Marketing budgets have plummeted, says Gartner
In the annual Gartner CMO Spend Survey, the company surveyed 400 CMO and marketing leaders in North America, the UK, France and Germany from March 2021 through May 2021, tracking the critical areas marketers are investing in and where cuts are being made from people, programs and technologies.
“Despite facing in-year budget cuts in 2020 due to the pandemic, most CMOs expected budgets to bounce back in 2021. This budgetary optimism was misplaced, as marketing budgets have fallen to their lowest level in the history of Gartner’s CMO Spend Survey (see Figure 1),” said Ewan McIntyre, co-chief of research and vice president analyst in the Gartner for Marketers practice. “However, these cuts have been a slow burn over the course of the last year, where many marketing budgets have not recovered what was originally lost.”
The annual Gartner CMO Spend Survey, 2021 revealed that no one – regardless of company size or industry – has escaped swinging cuts in marketing budgets. In fact, no industry achieved a double-digit budget in 2021 (see Figure 2). Travel & hospitality, manufacturing and tech product companies have experienced the greatest cuts in 2021.
Meanwhile, consumer products and goods (CPG) companies reported the strongest 2021 marketing budgets at 8.3% of company revenue. Large enterprises got hit the hardest – companies with revenue of more than $2 billion reported the lowest average marketing budget of just 5.7%. On the other hand, companies with revenue of under $500 million reported the highest allocation to marketing with an average budget of 8.6% of revenue.
Gartner research shows CMOs have shifted spending commitments across their channels and programs, with pure-play digital channels – owned, paid and earned – dominating those priorities and accounting for 72.2% of the total marketing budget.
When looking at the largest resource allocation – agencies, media, labor and paid media – agency spend continues to decline.
“Albeit a small dip from 23.7% in 2020 to 23% in 2021, this continual change indicates significant in-housing activity, as CMOs reimagine the capabilities that can be supported by their internal teams,” added McIntyre.
CMOs report that 29% of work previously carried out by agencies has moved in-house in just the last 12-months alone. The focus of in-housing is changing as well – with brand strategy, innovation and technology, and marketing strategy development making up the top three capabilities areas CMOs are moving to internal teams. Meanwhile, marketing technology (martech) continues to dominate, taking up 26.6% of the total budget.
Digital Commerce Tops Program Spend
2020 and 2021 have seen drastic changes to customer buying journeys – both B2C and B2B alike, forcing even digital late-comers to accept the inevitable shift to online channels. When looking at budget allocation by programs and operational areas, CMOs report digital commerce makes up 12.3% of the total budget. Likewise, marketing operations and brand strategy make up 11.9% and 11.3% of the total budget.
However, while marketing analytics still commands 11% of the total budget, it has continuously dropped in prioritization – now in the fourth position in 2021.
“CMOs continue to invest in marketing data and analytics, however, for many, the results have failed to live-up to expectations,” said McIntyre. “Given recent and upcoming regulations, and changes in data collection, we expect this investment area to continue to be a strategically important capability, but also to continue to fluctuate until uncertainties subside.”
ASA publishes latest study into restricted ads in children’s media
The Advertising Standards Authority (ASA) has published the findings from its fourth monitoring sweep, as part of a year-long project to identify and tackle age-restricted ads appearing in children’s online media.
Whilst the overwhelming majority of age-restricted ads are targeted responsibly in online media, targeting audiences heavily weighted (75 %+) to adult audiences, a minority end up in children’s online media.
Advertisers placing age-restricted ads online are required, under the Advertising Code, to take care to target their ads away from child audiences. In particular, that means websites and YouTube channels designed for children or that attract a disproportionately high child audience cannot carry age-restricted ads.
The latest report continued what the ASA calls CCTV-style scrutiny of online ads for: gambling, alcohol, e-cigarettes and tobacco, slimming and weight control products and food and soft drinks classified as high in fat, salt or sugar (HFSS products).
