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A Review of "8 Top Findings in Gartner CMO Spend Survey 2018-2019"

By Dan McDade

Contributor: Chris Pemberton

This year’s Gartner CMO Spend Survey polled over 600 cross-industry marketing leaders in North America and the U.K. “to help companies benchmark the spend and prioritize activities by better understanding marketing priorities and budget allocations.” It is no surprise that the following are on Gartner’s list for “key trends in marketing leaders’ budget and attention for 2019: Marketing technology, customer experience and innovation and personalization.”

Here are the eight top findings from the 2018-19 survey and my comments:

No. 1: Marketing budgets remain steady despite uncertain times ahead

Gartner: “Marketing budgets in 2018-19 are 11.2% of company revenue, nearly unchanged from last year. CMOs are optimistic that future budgets will grow, with nearly two-thirds (63%) expecting their budgets to increase in 2019.”

Dan: The article informs us that marketing budgets have dropped two years in a row (albeit marginally in 2019). In my opinion the push for accountability (measuring how marketing spend leads to revenue) will reduce marketing spend in 2019 and 2020. In all but the largest companies spend on difficult to account for “brand advertising” will shrink. More about brand spend later in this blog.

No. 2: Nearly 1/3 of CMO budgets are allocated to marketing technology

Gartner: “Marketing technology (martech) budgets continue their march forward with no signs of slowing. Up from 22% of the budget in 2017, technology now accounts for a whopping 29% of the total marketing expense budget, making martech the single largest area of investment when it comes to marketing resources and programs. Email marketing platforms, web content management and digital marketing analytics platforms top the CMO’s martech shopping list.”

Dan: The article goes on to warn readers that failing to have a roadmap for integrating applications, marketing and customer data will lead to costly mistakes. I rarely talk to anyone who hasn’t made costly mistakes. Example: using automation to scale a bad process happens all the time. That is one of the reasons why I started Prospect-Experience. Today it is not about doing things better. It is about doing things differently. For example, can a company continue to invest in marketing programs when there is no agreement on the definition of a lead. If leads are defined by a prospect’s score in marketing automation there is going to be wasted marketing spend. Sales reps will follow-up on the first few high scoring so-called leads, get discouraged and future leads will end up in the black hole called CRM. I hear from companies using a perfect cadence all week. However, what they are trying to sell me is what I sell. Using martech to automate bad processes just costs a lot more money.

No. 3: Advertising dominates the CMO’s multichannel budget

Gartner: “In this year’s survey, CMOs reported that they spend, on average, over 21% of their marketing budgets on advertising. CMOs also spend more on digital advertising than on offline advertising, with two-thirds of their advertising budgets invested in paid digital channels, including search advertising.”

Dan: This, according to Gartner, is “despite ongoing concerns over trust, transparency and the effectiveness of digital advertising, CMOs are still willing to invest a significant portion of their budget in paid digital media to boost revenue and prove marketing’s worth within the enterprise. CMOs are turning to digital advertising to increase brand awareness and drive new business.” However, while the claim is that digital marketing is easier to measure, the game is complicated by attribution rules AND the willingness of sales to accurately work and rate opportunities.

No. 4: Digital workhorses account for 25% of marketing investments

Gartner: “One-quarter of the average marketing expense budget is invested in: Paid search, Organic search, Website and Email. Marketers continue to invest in these tactics because they still work. And digital channels are easy to measure during a time when it’s critical to calculate marketing ROI. Additionally, organizations often face little challenge sourcing in-house talent and skills to fuel these marketing initiatives within their organization. Marketers face challenges proving the value of newer marketing techniques. For example, it’s difficult to demonstrate the economic impact influencers have on ROI. Contrast this with organic search (SEO), where measurability is cited as the No. 1 reason for channel selection.”

Dan: From everything I hear, digital channels are unreliable and not easy to measure. Sure, it is easy to measure the number of leads generated by a digital program, but what about the back-end? How many of the leads were with real buyers? How many of the leads were qualified? How many closed? Most of the time nobody knows the answer to these questions. I also feel that results in companies selling a more strategic B2B solution are very different than commodity B2B or B2C. Unfortunately, these disparate groups are frequently lumped together for analysis. Marketers are forever looking for a black box solution and the so-called digital transformation going on is replacing tried and true, successful marketing such as multi-touch, multi-media and multi-cycle campaigns (or carefully constructed cadences) that balance inbound spend with an appropriate amount of outbound spend. In other words, an all-bound approach.

No. 5: 1 in 6 marketing dollars spent on innovation

Gartner: “Over 9% of CMOs feel that marketing innovation will be vital to the delivery of their company’s marketing strategy over the next 18 months. As marketers adapt to a barrage of changes in consumer behaviors, technologies and environmental conditions, innovation spending plays a key role in many budgets. Sixty-three percent of CMOs expect their innovation budgets to increase in 2019. While still relying on core channels and tactics to deliver results, marketing leaders embrace new channels, models and methods to remain competitive.”

