Uncertainty has been the theme for 2020, and it has touched all aspects of our job including how we adapt and modify our marketing strategies. The Gartner 2020 CMO Survey gives some great insights into how marketing leaders are approaching budgets, channels, and marketing technologies as we head into 2021.
At the start of 2020, CMOs on average had a reasonable expectation to receive 11% of revenue as a budget, but then the pandemic hit and when surveyed in April and May, 44% reported mid-year budget cuts. This makes sense because at the same time almost 60% of CFOs surveyed had started planning for a second wave of the pandemic.
Most CMOs expect that within 18-24 months, business will return to normal, but until that proves out, budget restrictions are impacting marketing priorities for 2021. One of the ways CMOs are responding to tighter budgets is by pursuing more conservative growth strategies, with 79% of CMOs looking toward existing markets to fuel growth.
Another way CMOs are managing tighter budgets is to bring production activities – like social, creative, and content creation – in house. Nearly 33% of surveyed CMOs were shifting production work to internal resources while they continue to rely on external agencies for strategy, messaging, and martech expertise.
This shift certainly reduces expenses, though it also requires extra attention to communications and coordination so that key functions don’t inadvertently slip through the cracks and assignment of responsibilities are understood across the combined teams.
Channels and Objectives
The pandemic’s impact on marketing channels is not surprising. Early in the pandemic, digital advertising and paid search saw a sharp increase and made up almost a quarter of budgets. There was a simultaneous sharp decline in event marketing that has been shifting to virtual events. But virtual has created its own challenges in how to effectively connect with and engage the audience.
The result of these increases and decreases has caused channels to evolve as well. Most B2B CMOs believe they will spend more money on digital advertising, email, and mobile marketing. 33% of CMOs cite brand strategy as their most vital strategic objective. This is a big jump from last year when it was near the bottom of the same list.
Historically advertising in recessions has proven to be very effective because when companies cut back on their ad spend, other advertisers take advantage of the void to reposition a brand or introduce a new product.
Advertising during down markets also projects an image of corporate stability during challenging times. A great example of this is how Amazon has been focused on its brand strategy by releasing commercials humanizing the company.
The only area that doesn’t seem to be affected by COVID-19 is marketing technology (martech) budgets. Unsurprisingly, 68% of CMOs expect their martech budget to increase next year. But at the same time, most marketing leaders (58%) acknowledge the difficulty in fully utilizing the full capabilities of their existing technology. And part of that challenge is the struggle to upskill existing talent to extract these investments’ full value.
To improve the utility of their technology spend, CMOs are creating a centralized catalog of currently deployed marketing technologies. This provides a look into what is being used and what isn’t. Try to take it a step further by creating KPIs for each technology investment such as improved campaign performance or higher productivity. This can help identify which investments aren't pulling their weight.
What Does This Mean for You?
It’s time to be flexible and adjust your plans to become more adaptive. The coming year is still going to be quite unpredictable, but that doesn’t change your needs for the right tools, processes, and insight to evolve your strategies and priorities.
So what are some practical steps to take? Here is a list of ideas to get you brainstorming:
- Focus on metrics that improve efficiency and improve your ROI reporting. This will allow you to focus on getting better results with fewer dollars.
- Not all customers are created equal. Some are going to be more profitable and you should be value segmenting to take advantage of that.
- What do you consider investments you can’t lose in your organization? Make that distinction now so that you know what you can afford to lose if further belt-tightening is required.
- Focus your brand strategy on building connections, trust, and credibility. Try to be as transparent as possible. Avoid message fatigue around COVID-19.
- Clearly define roles for internal and external resources. Keep an eye on where duplication can be wasting time and spend, and perhaps more importantly, where critical roles have slipped through the cracks.
- Optimize and declutter your martech stack with an audit. Create a centralized catalog of currently deployed marketing technologies and get input from other affected departments.
Shifting your marketing strategy to allow for agility and adaptability will not only help navigate the volatility of the upcoming year, but it will also set you up for success regardless of what the next normal looks like.
Resetting your marketing foundation for greater agility will create a leaner, more efficient machine that will build growth for 2021.
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