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70 percent of marketers expect to boost spend in 2021
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Nearly two-thirds of those surveyed by the CMO Council say they will boost marketing spend in the coming year and most don’t expect to downsize or re-structure their organisations.

While many industry sectors have struggled in the past year, it appears most marketers have already done all the cutting, pruning and restructuring of budgets and teams in 2020, notes the Chief Marketing Officer (CMO) Council. 

The organization has 16,000 members in 10,000 companies across more than 110 countries worldwide. Members collectively control nearly $1 trillion of annual marketing spend.

Key indicators of a positive outlook come from a year-end “Getting It Done in 2021” audit of around 200 CMO Council members across all regions worldwide. Key findings reveal:

  • A surprising 65 percent will increase marketing spend in 2021; just 10 percent will reduce their budgets, while 24 percent expect no change
  • A large percentage of marketers (70 percent) report significant or growing investments in marketing technology to improve effectiveness
  • Most important areas of marketing automation and transformation will be sourcing and using customer data insights, executing campaigns more effectively, as well as improving operations and performance 
  • Just a quarter of marketing leaders say they will downsize or re-structure their marketing organizations in 2021, in contrast to 64 percent who will not
  • Working more effectively with lines of business is the number one priority for marketing leaders, who are also keen to lower cost, increase efficiency and do a better job of both globalizing and localizing campaigns
  • Over half of marketers surveyed want to optimize their customer journey, and more than a  third want to boost acquisition and conversion rates through better data-driven interaction and digital innovation
  • Interestingly, across company sizes, regions and industries, priorities remained consistent: marketers are looking to increase spend and automate; likewise they are looking to save costs through efficiencies rather than through staff cuts

“The most relevant and compelling areas of conversation among our members right now are all about ROI, efficiency and revenue optimization,” said Manuel Hüttl, Senior Vice President Europe beim CMO Council.” This means being more focused on digital marketing transformation, creating value from customer data, and upgrading customer engagement and experience.” 

The online survey was fielded in December and early January and a summary report and infographics can be downloaded at https://cmocouncil.org/thought-leadership/reports/getting-it-done-in-2021.

Marketing budgets up in 1Q 2019
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The net balance of marketing executives reporting upwardly revised budgets increased to +8.7% in Q1 2019, up from a +0.0% reading for the final quarter of 2018 and the highest since Q3 2017.

That’s according to the latest IPA Bellwether report, which says around 21.6% of panel members observed spending growth, compared to 12.8% registering budget cuts.

The quarterly report says that while the Brexit uncertainty that is shrouded over the UK’s political and economic climate continued to prompt belt-tightening and a delay in decision-making, other companies took a more pro-active approach and looked to push resources into their brands, enhancing digital marketing methods and expanding presence on social media platforms.

Firms were also wary of rising competitive pressures, leading some to diversify product offerings as part of efforts to enter new markets and attract new clients. As such, there were reports of boosting marketing spend as a defensive mechanism to protect brand reputation.

Nevertheless, the IPA Bellwether says unfavourable global economic conditions, coupled with fears of falling business and consumer confidence prompted caution over discretionary spending in some cases.

The best performing category of the Bellwether survey was internet, which saw its net balance jump from +2.1% to +17.2%. Firms showed a strong appetite to enhance their digital footprints, with Search/SEO spending (+14.2% from -3.9%), as well as targeted advertising on mobile (+3.6% from -2.4%) all receiving boosts. A renewed drive for big-ticket advertising campaigns was also apparent during the opening quarter of 2019, with main media marketing returning to growth (+5.2% from -6.2%). Events was the third and final Bellwether category to register expenditure growth (+3.4% from +2.6%).

However, market research, sales promotions and direct marketing budgets were all revised lower during Q1, with net balances of -4.2% (from -4.7%), -3.7% (from +3.8%) and -3.5% (from -5.6%) respectively.

Marketing executives erred on the side of caution with their forecasts for marketing spend for the 2019/20 financial year. A modest net balance of +3.4% anticipate budgets to grow during this period, which was notably weaker than past forecasts made before a new financial year and the lowest since 2009.
Although approximately 26% of panellists foresee growth, the remaining 74% expect cuts or no change. Compared to this time last year, a net balance of +18% of firms anticipated budget growth for the 2018/19 period.

