CMO Survey: Small Increase in Traditional Ad Spend Projected

Thu Mar 2, 2017

Kathy Crosett

The optimism that has seized the stock markets since last fall’s election is spreading through the leadership suites of America’s businesses. The latest CMO Survey, produced in conjunction with Dr. Christine Moorman, indicates businesses, on average, will spend up to 10.9% more on marketing in the next 12 months. The increase will put marketing spend at about 8.1% of total revenue. The survey, sponsored by the American Marketing Association, Deloitte, and Duke University’s Fuqua School of Business, contains great insight about where to find media sales opportunities this year.

Marketing and Ad Spending

B2B services businesses will lead the pack with a 14.4% planned marketing spend increase, while the other categories in this survey, B2B product, B2C product and B2C services, will come in with increases just below 9%. Some sectors are definitely planning expansions this year, and their marketing projections reflect this activity. For example, business in the education field, consumer services and tech/software/bio tech expect to increase marketing expenditures by 20.5%, 15.5%, and 15.2% respectively.

As part of their marketing outlay, enterprise ad budgets will rise, too. The average firm will increase digital marketing by 14.6%. And, in a trend that has not been seen in several years, spending on traditional media will increase 0.6%. Operators who will increase traditional advertising the most fall into the B2C product (+3.1%) and B2C services (+2.7%) categories.

Social Media

Marketers continue to believe in the power of social media. With spending on this format accounting for 10.5% of the current marketing budget, survey participants predict social media will take up 18.5% of the budget in 5 years. Not surprisingly, B2C product companies allocate more of the budget (14.6%) for social media, than other types of marketers.

If history is any indicator of what will likely happen, the social media spend may not rise as quickly as expected in the long term. Three years ago, survey participants predicted the average social media spend for February 2017 would be 19.5% of the marketing budget. The current spending is just a little over half of that amount. The slower than anticipated spending rate may be the result of poor ROI. 43.3% of marketers do not see a social media impact on their business. Only 18.4% have shown a quantitative impact, while 38.2% have a qualitative ‘sense’ that their social media efforts are making a difference.

Mobile

Mobile marketing is another focus area for businesses. Currently, the typical business spends 5.1% of its marketing budget on mobile. The biggest success area for mobile marketing, in terms of this survey, comes from increased customer engagement, which participants rank as a 3.5 on a scale of 1 to 7. Overall, mobile marketing’s contribution to the overall business performance scores on 2.7 on the same scale, but the format has gradually improved since last year.

Analytics

Businesses are also shifting more of the marketing budget to analytics. In the next 3 years, marketers say this form of spending will jump from 4.6% to 21.9% of the total. Larger firms, those with revenue exceeding $1 billion will commit the most to analytics. Before making key marketing decisions, execs are turning to data at least 31.6% of the time.

As media sales reps prepare their pitches for prospects, they’ll need to explain how their services and ad space will improve ROI and connect the details to the data. This strategy will be especially important in the consumer services sector where analytics score a 5.9 out of 7.0 in terms of contributing to performance. Cross that hurdle, and you’ll be able to sell more digital and traditional media.

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About Kathy Crosett

Kathy is the Research Director for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel.

View all posts by Kathy Crosett
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