December 09, 2020
During times of economic constraint and market upheaval, marketers have to make do with fewer staff and less budget. Where do they push their shrinking stack of chips? The smart bets are on MarTech and digital channels.
Here’s what marketers face today: U.S. marketing spend will fall 28% by the end of 2021, in the most optimistic scenario, predicts Forrester Research. Offline media spending will continue its dramatic decrease for at least six to 12 months.
Marketers have had to let go of staff, impose hiring freezes and put major initiatives on hold. There’s talk that reduced staff levels could become a permanent change — that is, doing more work with less people.
To do this, marketers are looking to MarTech.
MarTech automates mundane tasks, performing them at a speed and accuracy far beyond the capabilities of a human workforce. MarTech also helps brands deliver more personalized customer experiences at scale. Marketers gain data-driven insights about customer behavior and a better idea of how their campaigns impact the business.
That’s why MarTech spending remains strong.
Marketers continue to invest in MarTech with spend projected to reach $122 billion by 2022, according to Forrester. MarTech accounts for the largest proportion of marketing budgets (26.2%) compared to media (24.8%), in-house labor (24.5%) and agencies (23.7%), according to Gartner. MarTech investments are largely aimed at building customer loyalty.
“CMOs remain bullish about technology heading into the next 12 months: 68% expect their already significant outlays to increase,” said Gartner in a blog post this summer.
Another bright spot of marketing spend is digital channels. As consumers flocked online, leading to a spike in e-commerce, marketers began shifting their advertising dollars from traditional to digital media.
Traditional media accounted for 46% of the media budget in 2019 but is expected to fall to 40% next year, according to McKinsey & Company. More than half of ad buyers are moving from broadcast and cable TV to connected TV. Companies are increasing their budgets for ad supported video.
“If a silver lining exists, it’s that the shift toward digital channels should be making it easier to track media-spend performance with much greater precision,” said McKinsey in a report. “This budget precision is particularly useful when it comes to budget negotiations between marketing and finance, which tend to be protracted given how hard it is to ascertain the budget’ s impact on growth.”
However, the move to digital channels comes with risk.
While customers are happy to digitally self-serve and laud the speed and convenience of email, text, web, social, chatbots and video, they get frustrated when their needs aren’t met and they can’t escalate to a traditional channel, especially a live person.
In a new CMO Council study, Critical Channels of Choice: How Covid Has Changed the Channels of Engagement, consumers across generations and geographies are getting frustrated with brands to the point that 73% of frustrated consumers are considering moving on and spending their dollars elsewhere.
Tom Kaneshige is the Chief Content Officer at the CMO Council. He creates all forms of digital thought leadership content that helps growth and revenue officers, line of business leaders, and chief marketers succeed in their rapidly evolving roles. You can reach him at email@example.com.
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