Positive expectations were centred on main media marketing campaigns and advertising at events, which yielded net balances of +4.8% and +2.5% respectively. Some companies expect that brand-building initiatives seen during the most recent quarter will continue through the coming financial year, as they look to defend their brand and stave off tough competitive pressures. Plans to launch new products in some instances were also seen as opportunities for marketing budget growth.

Nevertheless, firms were much more downbeat for the remaining Bellwether categories. Negative outlooks were recorded for other marketing (-13.1%), PR (-7.0%), sales promotions (-5.3%), market research (-4.0%) and direct marketing (-1.8%).

Marketers’ confidence levels remain significantly negative

Following the first downbeat outlook towards own company financial prospects since Q3 2012 during the previous Bellwether survey, latest data showed no signs of an improvement. A net balance of -2.7% of surveyed marketing executives indicated a pessimistic assessment towards their company’s finances, compared to -0.9% during the final quarter of 2018, thereby indicating a stronger degree of negativity.

Industry-wide financial prospects also remained pessimistic during the first quarter. Although the net balance of firms casting a downbeat assessment was slightly lower than previously, registering -22.6% (- 28.6% in Q4 2018), it still signalled one of the most negative industry-wide outlooks since the global financial crisis.

Paul Bainsfair, IPA Director General, said: “This sharp increase following Q4 2018’s flatlining signals that UK marketing budgets have received a much-needed kiss of life in an economy gripped by Brexit uncertainty. The smart marketers realise that to grow their businesses, they must invest in them, particularly in mass reach, long-term media. While the forecast for the year ahead remains uncertain given the seemingly endless Brexit negotiations, those that want real competitive advantage should follow the proven rule that if you increase your share of voice above your share of market, you should expect to experience growth.”

Joe Hayes, Economist at IHS Markit and author of the Bellwether Report: “A return to growth in marketing budgets during the opening quarter of 2019 may come as a surprise given the uncertainty that shrouds the UK political and economic climate has only built further since the previous Bellwether Report. However, some companies began to show a determination to step up brand-building and protection in these challenging times, taking a pro-active, yet defensive approach in the face of business belt-tightening and weakening consumer confidence. That said, cautious undertones were still apparent in budget plans for the 2019/20 financial year, with panellists providing only modest growth expectations in available marketing spend. In fact, the outlook was the most subdued since 2009.”

Marketing spend set to remain stable in 2019
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80% of businesses plan to spend more or the same on PR in 2019 compared with 2018.

The findings are found in a new report, ‘Spotlight on Marketing,’ commissioned by marketing communications agency Voiceboxx.

100 communications professionals were asked a series of questions at the beginning of 2019 to help understand the nature of the marketing landscape for the year ahead, taking into consideration GDPR regulations and Brexit.

Out of those polled, 80% said that their budget for creative/branding would increase or stay the same for 2019, with creative design essential to direct mail, which all respondents were planning to invest in through 2019.

Digital tactics were also high on the agenda for marketeers, with 87% of businesses using video as a tool and the platform being the marketing tactic most respondents would like to utlise in 2019.

Other key points from the report revealed:

• 43% of respondents said their website needed improving in 2019
• 47% plan to spend more on their website in 2019, than they did in 2018
• Over half respondents said keeping up to date with social media trends was a challenge
• Most marketeers plan to invest more in strategy in 2019, than 2018
• 30% of respondents see new CRM system and staff training as essential for 2019
• 57% of businesses want to use social media advertising in 2019

Overall, the survey found that respondents saw 2019 as a year for improving communications across all channels, with analysis revealing marketeers already use a wide range of tactics, with new activity areas for 2019 being low priorities.

UK marketing spend stagnates as Brexit takes its toll
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A six-year run of continuous overall UK marketing budget growth came to an end in Q4 2018, with a net balance of +0.0% of marketing executives signalling no change in budgets during the fourth quarter.

That’s according to the latest IPA Bellwether Report, which says that while some marketers reported growth (+16%), this was completely offset by others observing spending cuts (-16%).

