A recent survey of CMOs from Gartner revealed that 73 percent of CMOs expect the negative impact of the pandemic to be short-lived. But the report also indicated that 44 percent of CMOs surveyed are experiencing midyear budget cuts and that 11 percent expects their budgets to be cut more than 15 percent.
The 2020 CMO Spend Survey, which fielded responses from 432 marketing executives in North America, the U.K., France and Germany at businesses that have between $500 million and $20 billion in annual revenue, indicates that this optimism held by CMOs is at odds with the expectations of their C-suite colleagues. While chief marketers appear to be upbeat about a recovery in 2021, 60 percent of CEOs surveyed by the World Economic Forum believe the recession will be U-shaped and 22 percent think it could be a double dip one. The contrast between CMOs’ optimism and CEOs’ more tempered predictions is stark—and, according to Gartner, should be cause for alarm.
Additional highlights from the report include:
*More than half (57 percent) of respondents across all industries believe that business performance will return to normal in 18 to 24 months. But only 22 percent of travel and hospitality CMOs predict a positive impact will occur by that time. Consumer products was another industry that was less optimistic, with 33 percent predicting a positive outcome.
*The top three actions that CMOs have taken in response to COVID-19 were: launched special COVID-19 communications to customers (61 percent); deployed listening tools to monitor customer COVID-19 sentiment of trends (47 percent); and developed scenarios for planning purposes (42 percent).
*Seventy-nine percent of CMOs will fuel growth in 2021 with existing markets, suggesting that CMOs’ priorities are trending toward conservative. Moreover, 69 percent said they will conserve the status quo or take limited risks.
*In terms of strategic marketing capabilities, brand strategy holds the top spot, with 33 percent of respondents, behind market analytics (29 percent) and marketing operations (28 percent).
*The most important brand metrics were brand health (44 percent ranked it in the top two) and competitive benchmarks (41 percent). And ROI (19 percent) and marketing qualified leads (18 percent) topped the list of CMOs’ most valuable metrics.
*A third of marketing work has shifted from agencies to in-house, but future plans may be interrupted by budget cuts.
*Martech spending has stayed strong, accounting for 26.2 percent of marketing budgets.
*Digital channels represent nearly 80 percent of budgets in 2020, and 62 percent of CMOs surveyed expect media spend to bounce back in 2021.
—
We spoke with Ewan McIntyre, Vice President Analyst at Gartner for Marketers, about the survey’s key findings and what strategies CMOs should employ to further economic recovery.
Chief Marketer: Do you have a theory on why CMOs’ optimism conflicts with the business reality they’re facing, such as budget cuts?
Ewan McIntyre: The challenge is that CMOs are just not looking at the right signals when considering the long-term outlook. This is not a new thing—CMOs have reported in previous Gartner surveys that they rely on near-term, and often internal indicators, when considering the environment. This is a different mindset and mentality from that displayed by other members of the C-suite. Marketing is considered being the enterprise’s optimist in chief. Positivity is a virtue—an essential attribute for marketing success. But only when married with pragmatism and a realistic view of the world outside the four walls of the marketing department.
CM: Why is there such a discrepancy between CMOs’ view of the recovery and CEOs’? Do you see this as a serious issue?
EM: This is a serious issue. As we move through the stages of the COVID crisis, marketing is fundamental to enterprise recovery and renewal. But marketing needs to firstly ensure that it has focused on optimizing its costs and built the right capabilities based on the fundamental changes that have occurred, not just to customer journeys, but also to the prevailing economic environment. The challenges have just started—the COVID-19 pandemic is a health crisis that precedes an economic crisis. Focusing on the right customers, strategies and resources to deliver recovery is of paramount importance. This requires strategic alignment across the enterprise.
CM: Do you think recent surges in COVID-19 cases across the U.S., and the fact that many states have reversed their course on reopening certain businesses, would influence CMOs’ responses if the survey was fielded today? If yes, how might they differ?
EM: We anticipate responses will evolve throughout the year. Gartner has been tracking CMO sentiment, strategies and budgets right from the start of 2020 and will continue to do so as the crisis evolves. Like consumers, CMOs are struggling to understand the implications of COVID-19, and how it will continue to impact journeys and demand. Furthermore, the budget challenges we reported in the survey are the first of a set of cuts. Those marketers who saw their budgets increase in the face of COVID may find their budgets normalize in the back half of 2020, as abnormal demand falls away. And even the almost half of CMOs who had to cut their budget in the first half of 2020 are likely to see further cuts in 2020 and 2021. This is likely to further dent the confidence of CMOs and their teams. But, by focusing on agile, adaptive strategies, re-prioritizing their spend commitments and maintaining a laser-sharp focus on their customers, CMOs can take positive steps to weather the storm ahead.
Network
