DMN3 Blog

Those responsible for marketing budgets are becoming more and more optimistic about the U.S. economy and about their own company’s prospects for the coming years. How would your responses compare to this February 2011 CMO Survey?

The February 2011 Survey is the latest of CMO surveys conducted twice annually by the Duke University Fuqua School of Business and the American Marketing Association.

Chief Marketing Officers (CMOs) agree on the fact that the health of the U.S. economy is improving and so are their interactions with customers. They rate the economy as a 63.3 on a hundred point scale and 68.8 percent of them are more optimistic about the economy. They also expect customers to buy more at higher prices, to retain more customers and to see new customers entering the market.

Higher prices may be the result of less customer emphasis on price. CMOs expect to see a shift from "price conscious consumers" to "brand conscious consumers" and for greater emphasis on innovation in the market place.

Companies are making their biggest spending increases to extend market penetration with existing products, with less emphasis on developing new products, markets and diversification strategies.

Those expectations and marketing strategies are translating into increased marketing budgets. Of the 421 companies who responded, the average marketing budget is 8.1 percent of the overall organization budget. Marketing budgets for all are expected to increase 6.7 percent on average over 2011 and early 2012.

It should be noted that the average percentage of marketing budget to overall budget varies by industry with consumer packaged goods marketing budget accounting for 18.6 percent of the overall firm budget while mining/construction marketing budgets only accounting for 3.3 percent of the overall budget.

The same can be said for increases in marketing budgets with consumer product businesses (B2C – Product) seeing the greatest increases. CMOs for these businesses expect a 20.4 percent increase in the 12 months following the survey.

Traditional advertising is slowly coming back. CMOs expect to see a modest 2.4 percent growth in spending while Internet marketing will continue to see strong growth at 12.1 percent according to the survey. Spending increases will also go to “brand building” and customer relationship management.

Social media spending will continue to grow dramatically. Marketers expect that the percentage of their marketing budget spent on social media to climb from 5.6 percent of their marketing budgets to almost 10 percent over the 12 months following the survey. They expect that figure to almost double again over the next five years with social media accounting for over 18 percent of the overall marketing budget.

There are also sector differences in the use of social media for marketing. Service companies, both B2B and B2C, will see the biggest increases over the next five years according to the survey with increases of about 21 percent projected.

As companies expand their marketing efforts, they are also spending to increase their own marketing knowledge with the largest increases going to “developing knowledge about how to do marketing.”

As marketing budgets increase, the percentage of companies outsourcing their marketing programs continues to increase as well. Over the twelve months, from February 2011 to February 2012, the percentage of companies outsourcing their marketing efforts will increase by another 4.5 percent to reach 75 percent overall.

You can see the Survey Results Here: February 2011 CMO Survey

The responses to this study reflect what has been seen in other surveys and analysis. Businesses are responding to better economic conditions in the U.S. and are increasing their marketing budgets. They also expect better fortunes for their companies as consumers become more confident and buy more on brand and quality than on price in the coming months.

All of us hope these CMOs are right!