The greatest increase in CMO spending over the next 12 months will be on new product and service introductions, according to The CMO Survey released this month. Investments in social media will grow too, as CMOs try to better integrate the online medium into their corporate strategies.
The CMO Survey, which is conducted twice yearly, found that companies are planning to increase their marketing budgets to account for 10% of their overall corporate expenditures over the next 12 months, up from a projected 8.1% reported in the February 2011 survey.
As the marketing function gains internal investment, CMOs will increase their rate of spending on new product introductions by 10.4% and new service introductions by 6.6%. More products and services coming to market at a faster rate, requiring more product launches and services launches, may be the reason.
At the same time, CMOs will reduce their rate of spending on traditional advertising to 1.3%, as the shift from legacy methods of marketing (e.g. print, TV, radio, outdoor, etc.) to mobile and web-based marketing continues.
CMOs will also be allocating more money to social media resources. According to the survey, social media spending is expected to grow over 10% in the next five years, from 7.1% of the budget today to 17.5% by 2016.
Marketers are increasing their spend in social media so that their brands are where consumers are, especially prospects who are likely to purchase online. Nielsen’s Social Media Report, issued this week, confirms that avid social networkers buy online. Nielsen found that “70 percent of active online adult social networkers shop online” and that they are “12 percent more likely than the average adult Internet users” to do so.
CMOs admitted in the study that social media is not well integrated into their companies’ corporate strategies, with just 9.1% replying that it is “very integrated” and 22.3% responding that it is “not integrated at all.” This shouldn’t come as a surprise. New methods of marketing often take time to be broadly incorporated into corporate cultures.
The marketing landscape is always changing. Now it seems to be doing so more rapidly than ever before. New methods to communicate with one another, new ways to get information and new tools to streamline the way we buy are all making it more challenging for marketers to come up with the right “formula” to influence purchases. Thankfully companies are deciding to increase their investments in marketing so that CMOs and their teams will have the opportunity to do their best to figure it out.
The CMO Survey is co-sponsored by The Fuqua School of Business at Duke University and the American Marketing Association. The August 2011 survey was the seventh time the survey has been conducted. It was inaugurated in August 2008. The study takes place twice a year. Respondents submit their answers via an online survey form. Two hundred and forty nine CMOs participated in the most recent study.
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