Chief marketing officers at top firms are optimistic about the economy, expect to attract and retain more customers and for budgets to grow. But they remain unsure how increased investments in social media and marketing analytics — marketing's version of big data — will help them become more successful, a new survey finds.
These are just some of the findings of The CMO Survey, which received responses from 288 top marketing executives. The survey, started in August 2008, is conducted biannually and is the longest-running survey dedicated to understanding the field of marketing.
Companies expect their share of spending on marketing analytics — the creation and use of quantitative data about customer behavior — to almost double in the next three years, from 6.4 percent of marketing budgets to 11.7 percent. But companies are not using all the data they have and report lower than expected levels of contribution for this strategic investment.
"We observe that companies under-utilize the marketing analytics that they've requested and have available for decision-making," said Christine Moorman, a professor at Duke University's Fuqua School of Business and director of The CMO Survey. "So therefore it's not surprising that marketing leaders also rate the contribution of marketing analytics to their company's performance as decreasing as well. It's clear that using marketing analytics remains a distinct challenge for companies — beyond the production of these sophisticated data."
Spending on digital marketing is expected to increase by 14.7 percent, while marketers anticipate the amount spent on traditional advertising will fall by 1.1 percent. It's expected spending on mobile advertising, which currently takes up 3.2 percent of marketing budgets, will almost triple to a 9 percent share in the next three years.
Growth in social media spending is also expected to continue its sharp climb. Currently accounting for 9.9 percent of marketing budgets, it is expected to make up almost a quarter of spending — 22.4 percent — in the next five years.
But demonstrating the impact of that outlay on company performance remains difficult for most companies. Only 13 percent of marketers report they can measure it even though 61 percent said they feel pressure from CEOs and boards to do so.
"Integrating social media activities with the rest of the company's marketing strategy also remains a challenge," Moorman said, "with no improvement in this rating over time."
Though companies are using more data about customers to market to them online, marketing leaders did not express worry that the use of data would prompt customer concerns about privacy.
"One view of this low level of concern that marketers have is that they believe their use of data about customers is allowing them to give more value, whether that's lower prices or customized products and services," Moorman said. "The idea here is to use that information to facilitate the creation of customer value, and not to take unfair advantage of customers in the marketplace."
Marketers expressed the highest levels of optimism about the U.S. economy seen since the recession hit, with an average outlook 22.2 points higher than in February 2009. They expect to acquire and retain more customers, and to sell those customers more products and services.
"They also expect low prices to be less important than superior product quality, excellent service and a trusting relationship between the company and the customer," Moorman said.
This optimism means marketers are spending more. Marketing budgets are expected to grow by 8.7 percent in the next year, the sharpest growth since 2012. "Compare that to the 1/2 percent growth that they expected in February '09 and their confidence in markets is very clear," Moorman said.
Other findings include:
- The slow growth of hiring in the marketing sector is expected to continue, with a 3.5 percent growth in hires over the next year.
- Social media activities are increasingly being handled externally, with an increase of 1.5 points to 18.9 percent this year.
- The overall outsourcing of marketing activities also continues to increase, with a 4.4 percent increase expected.
- Marketing spending represents about 8 percent of company revenue and about 10 percent of overall budgets.
For deeper analysis of the results, including business-to-business and business-to-consumer breakdowns, visit cmosurvey.org.