CMOs upbeat about spending levels, frustrated with organizational culture…and falsely betting on ROI
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According to the CMO Council’s latest annual Marketing Outlook survey (via Marketing Charts), CMOs are upbeat about spend levels, which are supposed to stay steady or trend higher, and frustrated and stymied by organizational culture, senior management mindsets, and insufficient budgets.
According to the survey, more dollars are going towards the analytics side of the business and the use of more tangible and targeted forms of personal interaction, contextual communication and online demand generation.
When asked how they measured success of their marketing spend (well they were asked for return on marketing spend – more on that later), 20% of respondents said they were not measuring marketing ROIs, and 32% said they were planning to introduce a formal ROI tracking system.
The leading area of marketing dollar allocation – strategy & branding! Following that are events and trade shows, operations, direct marketing, sales support, online marketing, advertising, and market research.
The main reasons why marketers switch agencies – which was very frequently, with 41% who switched ad agencies – are:
- Lack of innovation
- No value-added thinking
- Poor creative
- Quality of work
- Results and deliverables
Duh – maybe all the interrupt-based stuff that they use is just not working anymore 
Unfortunately, the increased focus on ROI will likely not be the expected savior that will return credibility to the marketing department. First off, ROI-driven companies are often focusing their measurements on transaction-based buying activities. In the long run, however, it is not the efficacy with which you can get one person to buy something once that counts, but rather the customer lifecycle value and the ongoing amplification in the form of word of mouth that goes along with a long term customer relation. ROI is also a trailing indicator, and as all financial services companies will tell you – past performance is not an indicator of future results. Lastly, and by measuring ROI on discreet processes (i.e., a specific lead generation campaign), which most companies who measure ROI do, companies are reducing marketing to a collection of simple linear processes, when in reality it is a complex multi-variable and non-linear system. So by oversimplifying marketing to make it measurable, many companies will actually break marketing more so than it already is.
Nowhere in the survey was there any mention of consumer generated content – somewhat of a surprise considering that fewer and fewer buyers make their buying decisions based on information coming from the vendors.
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January 16th, 2008 at 12:02 am
If you download the Executive Summary of the CMO Council report, you can read my commentary article, titled “Marketing 2.0 Hits a Tipping Point”. (My company, Marketo, was a sponsor of the survey.)
In my article, I directly address some of your points related to Marketing 2.0, e.g.:
1. Marketing 1.0 was about using push marketing tactics, such as cold calls and unsolicited email, that work but only if they interrupt the customer’s attention. In contrast, Marketing 2.0 uses “behavioral marketing” techniques to engage when and how consumers want, in direct response to behaviors and buying signals.
2. In Marketing 1.0, marketers thought they can control the message as well as the customer’s buying cycle and agenda. In Marketing 2.0, customers interact with each other, and marketers nurture passion and engagement from their best customers – marketing with prospects rather than marketing to them.
3. Marketing 1.0 was characterized by a severely limited ability to demonstrate ROI and marketing accountability, which lead to the perception that marketing is as a cost center. But Marketing 2.0 gives marketers the ability to measure the bottom-line impact of every marketing activity, to quantify the impact of changes to marketing budgets, and to demonstrate marketing’s impact on revenue.
My interpretation of the Marketing Outlook 2008: 2008 is the year that Marketing 2.0 will tip into the mainstream.
http://www.cmocouncil.org/resources/form_mo_execsummary.asp
January 16th, 2008 at 12:40 am
Jon – thanks for the comment – I appreciate the time.
I am not sure, however, how marketing 2.0 is any more “measurable” than marketing 1.0. If anything, and due to the fact that there are so many more outside factors (i.e., CGM) that influence buying behavior I would say that marketing 2.0 is probably harder to measure than 1.0 campaigns.
Also, and by forcing CMO to break down marketing in discreet processes that can get an ROI associated with it, aren’t companies continuing to send a message that marketing is nothing else but a cost center? If they were looking at marketing as an investment they would not measure it that way.
I also do not quite get what you mean, or how you concluded from the survey, that marketing will tip into the mainstream in 2008. I thought Marketing became mainstream when Management Guru Peter Drucker said “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” – that was last century…
January 16th, 2008 at 5:17 pm
I agree that current marketing ROI linear thinking just doesn’t cut it:if A and B then C, when in reality it’s more like predicting how much snow will fall a month from now in one town. But I still believe there needs to be metrics before engaging in a marketing program. After all, why are you doing it in the first place? But they most likely will be ancillary metrics. And it keeps management happy. Just remember, whatever you measure will improve. But is it the right thing?
January 16th, 2008 at 6:22 pm
Bruce – good to hear from you an thanks for the comment. I agree that marketing should be measured…and should have made that clear. I just think that it needs to be measured differently. I posted some follow-up thoughts in a more recent post – http://www.emergencemarketing.com/index.php/2008/01/16/measuring-marketing-roi-can-be-harmful-to-your-marketing-department/
January 18th, 2008 at 3:47 pm
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