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9 November 2018 | ITSM
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CMOs Remain Confident Amid Leveled Off Budgets and Uncertain Times
Marketing leaders under increased pressure to show business value, according to 2018 CMO spend survey...

Marketing budgets have remained steady for 2018 (11.2 percent of company revenue), but 63 percent of chief marketing officers (CMOs) expect their budgets to increase in 2019, according to the latest CMO Spend Survey by Gartner.  The report reveals CMOs are growing ever more confident in their investments in marketing technology, innovation and personalization.

In July and August of this year, Gartner surveyed 621 marketing executives to understand their budget and spending commitments in North America and the U.K. The survey findings are consistent with the 2018 Gartner CEO and Senior Business Executive Survey that found that 57 percent of CEOs expect to increase investment in marketing, as more companies look to become customer-centered.

However, this confidence could be misplaced, as pressure to demonstrate business value rises and economic uncertainty mounts. CMOs are still on the line to meet expectations for ROI in order to secure those future budgetary commitments — meaning they must clearly link marketing investments with business return.

“The internal organizational environment is looking very favorable for CMOs right now,” said Ewan McIntyre, senior research director at Gartner. “However, the growing macro environmental challenges — emerging markets, trade disputes and tariffs, Brexit and rumors of an impending U.S. economic downturn — mean that CMOs must expect the best, but plan for the worst as they prepare budgets and programs for the year ahead.”

Martech Investments Continue to Rise

Marketing technology (martech) investments have steadily grown in recent years and show no signs of slowing down. In 2018, martech accounted for 29 percent of the total marketing budget, up from 22 percent in 2017. This makes martech the single largest area of investment for marketing resources and programs across the board.

Meanwhile, labor budgets took a dip from 28 percent of overall marketing budgets in 2017 to 24 percent in 2018. “While many may be quick to relate this to the start of automation reducing human capital requirements, our analysis suggests this shift in marketing spend is a result of organizations dealing with capabilities, resources and talent in increasingly complex ways,” added Mr. McIntyre.

Gartner’s 2018 Marketing Technology Survey reports that marketing leaders use, on average, 61 percent of their martech stack’s capabilities. This emphasizes the need for an adaptable marketing technology roadmap, to clearly define use cases and remain cognizant to the challenges of integrating solutions, people, processes, data and culture in the marketing organization.

Marketing Innovation: Highly Valued, Heavily Backed and Still Lacking

One in every six marketing dollars is now spent on innovation-related initiatives, and 63 percent of CMOs expect their innovation-related budget to increase in 2019.

However, meaningful innovation requires a collaborative culture, structure and committed investments. Gartner research shows that despite the enthusiasm for innovation, marketing’s innovation capabilities are not up to par. In fact, Gartner’s 2018 Marketing Maturity Assessment reveals that while marketing leaders scored themselves an average of 2.3 out of 5 for marketing maturity in innovation, many wish to achieve a 4.3 maturity rating.

Personalization Prevails, But Proceed With Caution

Investments in personalization now make up more than 14 percent of CMO marketing budgets. Gartner’s 2018 State of Personalization Survey reports that more than half of CMOs have increased their personalization investment since 2017 as they have committed to delivering relevant messages to customers at scale. This requires in-depth knowledge of the customer journey as well as relevant, actionable content, and the technology and platforms to deliver, measure and optimize experiences.

While customers have grown cautious of how brands collect, store and use personal data, marketing leaders should proceed with caution when pursuing personalization efforts to help appease both consumers and regulators.

Marketing Measurement Remains a Struggle

Despite the positive outlook for the year to come, CMOs still struggle to prove the value of marketing to the enterprise. “We see some leading CMOs that have developed a shared understanding of the metrics that demonstrate the value marketing delivers to the overall organization,” noted Mr. McIntyre. “However, old habits die hard, and most CMOs still gravitate toward metrics that have less meaning outside of the marketing team.”

Gartner research reveals that 12 percent of CMOs report that brand awareness is the most important metric they measure — compared with 7 percent for ROI and only 1 percent for customer lifetime value. While ROI is still difficult to measure accurately for many, CMOs must not underplay its strategic importance. Today, brands must commit to delivering robust customer experiences, as well as growth and value to the business, and therefore must elevate the specific metrics that track these efforts.

Additional details from this year’s CMO Spend Survey and insights on marketing teams’ top investment priorities are available to Gartner for Marketers clients in the upcoming webinar, The CMO Spend Survey 2018-2019, on November 15, 2018 — for further details on the webinar click on the link https://gtnr.it/2PjlE4Q.

For additional information on the report “CMO Spend Survey 2018-2019: Marketers Proceed Into Uncharted Waters With Confidence” click on the link https://gtnr.it/2AWwJ2Z.


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