February 28th, 2017
Spending on marketing analytics—quantitative data about customer behavior and marketplace activities—is expected to leap from 4.6 percent to almost 22 percent of marketing budgets in the next three years, representing a 376 percent increase. At the same time, marketers say barely a third of available data are used to drive decision making in their companies.
These are among the latest findings from The CMO Survey. Conducted biannually since August 2008, and sponsored by the American Marketing Association, Deloitte, and Duke University’s Fuqua School of Business, The CMO Survey is the longest-running survey dedicated to understanding the field of marketing. The latest edition received responses from 388 top marketing executives.
When asked to rate the percent of projects in which available and/or requested marketing analytics are used before making a company decision, marketing leaders have consistently reported levels ranging from a high of 37 percent in 2012 to the current level of 31.6 percent. These levels are higher for business-to-consumer companies: 38.5 percent for business-to-consumer service companies, and 33.2 percent for business-to-consumer product companies.
Figure 1. Company Use of Marketing Analytics
Marketers cited a number of factors that prevent them from using analytics as shown in Figure 2. Almost one third reported that the biggest factor is the lack of processes or tools to measure success through analytics. This suggests that companies have not thought through how analytics will enter the decision making process or how analytics will help marketers understand the effectiveness of their actions. The second largest barrier is that firms lack people who can span the world of marketing analytics and marketing practice. This divide between rigor and relevance requires boundary spanners that are either analytical managers or analysts with managerial insight. Either way, there must be human capital that can connect the dots between marketing practice and analytics. A prior CMO Survey found that only 3.4 percent of senior marketers believe they have the right talent to play this role.
Figure 2. What Factors Prevent Your Company From Using More Marketing Analytics?
August 17th, 2016
This post was co-authored with Shiwani Kumar and Sylvia Yang, both MBA students at the Fuqua School of Business, Duke University.
Marketing analytics involves the creation and use of quantitative data to derive consumer insights and make decisions. It is often heralded as a critical resource necessary for effective marketing. So it is no surprise that marketing analytics continues to grow as a percentage of overall marketing budgets, with investments expected to nearly double over the next three years even after years of similar increases (Figure 1). However, returns from those investments are less clear: survey respondents’ view on the degree to which marketing analytics contributes to firm performance has stayed average and flat since it was first examined by The CMO Survey in 2012 (Figure 2). We interviewed experts in the area to better understand the challenges and the strategies that improve a firm’s return on marketing analytics. This is what we found.
Figure 1. Percent of marketing budget spent on marketing analytics (February 2016)
1. Don’t build a fun facts factory. Marketing analytics should resolve key business questions—not produce a collection of fun facts. To this end, it is important for marketing leaders to begin with the questions in mind and build the analytics strategies to answer them. That is how the insights produced from analytics investments find their way into plans, strategies, and decisions. At any given time, marketing leaders should be able to look at their analytics output and know for what purpose it was designed. Of course, when analyzing data, new insights can be uncovered, but this is a bonus from the process, not the main objective.
2. Nest analytics into marketing decisions. Using marketing analytics shouldn’t be a choice. It needs to be embedded into the marketing decision making process. For this to happen, capabilities need to be designed that point marketing executives to the right data at the right time. As analytics-informed decisions are realized, usage will shift from occasional to habitual. Jeff Simpson, Principal at Deloitte Consulting LLP noted, “Once analytics becomes embedded into the fabric of the business, companies will never be able to live without it.”
3. Crawl, walk, and then run to better analytics. For analytics to make a true impact, companies must build strong foundations of trust so that bigger leaps of faith can be taken. Baby steps to build data with integrity allows organizations to trust information about the past. Basic descriptive analyses give companies a clearer view into the factors driving the present and lay the foundation for planning the future. The ideal end-state is to develop advanced analytics such as predictive algorithms that contribute to the choice of strategies and tactics to achieve desired outcomes. “You have to be able to crawl before you walk before you run” said Pete Weir, Director at Red Ventures.
August 25th, 2015
Marketing leaders report their companies currently spend 6% of marketing budgets on mobile marketing and that this investment level is expected to increase to 15.6% over the next three years. The CMO Survey reports this increase in newly released results from 255 marketing leaders.
This whopping 160% increase reflects a growing reliance on mobile to interact with customers where they look for information and make purchases. On top of it, companies hope to reach customers closer to the time of purchase in order to make them aware of offerings, deals, and additional information that may help close more sales.
Despite these hopes, marketing leaders report only modest success in the impact of mobile marketing activities. When asked to rate the performance of their company’s mobile marketing activities on a scale from 1-7 where 1=poorly and 7=excellent, Figure 1 shows the current gap with only customer engagement breaching the halfway mark, while delivering your brand message, customer acquisition, customer retention, sales, and profits all falling below average.
Figure 1. How Mobile Marketing Performs (7-point scale where 1=poor, 7=excellent)