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)
March 6th, 2014
Marketing budgets are rebounding. They are expected to increase 6.7% in the next twelve months according to the February 2014 edition of The CMO Survey. This is a sizable increase over projected increases of 4.3% in August 2013 and a massive boost over the 0.5% increase reported in February 2009. Bounce!
To put these figures in perspective, The CMO Survey reports that marketing budgets represent approximately 10.9% of overall firm budgets. These figures have hovered around this average since this question was first asked in February 2011. On the other hand, marketing budgets as a percent of firm revenues improved to 9.3% from 7.9% in 2013 indicating that marketing budget growth outpaced revenue growth. One question that survey users often ask about these figures is whether or not they include salaries for marketing employees. Analysis indicates that these marketing spend estimates include both employee and non-employee investments in marketing.
I examined all three marketing spending metrics across several firm and industry characteristics. These are summarized in Tables 1-3. As shown in Table 1 across these three indicators, B2C-Product companies have the largest marketing budgets (as a percent of budgets and revenues) and the largest expected growth in marketing budgets across the four economic sectors. I expected a large increase over the B2B companies which may be reaching customers with their own or their channel’s salesforce. However, I did not expect to find B2C-Product companies also dominating B2C-Service companies by 20-30% differences. Would love to hear from marketing leaders in this sector about this differential.
November 21st, 2013
Two-thirds of all top marketers feel pressure from their CEO or Board to prove the value of marketing according to August 2013 results from The CMO Survey. Of those, 60% describe that pressure as increasing. These numbers are consistent with the fact that most CMOs continue to find proving the value of marketing elusive. Survey results indicate that only 36% of top marketers report being able to prove the value of marketing quantitatively in the short-run and 31% in the long-run. Demonstrations of the value of social media are even more elusive with only 15% able to offer quantitative evidence for the value of social media spending.
A key question that needs to be asked is whether pressure on CMOs to prove the value of marketing helps or hurts company performance. These are reasonably good arguments on both sides. On the positive side, increasing pressure might make marketers work harder. On the negative side, increasing pressure could make marketers focus on strategies that are easily measured or that only provide short-term boosts so that proof is in hand when the CEO or board comes knocking. This means that instead of designing and selecting strategies that are optimal for company goals, strategies are selected to help marketers defend their spending decisions.