SOURCE: CMO Council

January 14, 2008 08:35 ET

Positive Outlook for Marketing Spend Reported by CMO Council

Annual Survey Sponsored by Deloitte Consulting LLP and Marketo Reveals Top Strategic Priorities for '08; Better Accountability and Use of Customer Data Analytics Lead List of Accomplishments

PALO ALTO, CA--(Marketwire - January 14, 2008) - The Chief Marketing Officer (CMO) Council today released the findings of its annual Marketing Outlook survey with an upbeat report on spend levels mostly holding steady or trending upward in 2008. However, many marketers say they are frustrated and stymied by organization cultures, senior management mindset, and insufficient budgets.

More than 800 senior marketers across all global regions responded to the CMO Council audit, which looked at a wide range of planned investments, organizational changes, process improvements, and performance indicators. eRewards was a partner in fielding the online survey worldwide. The CMO Council has over 3,000 members controlling more than $70 billion in annual marketing spend worldwide. This year's research initiative was co-sponsored by Deloitte Consulting LLP and Marketo. Both contributed perspectives on operational effectiveness and advances in marketing automation to the report, which can be downloaded from the CMO Council web site (www.cmocouncil.org).

According to the CMO Council, 37.6 percent of respondents say annual budgets will not change in 2008, while 33.1 percent expect to increase spend by up to five percent, and almost 10 percent say their budgets will grow between six and 10 percent. Only 7.6 percent expect to see budget increases greater than 11 percent. Last year, the majority of global marketers (52.6 percent) had budgets that equaled less than four percent of revenue and 35.4 percent said their spend was between four and 10 percent of revenue.

"It's not just what they're spending, it's where dollars are going and how effectively they are being used," notes Donovan Neale-May, the CMO Council's executive director. "There's definitely more attention to 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 tracked and measured return on marketing spend, nearly 20 percent of marketers said they did not, and 34 percent said they were planning to introduce a formal ROI tracking system. Typical measures included revenue, profits and market share; volume, caliber and conversion of leads; as well as direct response metrics.

Key findings reveal:

--  Improved accountability of the marketing organization and using
    customer data and analytics for better targeting and effectiveness were the
    two top accomplishments in 2007. This was followed closely by adding new
    internal resources, capabilities and skill sets.
    
--  While some 79 percent believe marketing is making significant or
    reasonable progress in improving the perceived value of the function, 21
    percent of marketers are either still trying to gain traction or are
    stalled and losing credibility in their organizations.
    
--  Quantifying and measuring the value of marketing programs and
    investments remains the top challenge in the year ahead, report some 53
    percent of survey respondents. Other key priorities include growing
    customer knowledge, insight and conversations, as well as upgrading the
    efficiency and effectiveness of marketing groups.
    
--  Important organizational and operational changes planned for 2008
    included adding new competencies and capabilities, improving accountability
    of the marketing organization, deploying content and web site management
    solutions, and implementing marketing ROI and/or resource allocation
    capabilities. This focus on organizational improvement is not surprising
    considering that 50 percent of CMOs are hired to fix broken marketing
    organizations, reports the CMO Council.
    

"Based on the survey results, there's no doubt marketers are seeing the need to implement performance measurement systems and to re-tool their organizations to further yield and accountability," notes Dave Couture, a Deloitte Consulting LLP Principal and sales and marketing specialist. "Clearly, investments are being earmarked to better integrate and align marketing with sales and to leverage customer insight and intelligence to improve acquisition, conversations and relationships."

Marketing Automation

Given the strong focus on organizational effectiveness, those surveyed by the CMO Council identified key areas of system and solution spend to automate processes, optimize lead generation, and improve measurement. The top six areas of planned investment include:

--  Email campaign management
--  Customer relationship management (CRM)
--  Marketing performance measurement dashboards
--  Customer intelligence and solutions
--  Search engine marketing (SEM)
--  Sales and marketing integration tools
    

"Marketing's relationship with sales is now more important than ever as marketers seek to improve accountability and demonstrate their impact on the bottom-line," states Phil Fernandez, President and CEO at Marketo. "The advent of on-demand solutions finally makes this possible, while at the same time boosting campaign effectiveness and efficiency," he adds.

Marketers reported significant agency turnover in 2007 with advertising (41 percent), web design (38 percent) and public relations (26 percent) firms most frequently changed in 2007. Special markets (e.g., ethnic), demand generation, hosted services/solutions and sales promotion had the lowest incidence of substitution.

The need for global scale and size did not seem to be a factor in agency switches. Rather, performance issues were the most prevalent reasons for swapping out agencies in 2007. These included:

--  Lack of innovation
--  No value-added thinking
--  Poor creative
--  Quality of work
--  Results and deliverables
    

About CMO Council:

The CMO Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior marketing and brand decision-makers across a wide-range of global industries. More than 3,000 top marketing executives from 52 countries are represented on the CMO Council worldwide. These individuals control well over $70 billion in annual marketing expenditures. Visit the CMO Council website at www.cmocouncil.org to find out about programs and events produced by this Peer-Powered Network.

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