesn’t necessarily suggest that sponsorship budgets will decline, rather that in the event of decreased budgets, this would be one of the areas more likely set for tightening. In fact, global sponsorship spending is forecast to grow by 4.5% this year.
One other note: some analysts and experts have decried a decline in focus paid to creative in marketing in favor of data-driven marketing. So it’s worth noting that while creative gets slightly more budget share than analytics (see below), almost 5 times as many marketers surveyed said that a budget decrease would come from creative (19%) than from analytics (4%).
Which Areas Get the Biggest Spending?
That media placements and sponsoring budgets would be most ripe for cuts probably owes to their outsized influence in the marketing budget, combining for an estimated 44% of all spending.
Looking at respondents’ current marketing budget distribution, the report indicates that:
- Media placement leads, with 24% share of budgets;
- Sponsoring is next, with 21% share; followed by
- Product maintenance and support, such as promotions and packaging (16% share).
By comparison, analytics received 8% of the budget and market research/insights 9% share.
About the Data: The Marketers Confidence Index is based on an online survey conducted by Kantar Vermeer in December 2016, among a sample of 304 marketers in the U.S.