Are you a CMO worried about budget? Read this
It’s a tough time to be a marketing leader. Digital spend is accelerating and new channels are proliferating – yet your budget is most likely reducing. Finding the right balance between brand and demand generation is hard to begin with – and changes day by day. Here’s why it’s not all doom and gloom, concerned CMO.
Let’s get the bad news out of the way first. In its latest CMO spend survey, Gartner found that marketing budgets had fallen to 6.4% as a proportion of company turnover in 2021, down from 11% the previous year. This was the lowest figure since the survey began in 2014. Yet the claims on that budget are multiplying as new media channels come on stream. So, how should the smart CMO be allocating their newly reduced budgets?
The worrying answer is that many simply don’t know. A survey by Adverity found that 34% of marketers don’t trust the data they are given to inform campaigns. Much of this is down to the prevalence of manual processes: 6 out of 10 CMOs find that wrangling data for reporting purposes is the biggest challenge they face. Perhaps unsurprisingly, the next biggest challenge was an inability to measure ROI on marketing spend. All of this feeds into a general uncertainty about how to optimise allocation of marketing budget.
Brand vs. demand generation
Nowhere is this lack of good data more obvious than in brand/awareness activity. Prevailing wisdom suggests that brand campaigns should account for 60% of advertising budgets, with demand generation making up the remaining 40%. The reality, however, is very different. According to LinkedIn’s latest B2B institute report, almost 80% of B2B marketing budgets invest in lead generation activity.
It's not hard to figure out why demand gen is winning the battle for marketing budgets. There’s a direct line between a demand gen campaign and business outcomes – CTRs, conversions, MQLs, etc. As the Adverity data indicates, CMOs find it hard to draw the same line for brand activity.
The biggest reason for this is that brand traditional measurement mechanisms have required a detailed survey of large groups of different stakeholders – a slow and expensive process with often inaccurate results. CMOs simply can’t make decisions based on unreliable data that’s often unavailable until months after a campaign has closed – and so they default to demand gen activity for which a clear ROI is more readily demonstrable.
This disparity has significant implications for marketers. Lead gen activity drives pipeline, but without adequate brand activity, there simply won’t be enough new prospects entering the sales funnel to sustain marketing campaigns – and conversions will ultimately dry up.
The solution is out there
Today, however, there are platforms that provide timely and comprehensive data on brand health. These include Crayon and Qualtrics, but my current infatuation is BlueOcean. Their Brand Navigator platform looks at over 1300 touch points across paid, earned, and owned channels and assesses brand health in six different categories. It can even generate information about brand personality (so there’s something in it for creatives!).
If you’re thinking about your next solution, make sure it has a feature that continuously updates data. This not only makes it accurate, but allows CMOs to monitor fluctuations over time.
Of course, this isn’t exactly real-time data. But having a continuous update makes this data more than frequent enough to give confidence to the CMO that awareness campaigns are moving the needle, such as telling organisations when they need to move budget from demand gen to awareness activity (or vice versa).
License to experiment
In our experience, innovative measurement solutions for brand health are key to proving the value of awareness activity – and while that solution may only be one percent of your overall spend, it can provide the data that will unlock larger budgets in the future.
We are also living in a world where innovation is skyrocketing, and the fear of failure is dissipating – so a proper evergreen measurement solution will give you license to experiment and learn. A/B strategies are great – but they are archaic and slow. As Mark Zuckerberg said to his development teams, it’s important to ‘move fast and break things’. If you can track the impact of a new approach, you can turn off the tap if it’s not delivering –or invest additional budget if it’s performing well. Your marketing team can learn from each innovation – without gambling the entire budget on unproven technology.
Nor should a brand health check be the exclusive preserve of larger companies. Even for challenger brands with limited budget, it’s important to have this capability in place. So, if you’re looking back on a successful year, you can know which marketing activities were responsible for driving that growth.
Looking to the future
Someone recently asked me, “If analytics was a human being, how old would it be?”. After some consideration, my answer was that it’s probably of university age. Analytics has done a lot of growing up and there are some amazing resources available to it. But it’s not fully mature. As always, expertise lags a little behind raw capability.
Over the pandemic, analytics capabilities have shot forward, and we are starting to realize the power of what it can achieve. Innovation has been maintained – and in places like the UK, the number of patent applications has actually surged over the course of the past two years. Much of that innovation has been in the analytics space, and I’m very confident we’re going to see continuing breakthroughs in the value and ease-of use of these tools.
So, there are analytics solutions for pretty much everything now – even if some of them are complex and not necessarily as user-friendly as we’d like them to be. All a CMO needs to do is go out and find them.
My message to CMOs is simply to be brave. In this new frontier of analytics, it is hard to carve your own path but there is so much out there. So have the courage of your convictions, define your goals – just make sure you have access to the technical expertise that will help you figure out how to achieve them.
This is particularly true of smaller companies. Analytics tools are only going to get more expensive as they mature and achieve traction in the market – so better to be an early adopter than part of the late majority. The big players have already invested in analytics skills and tools – and the danger is that this will allow them to extend their lead in the marketplace.
Of course, different CMOs have different comfort levels with data: every CMO knows that analytics are critical but, for many, it’s someone else’s problem – whether it’s the web team, the sales guys or someone else. However, it’s important for CMOs to know that analytics is always going to be their secret weapon. As the saying goes, you should never bring a hunch to a data fight: Hard stats are always going to win the day over subjective opinions – and is likely to be the best way for a CMO to dig themselves out of the hole that the market is trying to create for them.
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