In 2019 we see the average marketing expense falling from 11.2% to 10.5%. So why are the CMOs surveyed in Gartners report so upbeat about 2020?
The first comment in the report is around budgetary growth, or the reverse of as we see the average marketing expense falling from 11.2% to 10.5%. But interestingly, the CMOs surveyed were still upbeat as they feel that 2020 would see a ramp up. In this blog we take a look at some of the reasons why they see an upside.
One of the early finding (and dear to ActualConversions heart) is that Analytics and Insight remain as the most strategically important capability. This comes as no surprise given that budgets are tightening, the ability to see what is truly adding values vs low performers is even more critical.
CEO confidence though in Marketing isn’t as strong as one would hope. The report states that only 56% of CEOs expected to increase their spend in 2019, compared to IT (74%), People and Culture (64%) and R&D and innovation (at 60%).
So why were the CMOs so bullish? They saw several key factors that would influence the spend:
The top 3 metrics are super interesting. Consumer Spending represents the biggest metric to track the business and economic climate. This is something essentially out of the CMOs hands. But position 2 and 3 (Marketing program performance and enterprise budget strategy respectively) are clearly internal factors that either the CMO controls or has a heavy influence of.
So, with the confidence of a decent budget, where will they look to spend it?
Spending on paid media represents 26% of the marketing budget, and of which CMOs are doubling down on digital channels. And the digital spend is spread pretty evenly as you can see from the chart on the left.
What does that graph say to you? To us it looks like ‘spread betting’ to see which channel is the best, that’s not a bad thing, but I am sure we will see a couple of these channels stretch ahead of the others. Regardless of which channel, the confidence is on digital. And with digital (if done right) there is control, the ability to target the right people at the right time and to ultimately track this performance.
With all these digital options, it is no surprise that the report states that the most vital capabilities supporting marketing strategy are analytics and insights. To this point, marketings analytics represents the largest area of investment:
Why is this analysis so important?
Well it fuels what is presented back to the rest of the management as spend vs return, and in turn shows the prediction vs actual return. And if marketing fails to deliver against the expectations set, then clearly that budget will be paused / reduced until it becomes predictable.
Another indicator that this analysis and prediction needs to be accurate is that the biggest detractor in the organisation when it comes to CMO supporters are finance. Clearly, any CFO will see a 10-15% of the company’s spend going into marketing, and if marketing can’t show the value well enough any self respecting CFO will share their concerns and recommend reduction or bigger investigation.
This is a relationship that the CMO MUST work at. Of course we want the CFO to be open to a dialogue, however, it is in the hands of the CMO to show value. Clear, no noise insight on spend vs return is all a CFO wants.
In previous organisations I have had the privilege of working with some great CFOs and the logic with them was simple. If the return was greater than the cost of our activities, then the budget would continue to grow (why would you stop a positive return?).
Having the CFO as part of the discussion is key and giving them a clear way to see performance is critical.
What are the metrics that CMOs gravitate to?
Interestingly, the report says that CMOs gravitate to volume rather than value metrics. As a marketer this does and does not surprise me. Stating large numbers about impressions and views is a lot easier (and seems more impressive) than talking of the number of form fills, the latter of this is far more complicated if you want to do multi-touch attribution.
The recommendation is clear, make it a balance. Respect that you will always need to show both values and one typically leads to the other.
The future is bright for the CMO, they have a wealth of technology open to them and some strong supporters within the business. But only if they can articulate the value they bring effectively.
We recommend this as a solid read for any marketer: https://www.gartner.com/en/marketing/research/cmo-spend-survey-2019-2020
As always, why not talk to our team about how you can strengthen the marketing buy-in within your organisation with clear insights that speak your internal customers language.
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