Top marketing executives for U.S. firms are optimistic about their own revenue prospects, but not as confident about the overall U.S. economy. Their mixed outlook is reflected in marketing strategies focused on building and maintaining strong relationships with current customers while cautiously increasing marketing spending and hiring.
These are some of the results of the August 2010 CMO Survey, a nationwide poll of top marketers conducted twice annually by Duke University's Fuqua School of Business and the American Marketing Association. The survey of 574 chief marketing officers (CMOs) also explored the ever-growing importance of social media marketing and found strong trends in its use for business-to-customer (B2C) marketing.
While only 35 percent of marketers feel more optimistic about the overall U.S. economy than they did last quarter, 64 percent said they have become more optimistic about their own companies' current prospects. This optimism about their own companies is likely grounded in strong recent results, according to Christine Moorman, a professor and director of the survey.
"Overall, these firms' sales and profits were both up during the past six months, and their goals for the next year are even higher," Moorman said, noting that this is the first time in more than a year that firms have reported any increase in sales.
This optimism for their own companies is playing out in marketing spending, with companies planning to increase their marketing budgets by nine percent, compared to a one percent planned increase reported just a year ago. "This is a huge lift that reinforces that marketers think the economy is turning," Moorman said.
Companies are also devoting more resources to nurturing existing customer relationships, including spending on social media, brand building and integrating what they know about customers into their work. Thirty-two percent of firms expect to eliminate channel partners and other "middle man" relationships in order to maintain direct contact with customers while reducing costs.
Firms continue to emphasize social media, which is forecasted to grow from six percent to 18 percent of marketing budgets within five years. B2C companies are making the most significant investments in social media, while service companies plan to scale back growth in social media spending.
"Consumer goods companies like Unilever and Procter & Gamble have been very effective at connecting with customers through social media," Moorman said. "However, these results indicate that social media may be more difficult to apply in the service sector environment, where there isn't a tangible product for customers to relate to."
Across the board, firms are still working to tie social media marketing to actual sales reports. Most marketers said their firms use social media metrics that are not directly linked to sales, such as visits or page views (48 percent) and repeat visits (35 percent). Less than one third of companies use conversion tracking or customer-level revenue-related analytics to evaluate the effectiveness of social media efforts.
The current survey also included a special section on marketing metrics. Marketers reported that revenue metrics are the primary means of evaluating their efforts, with few linking marketing outcomes to critically important firm outcomes including customer retention (15 percent), profits (14 percent), brand value (11 percent), and stock market performance (two percent).
Marketers also reported a slowdown in planned hiring, from a 12 percent increase in hiring in February to four percent in August. The communications/media and healthcare/pharmaceutical sectors reported planned hiring growth of eight percent, the most significant increases across all sectors.
Detailed results, including tabular summaries of results and results by firm and industry characteristics, are available at www.cmosurvey.org.
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About the survey: The CMO Survey collects and disseminates the opinions of top marketers in order to predict the future of markets, track marketing excellence and improve the value of marketing in firms and in society. Founded in August 2008, the survey is administered twice each year, with questions repeated over time to discern trends. The next survey will be in February 2011.