Marketing Spend on the Rise – Three Trends Worth Watching

Results from The CMO Survey™ (August 2012) contain three indicators that marketing spend is on the rise in companies.

First and the weakest, CMOs reported that marketing spend is expected to grow by 6.4% in the next year. This number is positive, supporting my thesis, but the number is actually down from expected growth of 9.1% from August 2011. Given continued depressed firm growth and slow economic growth, this decrease is not altogether unexpected. It is positive nonetheless.

Second and more telling is the fact that marketing budgets as a percent of firm budgets increased 40% from 8.1% in February 2011 to 11.4% in August 2012. The Figure shows that this percentage has increased steadily over the last 18 months, pointing to the fact that companies are placing a greater emphasis on marketing spend relative to other types of strategic spend.

Figure. Marketing Budgets as a Percent of Firm Budgets

Third, marketing spending as a percent of firm revenues increased 30% from 8.5% in February 2012, the first time The CMO Survey™ asked the question, to 11% in August 2012.

Digging deeper into these three findings, several other observations jump out.

  • Business-to-consumer product companies show the biggest increases in expected growth in marketing budgets (8.6%) and marketing budgets as a percent of firm budgets (17.4%), but not marketing budget as a percent of firm revenues (9.8%) which is dominated by business-to-consumer services companies (16.1%).
  • The biggest companies (>$10B) and the smallest companies (<$25M) surveyed in The CMO Survey™ display the biggest gains: marketing budgets as a percent of firm budgets (>$10B = 11.9% and <$25M = 18.1%), and marketing budgets as a percent of firm revenues (>$10B = 13.1% and <$25M = 17.8%). This is not true for expected growth in marketing budgets for which $100-$499M companies dominate (10.9%).
  • Companies that have more than 10% of sales from the internet also spend more on marketing: expected growth in marketing budgets (7.9%), marketing budgets as a percent of firm budgets (16.4%), but not marketing budget as a percent of firm revenues (18.3%).

In my next blog, I will offer some reasons underlying these trends.

Post By Christine Moorman (63 Posts)

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  1. avatar Six Reasons Marketing Budgets are on the Rise

    [...] of overall firm budgets and as a percent of firm revenues are both on the rise as noted in my prior post. Why are firms spending more on marketing? Here are six reasons I see in The CMO Survey™ data and [...]

  2. avatar avatarMichael Gallo, President Valerisys Consulting

    Christine,

    Great stats. Do you have data to show whether the additional marketing spend is helping to GROW revenue and if so, how much percentage growth was achieved for this additional investment? Or, is this spending defensive to help businesses MAINTAIN current levels of sales?

  3. avatar avatarChristine Moorman

    Good question, Michael. Examining this question requires that I have a solid panel of firms that I can study over time. I’m working on that with the survey. In the mean time, I can examining this question cross-sectionally which I will do in a follow up blog (thanks to your question!)

  4. avatar Six Reasons Marketing Budgets are on the Rise | The CMO Survey

    [...] of overall firm budgets and as a percent of firm revenues are both on the rise as noted in my prior post. Why are firms spending more on marketing? Here are six reasons I see in The CMO Survey™ data and [...]

  5. avatar OrangeGerbera | Ready to Stop Wasting Money on Marketing?

    […] sounds like a pretty good idea, right? Especially when we spend so much on marketing in the first […]

  6. avatar OrangeGerbera | Raedy to Stop Wasting Money on Marketing?

    […] sounds like a pretty good idea, right? Especially when we spend so much on marketing in the first […]

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