The CMO Survey Blog

Mobile Spending to Increase 160% Despite Performance Questions

Marketing leaders report their companies currently spend 6% of marketing budgets on mobile marketing and that this investment level is expected to increase to 15.6% over the next three years. The CMO Survey reports this increase in newly released results from 255 marketing leaders.

This whopping 160% increase reflects a growing reliance on mobile to interact with customers where they look for information and make purchases. On top of it, companies hope to reach customers closer to the time of purchase in order to make them aware of offerings, deals, and additional information that may help close more sales.

Despite these hopes, marketing leaders report only modest success in the impact of mobile marketing activities. When asked to rate the performance of their company’s mobile marketing activities on a scale from 1-7 where 1=poorly and 7=excellent, Figure 1 shows the current gap with only customer engagement breaching the halfway mark, while delivering your brand message, customer acquisition, customer retention, sales, and profits all falling below average.

Figure 1. How Mobile Marketing Performs (7-point scale where 1=poor, 7=excellent)
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Examining different sectors, Table 1 shows, on average, B2C companies outperform their B2B counterparts in getting returns from mobile. However, at the same time, no sector has any real advantages.

Table 1. Sector Performance on Mobile Marketing

The CMO Survey did not ask how marketing leaders plan to invest the huge increase in mobile spending over the next three years, but it is clear that allocating a large portion of it toward understanding and managing the impact of mobile is essential. As with other aspects of business, it is not the size of your budget that matters, but how you manage the investment to create and leverage critical customer, brand, and financial outcomes. Among the most important steps are fundamentals of marketing strategy, including selecting your target customer, developing and communicating a benefit that meets customers across all aspects of your marketing, including mobile, and then figuring how to reach and engage customers at the right time and in the most effective ways. Importantly, marketing leaders should not forget that poor mobile marketing can harm your brand and your relationships with customers.

Who Has the Biggest Marketing Budgets?

Marketing budgets are rebounding. They are expected to increase 6.7% in the next twelve months according to the February 2014 edition of The CMO Survey. This is a sizable increase over projected increases of 4.3% in August 2013 and a massive boost over the 0.5% increase reported in February 2009. Bounce!

To put these figures in perspective, The CMO Survey reports that marketing budgets represent approximately 10.9% of overall firm budgets. These figures have hovered around this average since this question was first asked in February 2011. On the other hand, marketing budgets as a percent of firm revenues improved to 9.3% from 7.9% in 2013 indicating that marketing budget growth outpaced revenue growth. One question that survey users often ask about these figures is whether or not they include salaries for marketing employees. Analysis indicates that these marketing spend estimates include both employee and non-employee investments in marketing.

I examined all three marketing spending metrics across several firm and industry characteristics. These are summarized in Tables 1-3. As shown in Table 1 across these three indicators, B2C-Product companies have the largest marketing budgets (as a percent of budgets and revenues) and the largest expected growth in marketing budgets across the four economic sectors. I expected a large increase over the B2B companies which may be reaching customers with their own or their channel’s salesforce. However, I did not expect to find B2C-Product companies also dominating B2C-Service companies by 20-30% differences. Would love to hear from marketing leaders in this sector about this differential.

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In Search of Marketing Excellence: Ten Differences Between High-Performing and Low-Performing Companies

Marketing excellence—marketing leaders strive to attain it and marketing professors try to dissect it. For the first time, The CMO Survey-August 2012 asked top marketers “How would you rate your company’s marketing excellence?” on a 7-point scale where 7=one of the best in the world, 6=a leader but not one of the best, 5=strong, 4=good, 3=fair, 2=weak, 1=very weak. The mean score was 4.4 (standard deviation=1.4). Figure 1 contains the full distribution of responses.

Figure 1. Marketing Excellence Ratings in Companies

Over time, The CMO Survey will develop a longitudinal database and provide more definitive answers to the questions surrounding marketing excellence. However, using only the August 2012 data, I can share some of the performance, spending, strategy, leadership, and organizational choices/outcomes that are and are not correlated with marketing excellence.

To generate these insights, I classified companies participating in The CMO Survey according to whether they performed above or below the mean on the marketing excellence question. The high-performing group (n=184 firms) has a mean marketing excellence score of 5.52 (s.d.=0.66) and the low-performing group (n=170 firms) has a mean marketing excellence score of 3.22 (s.d.=0.88).
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Investing in Marketing Knowledge

The CMO Survey tracks investments companies make in different kinds of marketing knowledge.  In the August 2011 survey, companies reported the following average investments: marketing training (+3.1%), marketing consulting (+3.5%), integrating what we know about marketing (+6.0%), market research and intelligence (+6.2%), and developing knowledge about how to do marketing (+6.4%).  (more…)

Who Outsources Marketing?

There are good reasons to outsource marketing and many companies choose to do so. Let’s look at more CMO Survey results to get a sense of what types of firms are outsourcing marketing and what financial and strategic conditions appear to give rise to outsourcing. (more…)