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.