In addition, roughly two-thirds of panel members reported no revision to their total marketing budgets. Evidence from some marketers highlighted some optimism for the coming year, with new product launches, expansion into overseas markets, digital transformation and technological development all expected to bring growth opportunities.

However, political and economic uncertainty caused by the ongoing Brexit negotiation process has dampened both business and consumer confidence, driving belt-tightening and restricting resources available to marketing executives.

The shift towards digital modes of advertising remained apparent during Q4, although growth moderated noticeably, as signalled by the net balance for internet falling to +2.1%, from +13.6% in the third quarter (within internet, search/SEO dropped from +5.8% in Q3 to -3.9% marking the first cut since Q2 2009; mobile advertising budgets were also revised down to -2.4% from +1.9% in Q3).

However, it was budgets for sales promotions that marketing executives enjoyed the greatest upward revisions for, with the net balance increasing to +3.8% from +0.6% in Q3. Events budgets also saw a slight increase (net balance of +2.6% from -1.1%), however panellists observed cuts to the remaining categories monitored by the Bellwether survey.

The first downward revision for two quarters was seen for main media advertising, which includes large-scale campaigns on TV and in newspapers. The net balance fell to -6.5% from +4.8%. Direct marketing (-5.6% from -7.4%), market research (-4.7% from – 3.7%), and PR budgets (-4.1% from +4.2%) were also areas of marketing that companies experienced a squeeze on spending.

Looking towards the 2019/20 financial year, preliminary data from the Bellwether panel indicated a near-neutral stance on overall marketing spend for the coming budget period. The proportion of marketers anticipating increased marketing expenditure (27%) was only marginally higher than that for those predicting cuts (26%), yielding a net balance of just +0.8%.

However, drilling down into the individual budget plans for each Bellwether category revealed a fairly negative outlook. A number of marketers expressed concern towards the adverse impact of Brexit-driven economic and political uncertainty on both consumer and business confidence. In some cases, there was evidence that the potential for a more challenging corporate environment was set to restrict financial resources available to marketing executives.

Paul Bainsfair, Director General at the IPA, said: “In uncertain political and economic times such as these, the understandable reaction for some advertisers is to lose confidence in brand building advertising and to think short term even to the point of heavily discounting their products and services. We’ve seen this on and offline in the run up to Christmas – and now see the impact in black and white in this latest Bellwether Report. We know from the research we have done into what builds and what destroys brands – and it is proven – that too much short-term sales promotion activity destroys brand value in the long term. Marketers need to weather this turbulent period and think ahead. Now is the time to be bold, to keep up their share of voice and, if they can, increase it to grow their share of market. Businesses that rely on the strength of their brands need to follow the general 60:40 (brand building vs activation spend) rule of thumb.”

Joe Hayes, Economist at IHS Markit and author of the Bellwether Report, said: “The slowdown in marketing budget growth seen in recent quarters culminated in Q4, as the six-year bullrun came to an end. Company-wide indecisiveness restricted the allocation of resources to marketers, as the wait-and-see approach to how the Brexit process will transpire appears to be the current strategy in place for many UK businesses. “The neutral stance on marketing budgets came in tandem with a first pessimistic outlook by businesses towards their own companies’ financial prospects for the first time since 2012, suggesting that top-level belt-tightening and plans to protect margins has seen marketing executives be given less discretion. Indeed, provisional data for budgets for the coming 2019/20 financial year indicate that downbeat stance seems likely to persist.”

James Goddard, Chief Executive, JJ Marketing, said: “This early part of 2019 is inevitably a time when uncertainty reigns but it’s no good standing still and weeping into your spreadsheets. For one thing, there remain areas of optimism, including digital transformation and the opportunities provided by technology. And, it’s now more important than ever for agencies to be able to react quickly to change. In the coming 12 months, expecting the unexpected will be crucial. Therefore, we need to focus on being flexible and innovative. Add strategy, creativity and accountability on top and taking advantage of a changing landscape will be more achievable than you might expect.”

