New results from The CMO Survey offer encouraging predictions about the future of markets and document ongoing challenges to marketing excellence and leadership. The 410 top marketers surveyed in August report their highest levels of optimism for the overall U.S. economy in four years. On a scale of 0-100, with 0 being the least optimistic, CMO scores came in at 65.7. This is nearly a 20-point increase over the same measure taken in August 2009 near the low point of the recession. Almost 50% of top marketers answered they are “more optimistic” about the overall U.S. economy compared to last quarter. Back in 2009, the optimists came in at just 14.9%. “Pessimists” went in the opposite direction with those reporting to be “less optimistic” dropping from 59.3% in 2009 to 13.2%.
Now for the rough news. Demonstrating the impact of marketing spending remains a challenge for marketing leaders. Only one-third of top marketers surveyed report their companies are able to demonstrate quantitatively the impact of their marketing spending. This percentage worsens when considering social media investments. Only 15% of CMOs surveyed report proven quantitative impacts from their social media marketing expenditures. Another 36% respond they have a good sense of the qualitative impact, but not the quantitative impact. Almost half of the CMOs surveyed (49%) have not been able to show that their company’s social media activities have an impact on their business (Figure 1). Despite this, marketers are expected to increase expenditures in social media from 6.6% to 15.8% over the next five years (Figure 2).
This “spend-not-show” pattern is not sustainable, of course. Given this situation, it is also not surprising that 66% of CMOs report experiencing more pressure to prove the value of marketing from their CEOs and boards. Of these, two-thirds report that this pressure is increasing. Marketing leadership requires that CMOs offer strong evidence that strategic marketing investments are paying off for their firms in the short and long run. CMOs will only earn a ‘seat at the table’ if they can demonstrate the effect of their marketing spend.
Marketing analytics, marketing’s version of big data, is currently 5.5% of marketing budgets and is expected to increase to 8.7% over the next three years. The use of this big data remains a challenge, however, as the reported percentage of projects using available or requested marketing analytics has decreased from 35% a year ago to 29% at present. This coincides with the finding that CMOs report only “average” contribution of marketing analytics to company performance (3.5 on a 7-point scale where 1 is “not at all” and 7 is “very highly”). This number has decreased from its first measurement (3.9) a year ago. Opportunities remain to convert this treasure trove of data into powerful insights for companies.
Marketers are also increasing their efforts to collect data about online customer behaviors. Approximately 60% collected online customer behavior data for targeting purposes and 88.5% are expected to increasingly do this over time. Despite growing outcry about surveillance in public and private sectors, privacy doesn’t seem to be a worry for marketers. Fifty percent of the respondents had low levels of concern, while just 3.5% answered they were “very worried” about privacy. I found this number lower than expected. My own view is that marketers need to strike an honest bargain with customers on the issue of privacy–customers need to know they are being observed, agree to those observations, and get more value from marketers in return.
More results to follow. Stay tuned as together we try to improve the value of marketing in companies and society.