Since undertaking the monitoring, the UK Government has announced new restrictions on the advertising of HFSS products on TV and online, which are due to take effect from the beginning of 2023. That policy shift does not change the ASA’s responsibility to take action against HFSS ads placed, in breach of the current rules, in children’s media.
Between January and March 2021, using monitoring tools to capture age-restricted ads served on a sample of 49 websites and 12 YouTube channels attracting a disproportionately high child audience, the ASA found that:
- Overall, 158 age-restricted ads broke the advertising rules; and
- In total, 41 advertisers placed age-restricted ads in 33 websites and 8 YouTube channels aimed at, or attracting a disproportionately large, child audience.
A breakdown of ads by product category that broke the rules reveals:
- 7 alcohol ads by 3 advertisers on 8 websites
- 29 ads by 3 advertisers on 17 websites
- 117 ads by 31 advertisers on 31 websites and 8 YouTube channels
- 5 ads by 4 advertisers on 4 websites
- No ads for e-cigarettes or tobacco products were picked up during this monitoring period
The ASA says its preliminary inspection of the data suggests that the majority of advertisers who it identified breaking the rules in earlier monitoring sweeps have not reoffended. It has warned the advertisers who we have caught in this latest sweep to review and, as necessary, amend their practices to ensure they target future ads responsibly.
Throughout the last year, harnessing innovative monitoring technology as part of a five-year strategy, More Impact Online, has proved effective in helping the ASA identify and tackle irresponsibly placed ads for age restricted products at scale and speed to better protect children.
Demand versus Brand – the dangers of fragmented marketing
Marketing excellence is a prerequisite to 21st century business success. But while budgets soar and CMO profiles rise, escalating marketing awareness to board level is creating a dangerous fragmentation of the marketing strategy.
Good CMOs are, unfortunately, spending more time justifying strategy than delivering. They are navigating a c-suite often polarised between brand and demand; obsessed with performance and ROI. They have to explain why it is important to explore multiple digital channels to market, even if one outperforms the others. Less confident individuals are caving in to pressure – undermining business performance as a result.
With the latest generation of marketing recruits demonstrating more confidence with marketingtechnology (MarTech) than converting sentiment into effective creatives, the essence of successful marketing risks being side-lined just as it is becoming more important than ever. Norman Guadagno, CMO, Acoustic, explains why good marketing is a holistic mix of brand and demand — and why MarTech should support, not replace, creative expertise…
Marketing has never been more important. In a world where the quality of customer experience dominates consumer and, therefore, corporate thinking, marketing is at the centre of many business initiatives. According to the latest CMO Survey, 73% of UK marketing leaders confirm the role of marketing in their companies increased in importance during the last year.
Yet this strategic role creates new challenges for marketers. CMOs have the ear of the board – even a seat at the board – for the first time, and very few c-suites have any real insight into the complexities or intricacies of successful marketing. This is understandable, to a degree, given the astonishing pace with which marketing has evolved over the past decade, from the increasing sophistication of new digital channels to the ever-extending marketing technology stack.
The result, however, is often divergent attitudes and priorities. For every board member citing the Oatly story, the company that has built a $10 billion ‘oat and water’ business on the back of a brand image that resonates with a health, environmental and wellness-focused customer audience, will be another lauding the value of demand-focused marketing, with the ability to compare lead generation performance in granular detail across a multiplicity of channels.
Brand and Demand
Both points-of-view have merit – but they are driving a worrying fragmentation in marketingactivity. CMOs are spending less time creating strategy and far more refereeing misinformed ‘brand’ versus ‘demand’ battles in the board room.
Brand and demand are two sides of the same coin. A brilliantly crafted demand generation campaign that presents the perfect message, in front of the ideal prospect, at the best time, will deliver far better results if that prospect already has some form of brand knowledge and understanding. Operating a demand campaign in a brand vacuum is a massive waste of marketing resources.
Successful marketing takes a holistic approach and even the most skilled expert in demand generation needs to understand brand to ensure every aspect of the marketing mix works.
