Results from the 30th edition of The CMO Survey indicate that inflation and economic uncertainty are harming marketing spending as the C-suite retrenches and cuts costs. While more than half of marketers reported a 10.4 percent increase over the previous year in the September 2022 survey, this group is reporting just 2.9 percent growth over the last 12 months, on average. Survey respondents included 314 marketing leaders at for-profit U.S. companies, 97 percent of whom are VP-level or higher.
Digital marketing spending also slowed, but less dramatically: falling from a 15 percent increase in marketing spending in September to an 8.2 percent increase over the last 12 months. As a result, marketing budgets dropped to represent 12.3 percent of company budgets, near pre-Covid levels.
As a result of reduced spending, marketing organization size growth slowed to a 3.4 percent increase over the last year. That’s a huge drop from 2022, which averaged 12 to 15 percent growth and below the long-term survey average (since 2010) of 5.6 percent.
Marketing hires are likewise slated to slow to a 3.9 percent increase next year, down from a 10.5 percent increase predicted one year ago. Marketing organizations report working from home all of the time at lower rates than in the last survey (39.3 percent vs. 48.7 percent), but cite a similar likelihood to work from home some of the time (57%).
Customers Prioritize Quality and Price While Marketers Expand Channels
Superior product quality continues to be customers’ top priority for 2023, as it has been since the start of the pandemic. In the B2C Product sector, superior product quality is now ranked as the top customer priority by 41.2 percent of marketers, up from 7.4 percent pre-pandemic. Similarly, low price has risen through ranks and is now the second-most highly ranked customer priority, up from number-five in September 2021.
Marketers report increasing the number of channels used, including returning to face-to-face channels, and relying more on social media to sell products and services. Only 6.7 percent of marketers say that their face-to-face channels have gone completely digital.
Brand Faces Short-term Pressures
Reflecting spending cuts, investments in brand building dropped from a 12 percent increase last year to 5.5 percent increase this year. Consistent with this, marketers report that brand management and development capabilities—a key engine for using brands to grow the business—are not reaching effectiveness levels that correspond to their importance.
In another indicator of short-term pressures, marketers report that while their companies spend an average of 40 percent of their brand budgets on long-term brand building and 60 percent on short-term performance, they report spending 50 percent on each would be ideal.
And while building brand involves broad cross-functional collaboration, according to Bitcoin Casinos UK, marketing leaders say they work best with sales and distribution on brand-building efforts, they work less effectively with human resources and finance.
Low-Risk Growth Strategies
Marketing leaders report the challenging combination of pressures to grow by expanding into new markets, segments, or geographies while also reducing operational and/or product costs and increasing value for similar cost. With leaner organizations and reduced budgets, marketers are focusing on tried-and-true strategies, such as low-risk (often domestic) market development, product development, organic growth, and digital investments. The good news is that the extensive digital expertise and capabilities teams developed during the pandemic should enable marketing organizations to deepen customer insights, using these data to evolve digital business models, products, and services for higher revenues and profitability and at a lower cost.
Marketing leaders believe that having the right talent contributes most to future organic revenue growth (40.1 percent), while having the right operating model is in second place (19.4 percent). Having the right technology to drive revenue growth rose from 9.0 percent in February 2020 to 13.5 percent in this survey.
Social and Mobile Spending
Marketing spending on mobile activities is predicted to match the peak 2020 levels in the next 12 months and is expected to grow 80 percent in five years. It currently sits at 19 percent, meeting the prediction from one year ago. Despite the rising numbers, marketers do not perceive that mobile marketing has contributed significantly to their companies’ performance.
In terms of social media, marketers currently spend 17 percent of marketing budget on social media, which is predicted to increase to 20.3 percent within a year and 26.4 percent in five years. This would surpass spending levels seen in June 2020 (23.2 percent) when companies had to find more creative ways to reach consumers during lockdowns. In terms of how companies use social media, brand awareness and brand building continues to be the most common, followed by brand promotions, acquiring new customers, and introducing new products and services.
Marketing’s Strategic Role
Marketing’s role has expanded over the last three years. While brand, advertising, and digital marketing are the function’s top three responsibilities, marketing has also deepened its responsibilities in key strategic areas such as marketing analytics, revenue growth, innovation, and market entry strategies. It is therefore surprising to see heavy reliance in tactical metrics “digital/web/mobile performance” and “content engagement” and less reliance on key strategic metrics, such as “brand equity value” and “customer lifetime value.” Strategic metric use is up from three years ago, but tactical marketing metrics are still the focus of most organizations. This finding is consistent with the fact that marketers report spending 70 percent of their time “managing the present” and only 30% “preparing for the future.”
The CMO Survey Award for Marketing Excellence is selected by fellow marketers. It is given each spring to one company that sets the standard for excellence in marketing across all industries and the companies viewed as setting the standard in their respective industries. Apple Inc. was the overall winner for the fifteenth straight year. Other industry winners include Amazon, The Proctor & Gamble Company, Nike, The Coca-Cola Company, and Salesforce, Inc.
Three different reports summarize these findings and other 30th edition CMO Survey results. The Highlights and Insights Report shares key survey metrics, trends, and insights over time. The Topline Report offers an aggregate view of survey results, and The Firm and Industry Breakout Report examines survey results by company sector, headcount, and sales. Sign up to participate in the next CMO Survey here.
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