November 21st, 2013
Two-thirds of all top marketers feel pressure from their CEO or Board to prove the value of marketing according to August 2013 results from The CMO Survey. Of those, 60% describe that pressure as increasing. These numbers are consistent with the fact that most CMOs continue to find proving the value of marketing elusive. Survey results indicate that only 36% of top marketers report being able to prove the value of marketing quantitatively in the short-run and 31% in the long-run. Demonstrations of the value of social media are even more elusive with only 15% able to offer quantitative evidence for the value of social media spending.
A key question that needs to be asked is whether pressure on CMOs to prove the value of marketing helps or hurts company performance. These are reasonably good arguments on both sides. On the positive side, increasing pressure might make marketers work harder. On the negative side, increasing pressure could make marketers focus on strategies that are easily measured or that only provide short-term boosts so that proof is in hand when the CEO or board comes knocking. This means that instead of designing and selecting strategies that are optimal for company goals, strategies are selected to help marketers defend their spending decisions.
September 4th, 2013
Companies are spending big dollars on big data. Approximately 5.5% of marketing budgets currently are spent on marketing analytics and this is expected to increase to 8.7% in the next three years as reported in The CMO Survey. Expectations are running high and many companies are trying to figure out how to crack the code to generate good strategic insight from the data.
I’m in favor of the trend to capture and use data to drive decisions. However, that is where the problem lies. As the stash of data grows, companies are using a smaller percentage of it. I first asked the question, “In what percent of projects does your company use available or requested marketing analytics before a decision made” in February 2012 and the result was 37%, which I thought was the bottom. However, when asked that same question in August 2013, the percentage dropped to 29%. Figure 1 shows the continuous decline over the last 18 months.
Figure 1. Percent of Projects Using Requested or Available Marketing Analytics
This finding is not completely unexpected, however. Reviewing the thirty-year history of research on this topic, usage rates have always been low for many types of marketing information—marketing research, advertising research, and, now, social media research. This marketing analytics utilization gap is a challenge to big data’s contribution to the bottom line.
October 19th, 2012
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.
July 13th, 2012
Apple was voted the overall winner of the 2012 CMO Survey Award for Marketing Excellence… yet again. Apple has been selected as the winner or co-winner for five consecutive years by the sample of top marketers. So why is Apple a great marketer?
When Apple, Inc. (then Apple Computer, Inc.) incorporated in January 1977, its investor/advisor, Mike Markkula, assembled a 3-point marketing philosophy. Amazingly, thirty-five years later, this philosophy remains at the core of what makes Apple so effective at creating and profiting from loyal customers. This, in my view, is the definition of a strong marketing capability. Here are Apple’s original three points:
- Empathy – We will truly understand their [customer] needs better than any other company.
- Focus – In order to do a good job of the things we decide to do, we must eliminate all of the unimportant opportunities.
- Impute – People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.
Apple has used these principles to become the world’s most valuable company (measured by market capitalization) and one of world’s most valuable brands. Here are ten strategies Apple has used to become one of the world’s greatest marketers:
May 25th, 2012
“What gets measured, gets managed” is a well-known management maxim. However, for marketing analytics, results from The CMO Survey suggest a slight twist on this adage to “what gets evaluated, gets used” (see cmosurvey.org/results/ for a complete set of reports).
To look into this topic, I asked top marketers two questions. The first was “In what percent of your projects does your company use available or requested market analytics* before a decision is made?” The average score was 37.2% of the time. The more important point is that 62.8% of the time managers are not using marketing analytics that are available or that have been requested!
To understand how the use of marketing analytics is related to the quality of marketing analytics, we could ask managers to rate the quality of marketing analytics and examine whether this is correlated with use of marketing analytics. However, if most managers are not using marketing analytics, measuring quality impressions is problematic—specifically, we would only be examining users of marketing analytics, which is not a representative view of what all potential users think about the quality of marketing analytics.
Given this, I took a different approach and asked top marketers to answer a second question, “Does your company formally evaluate the quality of marketing analytics?” 67% of top marketers answered “no.” To examine the relationship between the evaluation and use of marketing analytics, I calculated the mean marketing analytics’ usage level for companies that do and do not evaluate marketing analytics. As shown in the Figure 1, this difference is substantial, with marketing analytics used only 32% of time in companies that do not evaluate marketing analytics and rising to 49% of the time in companies that do evaluate marketing analytics. This difference is also statistically significant. There is no way, of course, to determine the causality of these two indicators—greater use is likely to affect the propensity to evaluate marketing analytics and greater evaluation of marketing analytics is likely to improve its use. Regardless, what gets evaluated, gets used.
May 19th, 2012
I recently reported that The CMO Survey found companies expect to increase the marketing analytics portion of their marketing budgets by 60% from 5.7% to 9.1% in the next three years. This is a monumental increase especially given that marketing budgets overall have grown only 8.3% over the last two years. While impressive, the true mark of whether marketing analytics is going live up to its expected role as a critical strategic asset cannot be measured by spending. Instead, we have to consider how marketing analytics affects what managers do and think and how well they perform.
To gauge this impact, the February 2012 CMO Survey asked top marketers to answer this question: “In what percent of your projects does your company use available or requested market analytics before a decision is made?” The average score was 37.2% (95% confidence interval: 31.5%-43%). This means that 62.8% of the time, managers are not using marketing analytics! By this measure, marketing analytics must do more. If not, its funders will place bets on other strategic weapons they believe will allow the company to serve customers better and to pull ahead of competitors.
Company Use of Marketing Analytics in Decision Making