Of course, many of the loudest voices in the c-suite will shout that ‘brand’ is a nebulous concept while ‘demand’ can be tracked and assessed in extraordinary detail. Again, this reinforces the lack of understanding into how good marketing works. In many ways, digital marketing’s inherent ‘measurability’ is its Achilles heel, encouraging the judgement of marketing activity only on quantitative performance.
Companies are endlessly demanding measurement of brand perception and brand awareness – and ROI from brand campaigns. This totally misses the point – brand as a holistic concept is not implicitly measurable (although investors certainly flock towards companies with excellent brand recognition) but it is hugely valuable within the overall marketing mix. Strong brand awareness coupled with positive brand perception will make it far easier to create marketing qualified leads (MQLs); it will ease the conversion process; it will set the foundation for customer expectation.
In addition to explaining the value of combining strong brand and demand campaigns many CMOs also have to justify the basics of marketing activity. Why, ask management teams, is money being wasted on multiple customer acquisition channels when one or two so clearly outperform the rest?
While such questions may make sense in a linear operational process – manufacturing or logistics, for example – marketing, irrespective of technology and metrics, remains a far more nuanced activity.
Good marketers know the importance of testing, evolving strategy and building the right messaging. They know that in a constantly changing market, performance is never static. Customer expectations change, cultural events will influence the relevance, even appropriateness, of activity. Yet there is a risk that less experienced individuals will cave into to management pressure to focus only on demand, on today’s top performing channels – and the business will suffer as a result.
Success should be analysed not just by the numbers. Companies need to understand the effectiveness and relevance of messaging: Does it reflect current cultural events? Is it enhancing the brand? Does it provide value to the customer or prospect?
The risk for marketers is that in an increasingly technology- and measurement-driven discipline, the essence of creativity — of recognising how to speak to the customer with the right sentiment — will be lost. Indeed, growing numbers of young marketers are now arriving in a business with a great understanding of the mechanics of successful campaign delivery and technology expertise but little, if not zero, insight into how to craft the correct message, one that piques the customer’s interest.
Technology should not drive marketing – and marketing teams need to be creative first, ‘mar-technicians’ second. Technology should provide the entire team with a complete view of how, where and when customers interact with marketing activity to ensure the strategy is infused into every message.
It should empower individuals to experiment with messaging, delivering rapid insight – through A/B testing for example – into how customers respond to small changes in emphasis. It should help a company understand how best to approach a new market, to measure existing brand awareness, for example, but the creative skills of the marketing team are then vital to identify how to entice that new audience, to create the best messaging to tap into their mindset.
Marketing is not a linear activity. Customer expectations, experiences and desires change constantly; the way they can interact with a brand evolves continuously. Good marketing will be judicious mix of innovation and consistency. And the best CMOs will balance brand with demand; they will maximise the value of proven channels while always looking towards – and experimenting with – the new.
Marketing teams require a holistic skillset that blends creativity with technical confidence. And business leaders need to recognise that while MarTech provides a great insight into marketingvalue, it is not the be all and end all of marketing success. Pitching brand against demand makes no sense – it is the way in which a company reaches out to customers that is key. It is the message, not the channel, that resonates.
Reconnect at October’s Digital Customer Engagement Summit
Do you specialise in Conversion Rate Optimisation? We want to hear from you!
Each month on Digital Marketing Briefing we’re shining the spotlight on different parts of the print and marketing sectors – and in August we’ll be focussing on Conversion Rate Optimisation solutions.
It’s all part of our ‘Recommended’ editorial feature, designed to help marketing industry professionals find the best products and services available today.
So, if you specialise in Conversion Rate Optimisation solutions and would like to be included as part of this exciting new shop window, we’d love to hear from you – for more info, contact Clair Wyld on firstname.lastname@example.org.
