Digital marketing is an increasingly important part of the marketing playbook. In fact, digital and offline marketing are now so intertwined it’s difficult to view them in isolation. The latest CMO Survey* quantifies digital marketing’s continuing growth and offers some important lessons for digital marketers in this more complex and expense-challenged era.
While total marketing spend (currently sitting, on average, at 10.3% of revenue) is expected to grow by 13.6% over the next year, digital marketing spend is expected to grow faster, by 16.2%. Already digital marketing takes 57.1% of total marketing budgets.
But it’s not just scale. Digital marketing is dynamic and growing in complexity.
It’s harder to manage as a result, so it’s no surprise that the CMO Survey finds data analytics as the top investment category for marketers, having grown by nearly 40% in the last year. It’s now a priority for over three quarters of marketers across the board, while 91.9% of businesses with over 10,000 employees are making investments in digital marketing analytics.
At the same time, the biggest challenges are reported as being integrating customer data across touchpoints and combining digital and offline data – critical to the success (and to demonstrating the success) of digital marketing.
These issues align with what we hear at 10th Man. Clients come to us because they want to simplify their marketing intelligence. They tell us they want to reduce the overwhelm of data and settle on a few, objective and reliable signals of success. They need to move from hard-won hindsight to real time, actionable insights that enable them to optimise their marketing spend and ultimately improve ROI.
Social media spending is expected to increase at a faster pace over the next five years, to reach 23.5% of marketing budgets. That, in itself, drives complexity because of the need to manage spend/efforts across multiple channels, different audiences and creatives for each, and to monitor organic versus paid activity and results.
In addition to greater activity, there are always other potential channels and inter-channel competition to monitor and manage too. TikTok’s dramatic rise to become the most visited site on the internet in 2021 is just one example.
The survey finds that around a third of all digital marketing activity (and a fifth of social media activity) is performed by outside agencies. For B2C Product companies, the figure is almost one half (45.4%).
This also adds to complexity. Greater outsourcing means more moving parts to coordinate, more reports and data to manage, and the risk of inconsistent metrics.
As the survey states, “MarTech stacks are becoming more complex by the minute and companies are investing in the technologies necessary to keep up."
Privacy is another consideration. Marketers are responding to their customers’ concerns while navigating their way around platform changes like Apple’s ATT and Google’s announcement on the death of third-party cookies.
Investments in managing privacy issues have grown by 20.5% and the survey reports that “marketers are being forced to move away from third-party data and learn[ing] how to take their first-party data to the next level.”
One of the most important findings of the CMO Survey is a sense of falling returns from digital marketing in this post-pandemic era.
As the report says, “The vast majority of marketers agree that their digital marketing contributed to their companies’ performance during the last year, but that contribution has weakened, likely due to new investments that introduce new metrics and require a learning curve to manage well.”
Some of this may be short-term. Initial deployment, set-up and training related to new investments will all be one-off costs that will reduce overall marketing ROI in the first year. But once these systems are up to speed, they should generate greater returns in future years.
But the reference to “new metrics” highlights the need for marketing to agree and adhere to a common set of objective, best-practice metrics that can reflect ongoing performance in a consistent and comparable way. New systems should not mean new metrics.
As the survey reports, “Perceived contributions from digital marketing decline as expectations heighten and attribution analyses become more advanced.”
At a time when marketing in general is of greater importance in two-thirds of businesses, and when marketing leaders report a stronger alignment with finance leaders, only 4 in 10 can say that their CFO is aware of and aligned with digital KPIs.
Among other related areas for improvement, the survey finds that:
For digital marketers to succeed, they need to demonstrate success across all channels of expenditure and across time in a way that C-Suite stakeholders can easily understand.
Digital marketers everywhere need to define and agree those objective metrics that will help them demonstrate success or show areas for improvement. This is especially important in the current economic climate of rising costs and tighter budgets. If you can’t justify your budget, you risk losing it.
In summary then, digital marketing is becoming more important and more complex but key stakeholders are finding it hard to understand and measure its contribution in a consistent way.
That’s a dangerous place for digital marketers to sit. Growth is good, complexity of channels may be inevitable, but it is vital that digital leaders can understand their own performance and demonstrate their success to others.
Approved, consistent, standard metrics that are commonly understood and shared are critical to continued success and agreeing these needs to be a top priority for digital marketing leaders.
The 10th Man platform is designed to simplify your marketing intelligence. We work with some of the world’s biggest brands to provide deep and unbiased insight into marketing performance and organisational decision-making. We help businesses assess and compare their marketing ROI across channels, solutions and time to truly understand and optimise their performance and their contribution. If you’d like to discuss how we can help you simplify your marketing intelligence, please contact us at team@10thMan.media.
All data referred to in this article comes from The CMO Survey’s Highlights and Insights Report, February 2022, available from https://cmosurvey.org/results/