The CMO Survey - March 2023: Managing Brand, Growth, and Metrics
Marketing Spending and Hiring Growth Slows Amidst Economic Uncertainty
Results from the 30th edition of The CMO Survey indicate that inflation and economic uncertainty are harming marketing spending as the C-suite retrenches and cuts costs. While more than half of marketers reported a 10.4 percent increase over the previous year in the September 2022 survey, this group is reporting just 2.9 percent growth over the last 12 months, on average. Survey respondents included 314 marketing leaders at for-profit U.S. companies, 97 percent of whom are VP-level or higher.
Digital marketing spending also slowed, but less dramatically: falling from a 15 percent increase in marketing spending in September to an 8.2 percent increase over the last 12 months. As a result, marketing budgets dropped to represent 12.3 percent of company budgets, near pre-Covid levels.
As a result of reduced spending, marketing organization size growth slowed to a 3.4 percent increase over the last year. That’s a huge drop from 2022, which averaged 12 to 15 percent growth and below the long-term survey average (since 2010) of 5.6 percent.
Marketing hires are likewise slated to slow to a 3.9 percent increase next year, down from a 10.5 percent increase predicted one year ago. Marketing organizations report working from home all of the time at lower rates than in the last survey (39.3 percent vs. 48.7 percent), but cite a similar likelihood to work from home some of the time (57%).
Brand Faces Short-term Pressures
Reflecting spending cuts, investments in brand building dropped from a 12 percent increase last year to 5.5 percent increase this year. Consistent with this, marketers report that brand management and development capabilities—a key engine for using brands to grow the business—are not reaching effectiveness levels that correspond to their importance.
In another indicator of short-term pressures, marketers report that while their companies spend an average of 40 percent of their brand budgets on long-term brand building and 60 percent on short-term performance, they report spending 50 percent on each would be ideal.
And while building brand involves broad cross-functional collaboration, marketing leaders say they work best with sales and distribution on brand-building efforts, they work less effectively with human resources and finance.
Low-Risk Growth Strategies
Marketing leaders report the challenging combination of pressures to grow by expanding into new markets, segments, or geographies while also reducing operational and/or product costs and increasing value for similar cost. With leaner organizations and reduced budgets, marketers are focusing on tried-and-true strategies, such as low-risk (often domestic) market development, product development, organic growth, and digital investments.
Marketing leaders believe that having the right talent contributes most to future organic revenue growth (40.1 percent), while having the right operating model is in second place (19.4 percent). Having the right technology to drive revenue growth rose from 9.0 percent in February 2020 to 13.5 percent in this survey.
Marketing’s Strategic Role
Marketing’s role has expanded over the last three years. While brand, advertising, and digital marketing are the function’s top three responsibilities, marketing has also deepened its responsibilities in key strategic areas such as marketing analytics, revenue growth, innovation, and market entry strategies. It is therefore surprising to see heavy reliance in tactical metrics “digital/web/mobile performance” and “content engagement” and less reliance on key strategic metrics, such as “brand equity value” and “customer lifetime value.” Strategic metric use is up from three years ago, but tactical marketing metrics are still the focus of most organizations. This finding is consistent with the fact that marketers report spending 70 percent of their time “managing the present” and only 30% “preparing for the future.”
Three different reports summarize these findings and other 30th edition CMO Survey results. The Highlights and Insights Report shares key survey metrics, trends, and insights over time. The Topline Report offers an aggregate view of survey results, and The Firm and Industry Breakout Report examines survey results by company sector, headcount, and sales. Sign up to participate in the next CMO Survey.
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