Here are the areas we’ll be covering, month by month:
Aug – Conversion Rate Optimisation
Sep – Digital Signage
Oct – Brochure Printing
Nov – Creative & Design
Dec – Online Strategy
Digital brand interaction on the rise due to pandemic
Over half (55%) of UK adults will interact with brands more through digital and virtual channels than face-to-face post-pandemic, according to a global study from Nuance.
The study, which polled 10,000 adults across the US, UK, Australia, Germany, France, Belgium, the Netherlands, Sweden, Italy, Spain and Mexico, also found that over half (51%) of UK respondents would rather use apps or a company’s website than go into a physical branch or store to complete tasks such as shopping and banking.
When it comes to communicating with brands, over one in four (26%) UK adults said they still preferred in-person visits or phone (13%), 42% choose digital channels including email, live-chat and chat-bots. Convenience (51%) and speed (36%) were the most common drivers for choosing a preferred method of communication, with speaking to a ‘real’ human (26%) trailing.
Nuance says the findings illustrate that consumers are becoming increasingly comfortable using technology to make purchases and access services, while still expecting brands to deliver a human touch when required.
In addition to being more comfortable using tech like chatbots, virtual assistants, and mobile applications to interact with brands, adults in the UK have also increased their trust in tech that helps them access their personal information and accounts online.
According to the study, almost half (45%) are now more comfortable using biometrics to authenticate themselves when accessing their accounts than they were before the pandemic, with 38% feeling more comfortable using their smartphone to access their accounts as well. These figures are reflected in the global findings with a similar number (49%) more comfortable using biometrics and 47% more comfortable using their smartphone to access accounts.
A third (34%) of UK respondents now place the most trust in a form of biometrics (either voice, facial, fingerprint, behavioural, or combinations of each) as a means of authentication. This is an important step in the right direction, says Nuance, as fraudsters have been increasingly targeting individuals during the pandemic, exploiting archaic authentication methods like PINs and passwords that can be made accessible via the dark web to gain access to consumer accounts and funds. While this is progress, the UK still lags behind the US in terms of trust in biometrics, with nearly half (45%) of adults backing the technology.
This growing trust in technology across age groups is likely a reflection of the positive experiences customers have received online. When asked about how they would rate the customer services they’ve accessed online over the past 12 months – services that might have previously been accessed in-person, like banking or shopping – 58% of UK shoppers said good or excellent. This is less than the global responses, in which two thirds (66%) rated their customer services at the same level.
“With convenience, speed, and ultimately getting the job done prevailing as clear priorities for buyers, organisations such as retailers, banks, and utilities companies must develop strategies for delivering consistently efficient and effective digital experiences,” said Seb Reeve, Intelligent Engagement Market Development at Nuance. “From slick and secure authentication processes to intuitive AI powered intelligent assistants, technology must be able to manage the personalised needs of customers while seamlessly bridging to human intervention when required at the right moment.”
“Customers expect immediate and effective conversations with the brands they engage with – whether those conversations are happening on the phone or via a chatbot on a company’s website. Empowering these engagements requires an integrated approach where an organisation not only can understand the customer’s intent but also authenticate that customer and start personalising their experience across every single channel – from in-person, to phone, to web, to mobile. With the pandemic creating an increasing comfort, trust, and preference among consumers to use technology when engaging with brands, it will be critical that organisations prioritise delivering superior digital experiences if they want to retain customer loyalty and continue to scale.”
Marketing directors ‘bullish’ about post-COVID outlook
The UK’s top 50 chief marketing officers are bullish about the growth of their organisations as the country emerges from lockdown, according to new research from the Chartered Institute of Marketing (CIM).
CIM’s latest report, ‘The CMO 50’, reveals that 71% of marketing leaders believe that the COVID-19 pandemic has had a positive impact on the perception of their brand, despite more than half (57%) having seen marketing budgets cut over the last year.
Whilst 52% believe that the marketing sector is stronger than five years ago. Only 20% believed it was weaker.
The research shows CMOs are optimistic about the post covid economy with levels of confidence rated at 81 out of 100. In comparison overall business optimism was rated at just 62 out of 100.
