It’s becoming a familiar story: marketers are shifting their budgets from traditional to digital marketing. Indeed, just 1 in 4 media buyers believe that traditional media will maintain a greater share of the marketing budget than digital in the years to come, according to a recent STRATA survey. The latest installment of The CMO Survey [pdf] from Duke University’s Fuqua School of Business indicates that CMOs continue to see a brighter future for digital than traditional media spending.
In this latest survey, CMOs estimated that they will increase their digital marketing spending by 10.1% over the next year. By comparison, they expect to rein in traditional media ad spending by 2.1%.
Interestingly, while the overall pattern continues, the gap in perceptions has narrowed slightly from previous installments of the survey. The 10.1% projected increase in digital marketing spending is the lowest growth estimate since the August 2009 survey. And while the 2.1% projected decrease in traditional media budgets can’t lay claim to that feat, it is slightly rosier than the last survey, and arrests what had been a clear downward trend in forecast budgets.
Such a narrowing can be expected to occur over time as CMOs optimize their media mix to take advantage of both traditional and digital media opportunities.
Breaking down the responses by company type, the study finds that B2B service firms will pull back on traditional advertising the most (-3.9%), with B2B product companies (-2.4%) also curtailing spending at a higher-than-average rate. B2C services (-1.9%) companies project a slightly slower decline, while B2C product (+0.8%) companies are actually forecasting a slight increase in their traditional media ad budgets. There is less variety in projected digital spending increases, which range from 9.5% to 11.1% across company types.
Meanwhile, CMOs are projecting increased budgets across a number of other areas, though they seem to have softer expectations than in the previous survey released in February. They’re expecting to spend more on new product (7.1%, down from 8% in February) and service (4.9%, down from 5.8%) introductions, while also forecasting an 6% increase in budgets devoted to customer relationship management (down from 8.1%), and 4.6% more spending on brand building (down from 6.8%).
Overall marketing spending is expected to grow by 4.3% over the next 12 months, a fairly marked step down from February’s 6.1% growth forecast. Currently, marketing budgets are reported to account for an average of 9.4% of firm budgets, down from 10.6% in February.
As a percentage of overall firm budgets, B2C product companies devote the largest share to marketing (14.3%).
About the Data: The CMO Survey is conducted online twice a year. The latest survey was fielded from July 16 to August 6, 2013. The survey had 410 respondents, of whom 93% were VP level or above.