Dan: I think this Gartner finding is fascinating. After they state how important innovation is, they go on to say: “Marketers’ innovation intent isn’t matched by their innovation capabilities.” Gartner substantiates the gap as follows: “On a scale of 1 to 5, marketing leaders surveyed in the Gartner Marketing Maturity Assessment scored themselves an average of 2.2 for their innovation maturity. Yet marketers noted that they wish to achieve a 4.3 maturity rating, indicating a significant innovation capability gap. It’s not surprising that CMOs are spending on innovation to fill this gap.” Then, finally a voice of reason: “Be mindful of the risks in this innovation arms race,” says Anna Maria Virzi, principal analyst and CMO Spend Survey co-author. “You risk siphoning off precious marketing investments for poorly defined projects with a loose scope and looser success criteria.”

No. 6: CMOs prioritize customer experience and customer analytics but risk overlooking acquisition and retention

Gartner: “CMOs continue to focus on CX, which is listed as one of the top three capabilities in this year’s survey, and one they consider to be vital to their marketing strategies in the coming 18 months. They estimate that 18% of their overall marketing budgets are allocated to CX initiatives.”

“Despite the focus on CX, capabilities around customer retention and growth have lost some ground, falling behind others such as marketing technology, digital business transformation and innovation. And customer acquisition fares even worse, cited only by 16% of CMOs as a top three capability.”

Dan: What about the poor prospect? Are they treated well? They are contacted by pushy appointment setters, read ineffective scripts by inexperienced telemarketers and barraged by email. Yet companies expect to convert the prospects to valuable customers (so they can shower the customers with customer experiences). Come on. It is high time to focus some love on the prospects. Invest in the top prospects. Slowly but steadily narrow your focus. Get to know the prospects. Speak to them like they are as important as they are. You can only work on the customer experience when you convert prospects to customers. 

No. 7: CMOs value awareness more than ROI and market share

Gartner: “CMOs have a shared understanding of the metrics that demonstrate marketing’s value to the enterprise, such as revenue, profitability and market share. But are they measuring what matters? The 2018-19 Spend Survey indicates that many CMOs still gravitate toward metrics that have little meaning outside the marketing organization. When asked to define the most important metrics on their marketing dashboard, CMOs cited ‘awareness’ as the most important, beating ROI and measures of customer value and customer satisfaction.”

Dan: I am not surprised by this one. This gets back to the age old problem: “the leads suck” (sales report on marketing) and “sales doesn’t follow-up on the leads” (marketing’s report on sales). Read this blog for a fix I call “The Judicial Branch.” One of the reasons leads don’t get followed up effectively, according to Mike Weinberg, author of New Sales Simplified and Sales Management Simplified is because there is a lack of persistence and quality in the follow-up. Mike states: “The harsh reality is that almost no one returns a first message or email from a salesperson. Truly, almost no one. Even ‘warm’ leads typically require multiple attempts to earn a reply or call back. So, it’s foolish to pretend people aren’t interested or that you’re doing something wrong when your first, or even second, contact attempt doesn’t produce a response. And it’s also a waste of energy to whine and complain about repeatedly getting someone’s voicemail. Instead of whining, try preparing. Instead of dreading your repeated follow-up attempts, look forward to them. Be ready with a series of touches, each one a bit unique. The keys to earning the call back or reply are creativity and perseverance. Drip little value nuggets with pieces of your 'sales story' as you go. Be creative; be interesting. And most importantly, be persistent.”

The reason CMOs focus on awareness is because it is a result that, while difficult to measure, is easier to defend. They don’t have to depend on sales to substantiate whether or not awareness has been attained and whether or not that awareness has value.

No. 8: Personalization prevails, and its meaning varies widely

Gartner: “This year’s Spend Survey found investments in personalization to be nearly universal. Personalization has emerged as a strategically important marketing capability, given the increased focus on customer experience and the fight for customer attention. Overall, CMOs spend an average of 14.2% of their budget on personalization efforts, with double-digit percentage averages across all industries and business models. Marketers investing in personalization should proceed with caution, however, because spend doesn’t guarantee success.”

Dan: Because personalization is so hot everyone is doing it—or at least saying they are. But how many of you have been the victim of bad and/or creepy personalization? I believe that the Zeitgeist around personalization over-hypes its use. In the complex sales part of the B2B world, you may never get enough information to provide quality personalization. Per Gartner: “Given the larger cultural conversations and trends around privacy and trust, marketers must tread lightly in their personalization efforts to appease both consumers and regulators.”

Summary

It worries me that marketers are focused more on martech, “digital workhorses,” personalization and technology and not focused on ROI. Bridging the expensive gap between marketing and sales is doable, but you can’t leave it up to marketing and sales to do it. If they could have done it, they would have done it by now. Get the CEO, CFO and COO involved. What is more important than increasing revenue and lowering costs? Check out Prospect-Experience for 12 ways to transform your marketing and improve results.  

We now know what marketers are thinking for 2019. We also know that the game will change and that there will be a hot new solution (AI, Surge & Intent, more CX) that will replace everything we worked on in 2019. Half implemented tech (as an example) will be supplemented or replaced by new tech.  

I hope you will email me or call me (770-262-9021) if you have questions (or answers). Thank you.

Nancy Joyce