CMOs are implementing significant shifts in where and how they allocate marketing spend.
In the ‘Customer in Control’ marketing age, marketers are experiencing a renaissance within their discipline. It is already disrupting how marketing operates and is re-writing the rules for the future.
To understand how marketing is evolving, The CMO Club in partnership with IBM surveyed 100 Chief Marketing Officers (CMOs). Then, we sat down with eight respected marketing executives to get their perspectives on the research, the marketplace and the implications.
Two notable trends we gathered from 100 CMOs:
1. CMOs are pivoting their marketing to include customer retention/advocacy while concurrently allocating investment across the entire customer journey, not by channel. Traditionally, marketing has been focused on awareness – reach and frequency, staying on message, and stuffing the top of the purchase funnel. However, the research revealed that today’s CMO is much more focused on investing across the entire customer journey from discover to advocacy – with an understanding that journeys have changed dramatically. Overall, marketing budgets were reported up, due to either strategic funds or strong organic increases, but so are expectations. Furthermore, CMOs are planning to increase their spending across every stage of the buyer journey over the next two years by an average of 50 percent.
2. Marketers are constantly testing, failing, winning and innovating with their digital multitaskers. As they are doing this, they are less interested in uni-directional tactics (e.g., television, print) and prefer multitasking digital tactics. Digital is rapidly gaining favor as marketers engage in closer dialogue with their customers across the buyer journey.
The main reason for this is both practical and strategic in nature. CMOs want to engage where their customers are – and that is increasing disproportionately into digital realms. The fact that digital channels are multitasking (addressing the buyer at different stages of their journey) and offering rapid feedback is allowing for more agile and nimble experimentation to test different approaches.
What follows are four key takeaways CMOs can apply to their own marketing strategies.
Four key takeaways from the CMO Study:
1. Understand that we’re in a Marketing Renaissance
Spencer Stuart reports that average CMO tenure is at 48 months – double where it was in 2004. As the recruiting and consulting firm has stated, “CMOs’ ability to leverage digital and analytics to create value for the business has been a factor in longer tenure. The ability to create measurably successful marketing initiatives built on customer insight has increased CMOs’ credibility in the C-suite.”
Accordingly, marketing budgets are rising. Our research found that 57% of respondents indicated their budgets would increase over the next 2-3 years. Duke University’s CMO Survey also reported in February 2015 that marketing budgets were expected to rise at their highest percentage (8.7%) in the next year.
Respondents indicated that their annual budgets may only be slightly increasing, however the ability to show quantifiable return on investment (ROI) is enabling access to strategic and innovation budgets that weren’t previously accessible.
And where are they investing their increasing marketing dollars? Content marketing. The CMO respondents reported that content (13%) is leading the charge. That is followed by digital advertising (11%), traditional advertising (11%), and even those analog, physical activities (11%) remain important.
2. Invest across the experience, not the funnel
Unlike their traditional counterparts, marketers in this new age of marketing are increasingly focused on the entire buyer journey. Our research shows that on average, marketing budgets are being invested evenly across the buyer journey, with the highest investment at the Buy stage (21%), followed by Discover (20%), Learn (16%), Try (16%), with Advocate (14%) and Use (13%) rounding it out.
What’s interesting is that marketers are planning to spend even more on the buyer journey, with CMOs planning to increase spending in each stage by an average of 50%. Furthermore, many CMOs identified a significant change in their buyers’ journey due to the digital disruption of the last 10 years. In short, the customer now dictates the journey, with or without you.
3. Bet on every horse in the race
Marketers are testing the waters by experimenting across tactics and buyer stages. In a sense, they are initially putting bets on every horse at the start of the race, but leveraging agile approaches to reallocate resources to the leading “horses” mid-race and increasing their chance to win the day.
What’s behind this experimental approach to budgeting? Fifty-three percent said that the main reason for experimenting with different allocations across they buyer cycle is due to the imperative to generate higher revenue. And 20% say that they are experimenting with different allocations because better data and technology allows them to measure the success (and failure) of each experimentation, so they can quickly identify winning approaches and pivot away from less-than-effective ones.
4. Learn from the rise of the digital multitaskers
CMOs clearly indicated in the survey that they are growing less interested in uni-directional tactics (e.g., television, print), but prefer multitasking using digital methods. Our research strongly shows this shifting interest with a 52% traditional and 48% digital spending split.
Digital is clearly king as marketers endeavor to get into closer dialogue with their customers across the buyer journey. The main reason for this is practical in nature, CMOs want to be where their customers are – and that is increasing disproportionately into digital realms.
Regardless, the rise of the digital multitasker is here. CMOs consistently rank social, website, email, digital and apps as their preferred tactics within each buyer stage. By investing in digital channels, CMOs are able to hedge their investments and deploy tactics across multiple buyer stages at the same time.
The fact that digital channels are multitasking (addressing the buyer at different stages of their journey) may have been a fortunate accident rather than an intentional investment. However, this approach allows for more agile and nimble experimentation to test different tactics. ROI attribution is a secondary bonus.
Peer advice: Practical how-to’s
Today: Evaluate your understanding of the buyer journey and how you create an experience. Don’t assume your buyer’s journey has not changed in the last few years as many CMOs are discovering shifts or even complete flips where they engage with the customer. Remember the customer does not care about your org chart and are engaging outside of the marketing department (e.g., sales, customer service, your other customers).
Tomorrow: Challenge your mental models of marketing and how/where you engage with your customer’s buyer journey. Evaluate who you will need to partner with in your organisation to deliver a better customer experience. Traditional media is not dead but the measurement and adaptability of digital channels means we need to evaluate where digital or a hybrid digital/traditional approach will create a better experience.
Next month: Run, don’t walk. Longer CMO tenures, access to strategic budgets, and newly quantifiable marketing plans are enabling you to transform your organisation and quickly show impact. Don’t forget the content needed to fuel the machine, but evaluate if you are encouraging more or precise content.
Next quarter: Make experimenting (and failing) systemic and part of your culture. It will not happen overnight. Actions including allocating a set percentage of your budget for edgy, untested ideas and enabling the team to become domain experts in new channels will support experimentation without reprisal if it goes sideways. Place multiple bets before the race, but measure and agilely move your bets mid-race, not after the season is over.
This article was first published on IBM