Are CMOs getting it right? From Latest Gartner CMO Survey 2018-19

Key findings were as below…

Marketing expense budgets leveled off in 2018, remaining steady at an average of 11.2% of company revenue. (In 2016, it was 12.1% of revenueMarketing technology (martech) now accounts for almost one-third of marketing’s budget (29%), while in-house labor investments lose share.  
One in every $6 spent by CMOs is invested in innovation, despite doubts in the skills and capabilities available to support these programs. 
CMOs struggle to align marketing metrics with business priorities, favouring awareness as their No. 1 strategic measure instead of customer value and return on investment (ROI).

(Source : Gartner’s CMO survey 2018-19)

I personally see the levelling of budget%, shift towards automation and CMO’s struggle with focusing customer value and ROI has clear connections.

Decisive Shift Towards Marketing Technology

“Marketing technology is becoming a top priority for organisations and CMOs. Twenty-Nine Percent of the Marketing Budget Is Allocated to Technology, Diverting Budget From All Areas of Marketing Operations.

Salaries budgets have taken a slide in 2018, falling from 27% to 24% of marketing expense budgets, paving way for technology, automaton. The survey raises question : could this be the turning point where automation starts to reduce human capital requirements?”

(Source : Gartner’s CMO survey 2018-19)

“For example, artificial intelligence (AI)  technologies in use today include “conversational experiences.” In the future, multichannel marketing campaigns could be designed by an unsupervised, AI enabled orchestration based on a customer’s self-directed journey rather than manually defined campaign flows directed by marketing managers. While this makes for attention-grabbing (verging on clickbait) copy, the chances are that AI and technology are not putting jobs at risk just yet. Rather, this shift in marketing spend indicates that organisations are dealing with capabilities, resources and talent in increasingly complex ways.”

(Source : Gartner’s CMO survey 2018-19) 

Proving the value of marketing to the enterprise remains a perennial challenge for CMOs. In the past, there’s often been a stark difference in the metrics that key stakeholders hold dear. CEOs, for example, may value revenue, profitability and market value share, while CMOs may elevate share of voice, awareness and brand metrics to their strategic dashboards. Modern CMOs have a shared understanding of the metrics that demonstrate the value marketing delivers to the enterprise. However, old habits die hard, and many CMOs still gravitate towards awareness. Below table shows that.

(Source : Gartner’s CMO survey 2018-19)

“Logic dictates that common customer measures, such as customer acquisition cost (CAC), customer satisfaction (CSAT) and retention would be closely tracked on CMOs’ strategic dashboards. But only 51% of CMOs say they track customer acquisition costs; even fewer (43%) track customer retention or churn rates. Furthermore, brand metrics are used two times more frequently as KPIs than customer experience metrics.”

Gartner’s report recommends the following to address the above and I completely agree with that.

– Conduct an honest appraisal of your metrics and KPIs.

– Elevate metrics that demonstrate financial and customer value.

(Above content excerpts and charts are taken from Gartner’s The CMO Spend Survey 2018-2019)

My personal take is that marketing budgets getting leveled, investment focus on technology and CMO’s focus on awareness more then the customer value and ROI has its connection. The game is shifting and many CMOs are shifting towards business value driven metrics, but it’s a slow shift.

In 2019 and 2020, I expect that CMOs will shift gears rapidly and increase focus on data and ROI driven marketing.