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Mo' Money, Mo' Problems: CMO Marketing Spend to Increase in 2016

Where are you spending your valuable Marketing budget in 2016?

Social media? Digital commerce? Marketing analytics?

Not surprisingly, these areas are among the top 5 CMO priorities along with customer experience and advertising operations, according to a recent Gartner CMO Spend Report.

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Gartner surveyed over 330 organizations with revenue greater than $500 million USD – and an average revenue around $4.8 billion USD. The report collects valuable insights from business leaders of successful organizations about strategies, activities, and budgets.

According to the report, CMO budgets are increasing, the line between online and offline marketing is blurring, and digital commerce has become critical for sustainable growth. 

The merger of online and offline marketing

As eMarketer stated, “More and more marketers see the different channels as supplementing each other for a well-rounded campaign.” Integrating traditional marketing and online technology exploits the unique advantages that each approach offers and makes all channels more successful.

According to the Gartner CMO Spend report, 98% of marketers agree that offline and online marketing are merging. However, only one-third of marketers say digital techniques are fully incorporated into their marketing operation, showing a clear gap and a great opportunity to combine traditional and digital marketing as a unique strategy that generates the highest ROI.

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Digital Commerce is king

As online and offline blur, marketing and sales must also integrate as a closed loop discipline, being responsible to attract, convert, close, and delight customers.

In this context, digital commerce is surging as a critical piece of a sustainable growth. In fact, it is the highest area of budget increase compared to last year, and accounts for 11% of the digital marketing budget.

Companies are investing heavily and using digital commerce initiatives as a direct bridge to communicate with their end customers.

Increased Expectations, Budget, and Accountability

Looking for better results and profitable growth, senior management has increased their expectations when it comes to digital commerce, innovation, converting leads to sales, and improvements in customer retention over the previous year.

These growing expectations of marketing’s responsibility require larger budgets. Marketing spend now accounts for 11% of corporate revenue, an increase of 1% compared to last year. For a company with $2 billion in revenue, it means an additional $20 million to their marketing budget. Moreover, 2 out of 3 marketers expect their budgets will continue to grow in 2016.

Not only has the budget increased but also accountability for results.  Most of marketers own or share P&L responsibility. Optimizing media spend is key for a successful marketing plan, and Marketing Spend Effectiveness is more critical than ever.

Here’s a roadmap to help you understand and measure the impact of campaign spending on growth and profitability:

  • Identify specific market drivers that create a sales lift by product or service
  • Measure the sales to investment ratios for each marketing medium
  • Test different marketing spend allocation scenarios (by media type and market) to determine the biggest impact on sales and revenue

To get a complete overview of how organizations are budgeting today and what they’re projecting for 2016, check out the complete Gartner CMO spending report.

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