Tom George, CEO, GroupM and Chair of the IPA Media Futures Group, said: “By the time the latest Bellwether report is published, we will know the outcome of parliament’s vote on the government’s Brexit proposal. Whether this provides any further clarity on a resolution is highly doubtful however. What is clear is that uncertainty is not the friend of economic optimism and the latest Bellwether sentiment reflects this.

“Advertising is also not immune to uncertainty and this is highlighted by a net balance of -6.5% for main media (a scale of decline not seen since 2009) and a softening in the positive sentiment for internet, search & mobile of +2.1%. The good news for the sector is that all commentators still report growth in ad expenditure for 2019 on the back of 6% growth in 2018 – our own GroupM forecasts predicts growth to 4.6% for 2019. Of course, what plays out over the course of the next few months may supress this relative optimism. To continue on a ‘glass half full’ theme, even the most pessimistic estimates I’ve seen for the impact of a no-deal Brexit scenario, don’t approach anywhere near the levels of decline for we witnessed in 2009. Watch this space.’’

Patrick Reid, CEO EMEA, Imagination, said: “As the expectation for brands to create more imaginative experiences grows, the current climate highlights the need for clients to work with a creative partner who can deliver effective, efficient and agile creative solutions. With exciting developments in technology, collaborative ways of working and more rigorous measurement, you can produce powerful experiences which deliver meaningful results despite the constantly evolving landscape.”

Pete Robins, Managing Partner, Agenda21 and Chair of the IPA Digital Media Group, said: “For once in a very long time, overall market pressures have even dented the growth rate of internet reacted spends. However, also worth noting that the prominence of businesses looking to continue or advance their digital transformation, could mean that once these initiatives are sufficiently progressed that growth in connected media channels will be at the forefront of their plans once the uncertainty in the market has acerbated.”

James Pais, IPA Scotland Chair and Creative Services Director at Frame, said: “Last year I commented that the Q4 Bellwether report would make for some interesting reading. I was trying to be optimistic here.

“Alas the uncertainty of Brexit has generated grave concerns and a lack of confidence which as a result meant that the findings in this Bellwether report have a rather pessimistic and downbeat outlook. The predicted reaction for advertisers to reduce their adspend in the later part of 2018 is evident in this report and to misquote D:Ream, things don’t look like they’re going to get better. There is a rather negative outlook to budgeting in 2019/20 with still further concern towards the adverse impact of Brexit on the economy and the effect it will have on both consumer and business confidence.

“So again, the 2019 Q1 Bellwether report will make for some interesting reading, by then hopefully we will have some clarity as to our new relations with the EU. As an optimist I want to be encouraged by the Office for Budget Responsibility projection of a bounceback in business investment, and the Bellwether prediction of an upward revision to adspend forecast for 2019, but I guess we will see in a few months, right?”

Business leaders in the dark over marketing budgets and activity
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Thirty-seven per cent of business leaders admit they don’t know what they are spending their marketing budgets on, according to a survey of 1,021 UK workers.

The study, carried out by MarketingSignals.com, also revealed that more than 1 in 3 (35 per cent) said they are unsure as to whether the marketing budget has increased or decreased in the last financial year.

In addition, the research found that 21 per cent of business leaders don’t even know what audiences their marketing campaigns are targeting. A further 16 per cent confessed they are unsure as to which marketing channels they have used for this activity.

And nine per cent of business leaders surveyed said that they don’t know what marketing measurement techniques the company has employed.

Gareth Hoyle, managing director at MarketingSignals.com, said: “The research shows how business leaders are worryingly unaware of the marketing activity that is being carried out for their company. From the budget, the target audience to measurement methods, there are a number of marketing practices that business leaders aren’t up to speed on, which play a crucial role in the success of the business.

“Of course, those at the top often have a lack of time to study campaign activity in depth, but they are often the most well informed on the overall strategy of their business, making it an imperative that they understand the detail of their current marketing efforts.

“Ultimately, the bottom line of any business is to make money and marketing is an essential component of this process. Moreover, marketing can impact on a business in many different ways – from increasing sales, to growing the business and engaging customers. Therefore, it is extremely important that business leaders make more of a concerted effort to recognise what marketing activity the company is undertaking.”