CMOs to Rein in Traditional Ad Spend, Press on With Digital Marketing

February 27, 2013

This article is included in these additional categories:

B2B | Brand Metrics | Digital | Financial Services | Media & Entertainment | Uncategorized

DukeCMOSurvey-Marketing-Spending-Projections-Feb2013Despite consumer and marketer beliefs that traditional media advertising on the whole is more effective than online advertising, marketers continue to shift budgets away from traditional media and towards digital marketing channels, finds Duke University’s Fuqua School of Business in its latest installment of The CMO Survey. In this latest survey, CMOs forecast a 2.7% decline in traditional advertising spend over the next 12 months, after predicting a 1.9% decrease in August 2012, an 0.8% decrease in February 2012, and a 1.3% increase in August 2011.

By contrast, digital marketing spending is forecast to grow by 10.2%, a slower rate than the 11.5% increase forecast in August 2012, but a healthy rate nonetheless.

Segregating the responses by company type, the study finds that B2C service firms will pull back on traditional advertising the most (-5.4%), with B2B product companies (-4.1%) also curtailing spending. B2B services (-2.2%) and B2C product (-0.6%) companies will keep their budgets relatively flat. Each company type is projecting a double-digit increase in digital marketing spend, save for B2B product companies (+8.2%).

Meanwhile, CMOs are projecting increased budgets across a number of other areas, though they’re less bullish than in the August 2012 survey. They’re expecting to spend more on new product (8%, down from 9.4% in August 2012) and service (5.8%, down from 6.5%) introductions, while also forecasting an 8.1% increase in budgets devoted to customer relationship management (down from 9%), and 6.8% more spending on brand building (down from 7.5%).

Overall marketing spending is expected to grow by 6.1% over the next 12 months, slightly slower than the 6.4% growth forecast from August 2012. Currently, marketing budgets are reported to account for an average of 10.6% of firm budgets, down from 11.4% in August 2012.

As a percentage of overall firm budgets, B2C product companies devote the largest share to marketing (16.3%). B2C services companies had reported 16.8% share of budgets going to marketing in February 2012, but that dropped to 10.9% in the most recent survey.

About the Data: The CMO Survey is conducted online twice a year. The latest survey was fielded from January 22 to February 8, 2013. 468 CMOs responded to the survey, of which 95% were VP level or above.

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