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9 Ways Marketers Are Driving Growth In 2019

Apr 19, 2019 |

The February 2019 CMO Survey finds CMOs preoccupied with the same imperative: growth.  When asked for their top challenge in 2019, 37.9% of marketing leaders ranked growth as their #1 challenge and another 28.9% of marketers ranked it as either #2 or #3. This challenge holds regardless of company size, sector, or industry among the 323 marketing leaders completing the survey. We suspect looming economic uncertainty, increased competition, and the opportunities/threats associated with digital transformation lie at the heart of this challenge.

Here are 9 strategies CMOs reported using to meet the growth challenge and opportunity.

  1. Marketing penetration remains a top priority for CMOs.

Marketing leaders reported how their growth dollars were allocated among four key areas over the last year: market penetration, product/service development, market development, and diversification (shown in the Product-Market Growth Matrix below).

Marketers reported that their #1 source of growth spending is to build existing markets and offerings. Marketers spent on average 55.1% of their growth budgets on market penetration, 21.8% on product/service development, 13.5% on market development, and only 9.6% on diversification.

Over time, marketers appear to be shifting away from new product/service development toward existing market penetration, with the percentage spend on penetration reaching a two-year peak. This finding exists across industries, with B2C services companies focusing most intently on market penetration for growth, spending on average 70.8% of their budgets on this goal.

This shift inward could signal that marketers are “hunkering down” on the tried-and-true strategy of deepening existing markets to prepare for an expected economic downturn. Economic optimism among U.S. marketing leaders has fallen to its lowest level in seven years. On a scale of 1 to 100, with 100 being the most optimistic, CMOs ranked their optimism on average at 57.0, a 21% drop from the 68.9 score we reported one year ago.

  1. CMOs renew focus on domestic markets, rather than reaching internationally.

In addition to focusing on existing product offerings, CMOs report they are spending the majority of their budgets on domestic marketing (87%) rather than international marketing.  CMOs have grown domestic spending nearly 10% since our 2012 survey, signaling a lower tolerance for the business risk of expanding into international markets.

While large brands have poured billions into developing international markets, they also have faced some significant headwinds, including new government regulations aimed at protecting domestic competitors, copycat brands, and negative consumer sentiment around brand missteps. Thus, many companies seem to be adjusting their priorities based upon expectations of a slower-growth future.

There are some industries bucking this trend, including mining/construction, consumer packaged goods, and transportation. When companies do focus internationally, they look primarily towards Western Europe and China for growth. Some 34.8% report Western Europe as their largest international market in terms of sales. Additionally, when asked where they see the biggest international opportunity for the future, 21.5% said China and 14.5% said Western Europe.

  1. Marketers play the long game by investing in capabilities.

Marketers are building their marketing capabilities internally to help boost growth. Bolstered by digital technologies, teams will be expected to do more with less in the event of a downturn and will likely insource a wider range of marketing responsibilities currently given to agencies and other partners. Marketers reported that they are spending 10.4% more this year on developing marketing capabilities compared to other marketing knowledge investments (marketing consulting +8.7%, marketing research +7.7%, and marketing training +3.4%). Additionally, when rating the quality of their own marketing knowledge resources, CMOs rated marketing capabilities as their best asset.

  1. Marketers rely on strategic partnerships to fuel growth.

Marketers reported that they are going to market via channel partners 74% of the time, up from 55.4% two years ago. That trend is likely a response to the market’s demand for speed. Companies simply don’t have the time to build the technology infrastructures, full sets of products and services, market entrance strategies, and brand recognition they did even a decade ago. Teaming with channel partners gives marketers a broader toolkit and brand recognition to tackle the growth challenge.

For example, in financial services, leading banks are teaming with fintech providers to gain access to end-to-end services, such as payment and credit, that they can integrate into their own. Bank leaders realize they must buy, not build, to meet consumers’ demands for personalization, a full suite of services, and fast lending decisions.

Similarly, brands are partnering with managed service providers (MSPs) across multiple industries to meet customer demands for service business models, analytics to optimize processes, and a desire to offload non-core operations.

  1. Marketers are investing in their brands.

Spending on brand outpaces all other marketing spend and shows the most growth of any marketing spend category. These investments have more than doubled over the past five years (from 4.3% growth in 2014 to 9.3% in 2019).

This finding likely indicates that marketers realize they have to compete harder than ever to acquire and retain fickle customers. Customers are no longer content to buy products on auto-pilot from favored brands. Instead, they are driven by a myriad of factors, including deal-seeking, personalization, and convenience. In the grocery and retail industry, private brands, discounters, and niche products have all eaten into leaders’ market share.

Brands that create stronger connections with customers and differentiate themselves in the market can protect themselves from these pressures. That’s likely the strong impetus for the increased brand spending we see in the most recent CMO Survey.

  1. CMOs look to training to maintain a growth edge.

Marketing spend on training and development reaches the highest level in five years. Almost 5% of marketing budgets are now devoted to training and development.

CMOs recognize that today’s digital skills are the next decade’s legacy processes, which is why they are demanding that teams continuously update their skills. Further, in a tight labor market, marketers will need to tool up teams as hiring the best and the brightest will be increasingly challenging.

  1. CMOs view social media as a tool to accomplish strategic objectives.

Social media has evolved from an untried customer engagement tool to a key strategic growth weapon. The CMO Survey finds that 88.2% of companies use social media to build brand awareness, 60.1% use it to acquire new customers, and 64.7% use it to introduce new products and services. The most recent survey finds that this commitment has doubled from what we reported just one year ago, indicating that social media is now on everyone’s watch list in the C-Suite.

  1. Marketers rely on marketing analytics to drive decision making.

Marketers reported they use marketing analytics in making 43.5% of marketing decisions, the highest reported number in six years. This finding could indicate that marketers are developing greater competency—and confidence—in their data insights. It could also indicate that marketers are seeking to reduce risk as a possible recession looms.

  1. CMOs lean on AI to get closer to customers.

Some 56.5% of marketers report utilizing artificial intelligence (AI) technologies to generate customer insights using predictive analytics and to personalize content for greater engagement and sales. Over 40% also use AI to segment and target customers. AI has been widely heralded as a tool to fuel deeper engagement, deliver better service, and get smarter across interactions. While we are in the early days of the AI revolution, the coming years will bring interesting advances in customer targeting—while also creating ethical dilemmas marketers will need to navigate.

We hope you’ve enjoyed reading about the 9 ways CMOs are fueling growth in the digital economy.  For a deeper dive, read the February-2019 CMO Survey.

The CMO Survey has been conducted biannually since August 2008, and is sponsored by the American Marketing Association, Deloitte and Duke University’s Fuqua School of Business. It is the longest-running survey dedicated to understanding the field of marketing. The latest edition, conducted from January 8-29, received responses from 323 top marketing executives.

Learn more about CMO expectations for 2019 and sign up to participate in the next survey.

*Lauren Kirby and Holly Larson contributed to this post.