Three Short-Term Trends From The Latest CMO Survey

September 10, 2018

The latest biannual iteration of The CMO Survey [pdf] was recently released, and it contains some interesting – and at times sobering – statistics about the direction of marketing budgets and measurement. Here are 3 takeaways from the report that are noteworthy but maybe a little too early to call meaningful trends.

1. Marketing Budget Growth Decelerates

CMOs have been forecasting budget increases of various degrees for several years now. Yet it seems that peak optimism was reached early last year, when the February 2017 survey found CMOs predicting a 10.9% increase in budgets.

Since then, budget growth estimates have fallen to 8.9% (in the two subsequent surveys) and then to 7.5% in this latest edition.

It’s too early to suggest that this will be a long-running trend, but if nothing else budget growth seems to have fallen back in line with earlier trends, when growth expectations ranged from around 5-9%.

One trend that does seem to be gradually playing out over the course of the past couple of years is marketing budgets’ declining portion of firm-wide budgets. As of this latest survey marketing budgets are estimated to account for 10.8% of firm budgets, down from a peak of 12.1% in February 2016.

B2C product companies stand out in this respect, with CMOs in these companies estimating a massive 17.2% share of their firm-wide budgets going to marketing.

Here’s a fun stat: if CMOs of B2C product companies are correct in these estimations, then they’re spending more than 5% of their firm-wide budgets on social media and mobile marketing. (More on that to come right now!)

2. Social + Mobile Are Reaching New Budget Heights

Social Tops 1 in 8 Marketing Dollars

Respondents to The CMO Survey have also been envisioning greater influence for social media on their budgets for some time. These forecasts are gradually coming into fruition, if not quite at the expected pace, as CMOs in a separate study point to social media as their most important media channel.

Social media is now estimated to account for more than 1 in every 8 dollars spent on marketing. The 13.8% share of budget represents a fairly sizable uptick from 12% just 6 months ago and slightly less than 10% a year ago.

But that figure masks a significant disparity between B2B and B2C companies, as the respondent sample skews towards B2B companies.

B2C companies, unsurprisingly, are devoting a much larger share of their budgets to social media than B2B firms. Indeed, for B2C product (18.6%) and B2C service (17.6%) companies, social media is approaching one-fifth of marketing budgets.

(For what it’s worth, social media captures an estimated 1 in 5 online ad dollars in the US, per IAB and PwC figures.)

B2B companies are a little behind in terms of their social spending. But even so, B2B services companies are allocating 1 in 8 marketing dollars to social media (13.9%), and B2B product companies about 1 in 10 marketing dollars (9.7%).

Mobile Reaches 1 in 10 Marketing Dollars

Mobile trails social media in budget influence, but there are now real indications that mobile marketing spend is ramping up.

Overall, CMOs in this iteration of the report estimate allocating almost one-tenth (9.4% share) of their budgets to mobile.

That’s a substantial rise from just a year ago, and is more than 2.5x the share devoted to mobile just 2 years ago (3.8%).

Once again, B2C companies are leading the way: B2C services companies are spending just over 15% of their budgets on mobile, and B2C product companies one-eighth (12.5%).

By contrast, B2B product companies are spending 7.5% of their budgets on mobile marketing, and B2B service companies even less (6.9%).

If you’re keeping count (don’t worry, we’ll do that for you), the combined amount of budget allocated to social media and marketing works out to:

  • B2C Product: 31.1%;
  • B2C Service: 32.9%;
  • B2B Product: 17.2%; and
  • B2B Service: 20.5%.

So, very roughly, it’s about one-third of budgets going to mobile and social for B2B companies, and about one-fifth for B2B companies.

Social and mobile are clearly benefiting from the rise of digital, as CMOs continue to project double-digit increases in digital marketing spend, and small declines in traditional advertising spend.

All told, while budgets continue to favor non-digital (55.3% share) over digital spending (44.3%) for now, that will change in the near future. In the next 5 years, CMOs overall expect to spend the majority (54.1%) of their budgets on digital. (A recent CMO study from Nielsen also found that tipping point on the near horizon.)

3. CMOs’ Use of Marketing Analytics Dips Again

For a moment there, it looked like CMOs might be on track to conquering the question of ROI proof. Just 6 months ago, there were signs that they were becoming more able to demonstrate ROI quantitatively and this increased confidence seemed tied to a greater use of marketing analytics.

It turns out it was too soon to call that a trend… In this edition of the survey, CMOs are back down to estimating marketing analytics being used in decision-making around 36% of the time. That’s down from 42% in the prior survey.

One might wonder if the survey sample distribution could impact these overall results. That’s because B2C companies (which only make up around one-third of the respondents) are far ahead of their B2B counterparts in their use of analytics. But comparing these results with the last iterations shows that CMOs are using analytics:

  • 47.3% of the time for B2C Product companies, down from 53.8%;
  • 42.2% of the time for B2C Service companies, down from 55.7%;
  • 32.3% of the time for B2B Product companies, down from 37.5%; and
  • 29.1% of the time for B2B Service companies, down from 35.2%.

As it stands, then, analytics use has decreased across all company types.

Alongside that decline is another: CMOs now rate analytics’ contribution to performance at just a 3.5 on a 7-point scale. That’s the lowest average since February 2015.

If there’s one bright spot, it’s to be found in budgets: analytics are now getting 6.7% of budgets, up from 4.6% in February 2017.

And somehow, despite analytics’ declining use and contribution, CMOs are making more sense of their social media spend: 1 in 4 now can prove the impact of social media quantitatively, the highest figure yet.

About the Data: The results are based on a survey of 324 top marketers at US for-profit companies, 95% of whom are VP-level and above. Roughly two-thirds are B2B-focused, and a majority (57%) have more than $100 million in sales revenue.

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