Marketing leaders identified four clear themes underpinning their future plans to adapt to the needs of the post-Covid economy:
- Adaptation to changes in technology and data;
- Motivating, retaining and managing people;
- Recruitment and development of the right skills;
- Demonstrating the value of marketing investment vs. expenditure.
The research also identified a desire to address regulatory issues affecting marketing. Just 26% of the CMOs believe the current regulatory regime for alcohol, gambling, HFSS (high fat, salt and sugar) products and environmentally damaging goods is fit for purpose, and the majority would back rules equivalent to those for cigarettes to restrict the marketing of potentially harmful goods and services.
- 76% back marketing restrictions for products that damage the environment, keen to see limits similar to those for cigarettes.
- 72% back restrictions for gambling, 58% for products aimed at children, 54% for unhealthy HFSS foods and 34% for alcohol.
- More than half (54%) of marketing leaders think there is currently too little regulation of social media, and just 44% feel it is not the responsibility of marketers to protect the users of their social media channels.
Chris Daly (pictured), chief executive of the Chartered Institute of Marketing said: “Marketing leaders calling for restrictions on marketing may seem counterintuitive, but it reflects a clear shift in our society towards purpose driven marketing. Marketers have been at the forefront of helping the nation adapt to the strictures of lockdown, and in doing so have built stronger relationships with consumers. That hard-won reputational boost has the potential to accelerate economic growth as we emerge from lockdown, and professional marketers are rightly wary of loose regulatory controls allowing a few bad apples to sour the trust of consumers.”
The acceleration of structural shifts in society’s use of technology is reflected in the views of marketers. 92% of those interviewed, believed that brands had a direct duty to pull advertising from social media platforms that failed to protect users. Just 44% felt that the protection of social media users lay outside the responsibility of marketers. In contrast, 86% agreed that professional marketers should encourage social media platforms to do more to protect users.
Daly added: “To prosper, a professional marketer needs clear parameters within which to work. Give them the rules and a level playing field and marketers will adapt and deliver. Having accommodated the necessary changes of GDPR, the UK’s most senior marketers are right to be wary of the dangers that poorly policed social media platforms pose to the long-term growth of their brands and the wider economy. The UK marketing community has an opportunity to build back better by targeting spend and training on marketing channels and products that deliver greater value to our society.”
Digital Customer Engagement Summit: Find your keys to success this October
This October’s Digital Customer Engagement Summit Summit is still going ahead as planned and we cannot wait to see you in person!
The Summit has been unaffected by the recent government announcements, but we wanted to update you about the guidelines that we have put in place at the event;
– Plenty of space as the venue be running at 50% capacity
– Registration will be staggered ensuring no long queues
– Your temperature will be taken at arrival
– Face masks must be worn at all times, unless exempt or seated
– The event will be as paper free as possible – your itinerary will be sent to you via email
– Sanitation stations will be dotted around the venue for you to use
– Meeting booths will be spaced out (in line with the current social distance measures) and will consist of a table and two chairs with a protective screen
– There will be a one way system in place, which will be pointed out with arrows on the floor
– All meals and refreshment will follow the government guidelines – creating a relaxed and fun atmosphere.
Please note, we have Flexible attendance options – for duration and also the ability to switch to VIRTUAL attendance at any given time.
We look forward to seeing you on the 13th October at Hilton London Canary Wharf.
Or if you have any questions then you can contact Haley Stratton at email@example.com.
Digital Customer Engagement Summit: Register today!
As a professional within the customer engagement sector, we’d like to invite you to a small niche event that we’re hosting on the 13th October at Hilton London Canary Wharf.
We understand that your time is precious and extremely limited – the Digital Customer Engagement Summit can save you time by allowing you to connect and network with a range of suppliers that offer innovative and budget-saving solutions for your current workload.
Your invitation is entirely free and includes lunch and refreshments throughout. Plus, access to a series of industry seminar sessions – (Virtual attendance options are available also).