As business leaders look ahead to the next 12 months, they expect to boost marketing budgets by 10.1%. The CMO Survey, produced by Duke University’s Fuqua School of Business, Deloitte and the American Marketing Association, contains fresh data as of February 2021. The survey, released twice a year since 2008, reflects the sentiments and opinions of over 350 senior business leaders across the U.S. There are six key factors to consider as you help clients think about their 2021 ad budget:
- Boost Marketing Budgets
- Online Sales Jump
- Digital Marketing
- Traditional Ad Spending
- Mobile Marketing
- Objectives: Trust and New Customers
Here are the details about where businesses will be spending and the objectives they’ve set for their organizations.
Boost Marketing Budgets
The average marketing budget as a percent of revenue increased from 11.4% to 13.2% between June 2020 and February 2021. That number is a bit misleading as many businesses experienced a revenue drop during the early part of the pandemic. In fact, actual marketing expenditures dropped 3.9% in the past six months. However, CMOs anticipate spending 10.1% more in the next year. By economic sector, here’s how the data breaks out:
- B2B Product 11.3%
- B2B Services 10.3%
- B2C Product 8.7%
- B2C Services 8.4%
Online Sales Jump and Digital Marketing Rises
Between February 2020 and February 2021, average revenue through online channels increased from 9.9% to 19.4% for the businesses participating in this survey. The rise in e‑commerce was accompanied by an average jump in digital ad spending of 11.5%. Verticals where digital ad spending increased the most included pharma/biotech 36.3% and consumer services (31.1%).
B2C services businesses only increased their digital ad spending by 3.9%, but that may be due to the fact that so many personal services businesses still face operating restrictions. B2B services businesses, however, increased digital marketing by 15.6% in the past year. The digital marketing expenditures were allocated to the following types of activities:
- Optimized company website 73.8%
- Digital media and search 65%
- Direct digital marketing 57.3%
- Data analytics 56.5%
In the next 12 months, businesses expect to increase their digital marketing budgets by 14.3%. Overall, their effort on brand building will drive 9.5% of their marketing spending. One industry will be an outlier when it comes to brand building. Health care marketers will increase their brand building investment (15.4%) in the next year. After a year in which many postponed health care services, providers are eager to build up their patient base.
Traditional Ad Spending
In the next year, the businesses in this survey indicate they’ll reduce traditional ad spending by ‑0.2%. Not all sectors will cut back on traditional formats, though. Pharma and biotech marketers will make the biggest positive investment in traditional advertising (10%).
Between June 2020 and February 2021, spending on mobile shrank from 23% to 18.5% of the budget, but marketers will return their investment in that format to a 23.3% level by the end of 2021. Mobile is a star performer for B2C product operators with a 15.9% of their marketing budgets going to the platform. B2C services businesses devote 13.1% of their marketing spend to mobile.
Objectives: Trust and New Customers
Good marketing will help businesses with one of their key objectives: acquiring customers. By economic sector, here are the percentages of businesses who have made new customer acquisition a top goal for 2021:
- B2B Services 28.2%
- B2B Product 21.0%
- B2C Product 18.0%
- B2C Services 13.6%
The bigger a marketer is, the more consumers trust them, according to the result of this survey. This trust may be partly driven by strong branding campaigns. As the pandemic has dragged on, 72.2% of marketers say marketing has increased in importance and this sentiment may be especially true when it comes to building trust. Firms with between $10M and $25M in revenue were most likely to say this (88%). Businesses in the following verticals said marketing has been extremely important for them:
- Education 100%
- Tech/Software 84.1%
- Consumer services 77.8%
By economic sector, B2B services business (76.6%) were most likely to agree with the increased importance of marketing.
If your clients haven’t increased their spending on brand building campaigns, especially online, now is the time to do so and they can boost marketing budgets. Review their online position by running a Digital Audit on them. The tool is available from AdMall by SalesFuel and discussing the results is a great way to open a conversation with a prospect or client.