The recent Gartner CMO Spend Survey 2018-2019 polled over 600 marketing leaders across industries in North America and the UK, reporting on marketing spend and activities. They identified eight key themes for businesses to consider in 2019 and beyond.
At Annalect we have seen a clear trend emerging in recent years; as relationships between consumers and brands increase in complexity, the need for specialist understanding also increases. As specialist expertise is developed this often leads to siloed functional teams. This makes it harder for businesses to view the overall value of their marketing as teams naturally focus on their specific specialist areas in isolation from other adjacent functions.
To ensure success, it is extremely important to keep sight of the overarching objectives to understand the wider context. We therefore recommend that companies keep asking themselves five questions when considering these eight themes to ensure success:
- What are the commercial objectives of the business?
- What is the intended role of marketing in achieving these business objectives?
- Have you got the right people in place to leverage the potential of your marketing budgets?
- How does the business drive success in the long term?
- Is it the sum of the short-term successes or does focusing fully on the short-term risk long-term potential success?
We will explore each theme, identifying the true implications these may have on key business objectives, with these overarching questions in mind:
- Gartner finding #1:
Marketing budgets remain steady despite uncertain times ahead
Although marketing budgets were found to be static y-o-y as a % of revenue, many businesses have seen a recent decrease in revenue. This means in actual terms, marketing budgets will have fallen. If businesses are setting budgets at a % of revenue, they may not truly know if their budgets are sufficient to achieve their objectives. Also, with the changing communications landscape a £ spent in 2019 might not give you the same ROI as a £ spent in 2018, or 2017.
Businesses need to be clear on their objectives and understand what reaching them will require in terms of spend. This doesn’t mean they shouldn’t experiment or innovate, but that they should knowingly attribute spend, with a clear understanding of the intended role of each activity within the full marketing strategy.
- Gartner finding #2:
Nearly 1/3 of CMO budgets allocated to marketing technology
If an increasing % of the budget is spent on MarTech, budgets elsewhere are decreasing (as a proportion). Businesses therefore need to know that the re-focused investment is generating strong ROI and, where budgets have been reduced, they are working as efficiently and effectively as possible. It’s also important that investment in technology is supported with sufficient investment in people to extract the most from the infrastructure investment.
- Gartner finding #3:
Advertising dominates the CMO’s multichannel budget.
- Gartner finding #4:
Digital workhorses account for marketing investments.
Both findings #3 and #4 point to increased spend in measurable digital channels. People are still concentrating on what’s easy to measure and therefore spend is prioritised in these channels. Businesses should start with their desired outcomes and an understanding of the role of each activity in driving these, not just focus on measurable channels.
- Gartner finding #5:
1 in 6 marketing dollars spent on innovation
If 1 in 6 marketing dollars are spent on innovation and 1/3 on MarTech, this is 50% of the total budget. However, clients say they are only 50% of the way to where they want to be in terms of their innovation maturity. It’s therefore important that they upskill quickly in this area and can measure the financial benefit this spend provides.
- Gartner finding #6:
CMOs prioritise customer experience and customer analytics but risk overlooking acquisition and retention
As with digital, customer experience (CX) is easy to isolate and measure. In a complex world and an uncertain economic backdrop where accountability is key, it’s easy to prioritise. When done properly, customer experience analysis covers the full consumer journey but in reality, it’s rare for this to happen and the long-term risks are therefore significant. It’s important that businesses don’t lose sight of the wider business objectives by having a very narrow focus on CX.
- Gartner finding #7:
CMOs value awareness more than ROI and market share
Advertising and brand awareness are easy to track and link to short term activities but demonstrating the contribution of an individual activity to financial success can be complex. This shouldn’t deter businesses from trying to unpick the complexity, or to let that complexity stifle decisions.
- Gartner finding #8:
Personalisation prevails, and its meaning varies widely
Not only does the meaning of personalisation vary from individual to individual but it also varies by context for each individual. The world is only just starting to adopt and adapt to data privacy and this will change over time both as regulation changes and as consumer attitudes to privacy change. Businesses need to be able to understand the implication of these changes both for their strategy and the impact on the bottom line. It’s also important to understand the ROI of pursuing a highly targeted personalisation strategy and the point at which the ROI of micro personalisation declines.
Against the backdrop of greater complexity and the resulting increases in specialisms and siloes we’ve seen a greater need for integrated data, tech and analytics solutions, particularly in large organisations where the ambition for integration can be even harder to achieve.
At Annalect we are developing an approach to mapping the true value of marketing as it flows through the whole business, drawing on our established expertise across a range of specialisms including data and technology strategy, ROI modelling and attribution, audience analysis and customer journey analytics.
By Sarah Hunt, General Manager, Annalect