Some of you may know that one of my favorite things is to read the Gartner CMO study every year when it’s released. I don’t know why I enjoy this so much, but I always find the insights and commentary interesting and helpful for understanding what’s going on in the broader marketing world. Unfortunately, this year, the Gartner study was lackluster. This led me to look around a little more, and I happened to find the Deloitte CMO study!
Apparently, this CMO study has been going on for a long time, and I never knew about it. After reading through the report, I found it was much more informative and helpful than this year’s Gartner study.
The Slowing Economy is Hitting Budgets and Expectations
Not a surprise to anyone, the survey results show that marketing spending and hiring growth have slowed down significantly, as marketers have become more cautious and focused on short-term results. Marketing budgets have dropped to 12.3% of company budgets, near pre-Covid levels, and marketing organization size growth has slowed to 3.4% over the last year. Also not a surprise that digital marketing spending has also decreased, but less than traditional marketing spending, and marketers have increased the number of channels they use, including face-to-face channels, social media and mobile.
Although the CMO Survey found that marketing spending and hiring growth is slowing due to inflation and economic uncertainty, the survey also found that marketers are still optimistic about the long-term outlook for their field.
In several places, the survey points out that marketing’s priorities are shifting in this environment:
Most important is selling existing offerings into new markets and segments. This is a clear demand gen focus and is tied to revenue. To reach these markets, channel mix is becoming more diverse. Impact rather than innovation rules the day, and the bottom line is where people are most focused.
Cost reduction is second most important and, again, keeps things tied to the bottom line. This bodes well for CRO programs and the importance of analytics in the decision-making process.
Upleveling skills is critical to success. This is likely tied to utilization of the technical capabilities that have been acquired over the past few years. Marketers are looking for these investments to start paying off.
Some Ways to Carry Forward in This Environment
Lean toward demand gen, not brand building. Balance your efforts 60/40 short term vs. long term gains. Marketers are still investing in long-term brand building initiatives, but they are focusing more on short-term gains, such as lead generation and sales. Thinking seems to be focused lower in the funnel. Success is currently not tied to brand gains. This suggests that marketers may be struggling to measure the business impact of their branding efforts. Not surprisingly, analytics are focused on tactical optimization and brand metrics are used far less often.
Along with brand, CX initiatives are down also. This suggests that marketers are being more cautious with their budgets when it comes to new projects that are based in strategy more than tactics.
Some of this could be driven by the current scenario where customers have prioritized superior product quality and low price over other factors. Consequently, marketers have faced challenges in building brand loyalty.
Don’t underestimate the importance of analytics. Analytics and a good measurement strategy can help you measure your performance, optimize your campaigns, and identify new opportunities. It's important to use both quantitative and qualitative data to understand your customers’ needs, preferences, and behaviors.
Unfortunately, the study also suggests that analytics efforts appear to be plateauing. Considering the constant drumbeat to invest more over the past few years, there could be some complacency or even a little disillusionment setting in. The survey notes that most companies think they have pretty good analysis capabilities. CMOs may be thinking their analytics practice is "good enough" (for now at least).
Don’t be afraid to take a stand on social issues that matter to you and your customers. Taking a stand can help you attract talented employees and loyal customers who share your values. This could help with market penetration and expansion. However, be prepared to face some backlash from those who disagree with you.
This Could Be an Opportunity for Agencies
Marketing teams are in flux – growing and shrinking across industries. Shrinking teams could be an opportunity for agencies. With these reductions, companies may be looking for ways to access capabilities they need without the long-term commitment of hiring.
Optimistically, now could be the best time for a big brand push because there is likely to be space in the market with less competing brand voices. This can be a challenge, but it is important to remember that brand is the foundation of any successful marketing strategy. Don’t neglect the long-term value of your brand. Brand building can help you differentiate yourself from competitors, increase customer loyalty, and enhance your reputation. Tie this back to channel diversification by leveraging social media to communicate your brand story and values to your target audience.
That being said, in practice any pitch will need to be tempered with reality by keeping the focus on low-funnel, near-term, cost-effective gains. It’s probably a good idea not to overweight on bigger brand strategy for now (keep it on the sidelines until pessimism subsides).
Overall, the CMO Survey found that marketers are facing several challenges in the current economic environment. However, the survey also found that marketers are still optimistic about the long-term outlook for their field. By focusing on short-term gains, while also investing in long-term brand building initiatives, marketers can position themselves for success in the years to come.
You can download the original study at CMOsurvey.org or you can download my annotated version