What 2017 Budgets Mean for 2018 CMOs

December 19, 2017

By Carla Johnson

John Wanamaker was a successful merchant, religious leader, a political figure and a U.S. Postmaster General. Some considered him to be a pioneer in marketing and many know him through his infamous quote on advertising:

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

This sentiment haunts many a CMO these days, especially as we feel mounting pressure to take on more accountability and deliver greater ROI. Gartner’s recent CMO Spend Survey makes it clear that it’s ‘show’ time…

It’s time to show marketing’s financial management credentials.

It’s time to show that marketing can deal with financial constraints.

It’s time to assume accountability for business performance and show that marketing can grow the business while making hard choices.

After three years of growing budgets, things began to sputter in 2017. Gartner reports that budgets slipped by .8 percent this year. Which means that marketing leaders have to show evidence that marketing’s been a wise investment and deserves to have more funding.

“As CMOs survey the landscape, one thing is clear – previous budget increases have come with weighty expectations, some of which have yet to be met,” says Ewan McIntyre, research director, Gartner for Marketers.

Here’s the highlights of the Gartner CMO Spend Survey –

1. Marketing budgets start to recede

Overall marketing budgets tumbled by 6 percent from their peak just two years ago. Natural disasters. Political upheaval. An unpredictable future. Marketing’s not immune to the topsy-turvy economy. CMOs are either playing too close to home or thinking too far down the road. Both are dangerous, but both have to be done – simultaneously.

What you can do: Tap your most powerful weapon – customers. Make sure that your efforts all line up with bigger business objectives when it comes to the customer. Not just how to attract them, but how to grow them and deliver a truly differentiating experience for them that builds deep brand loyalty. Take a hard look at things you’re used to doing and decide if they support the customer or are legacy activities.

2. Half of CMOs lack financial planning muscle

Almost half of the CMOs survey take what’s been done before and tack on an incremental increase. We can do better than that. Lacking financial savvy is a marketing executives kryptonite. Using historical data assumes that historical external factors are still the ones that will come into play.

What you can do: Start with a clean slate. What would you do if you were building from the ground up? What would you prioritize? Where would you invest? Take this mindset and you’ll have a different point of view about what’s worth investing in and where you allocate money by default.

3. CMOs playing it safe; budgets focused on existing customers

CMOs are spending twice as much to keep customers as they are investing in getting new ones. But is that the right approach? While we want to keep existing customers, we also have to discern if these are customers worth keeping. Are they profitable? Loyal? Referring?

What you can do: Dig deep into the numbers and understand the dynamics of your most profitable customers over time. A customer that ends up costing you money over the life of your relationship isn’t worth keeping. What’s the true net that they deliver to your bottom line?

4. Marketing analytics gets the greatest share of budget at 9.2%

Of the 13 marketing capabilities Gartner asked about, CMOs spent just under one-tenth of their budget on marketing analytics. That’s the heaviest weighted investment of any capability. CMOs want to understand and be able to report what’s going on with customer experience, acquiring and growing customers, and getting a true picture of marketing’s performance.

What you can do: Make sure you’re not just reporting numbers but get true insights from the data you’re collecting. Look at how you’re measuring and the technology you’re using. Does it integrate effectively? And remember, data tells an important story, but it’s not the whole story.

If you’re a Gartner customer, you can download the full report.

Photo Credit: Flickr user 401(k) 2012

About Carla Johnson

Carla Johnson is a world-renowned storyteller, an entertaining speaker, and a prolific author.

Over the last two decades, Carla has helped architects and actuaries, executives and volunteers, innovators and visionaries leverage the art of storytelling to inspire action. Her work with Fortune 500 brands hasn’t gone unnoticed and the latest of her seven books, Experiences: The 7th Era of Marketingsets the benchmark for a new era in marketing. Named one of the top 50 women in marketing and the chair of the ANA’s Business Marketing Association, Carla regularly challenges conventional thinking.

Today, Carla travels the world teaching anyone (and everyone) how to cultivate idea-driven teams that breed unstoppable creativity and game-changing innovation