No measly little virus can stop the global marketing machine… although it certainly might have altered it for a bit. While marketing budgets have remained relatively consistent for more than a decade, the expected 7.6% growth for 2020 was adjusted to just 1.6% growth, according to the latest CMO Survey.
At the same time, marketing budget plans have steadily remained at more than 11% of overall firm budgets. Companies are still marketing their brands, but many had to modify their preferred channels, opting for cost-effective strategies like email marketing and SEO instead of costly live events and trade shows.
So, what are the best ways to invest a marketing budget to get the best return on investment? To get some valuable insight, we asked a few disruptive CMOs for their advice.
Our marketing experts:
- Scott Todaro serves as CMO at Plannuh, Inc., an AI-driven platform designed to create and manage successful marketing budget plans with ease. Co-author of “The Next CMO,” Todaro has been leading marketing teams for nearly 30 years, including assisting three companies through successful acquisition and another through its IPO.
- Donovan Neale-May is the founder and executive director of the Chief Marketing Officer Council, a global network of more than 16,000 senior marketing executives and 10,000 companies. He is also the executive director of the Business Performance Innovation Network and president of the multi-channel marketing firm GlobalFluency, Inc.
- Kirill Kniazev is the marketing director at Motili, a tech platform that helps property owners manage their HVAC assets. Author of works such as “Digital Marketing Explained: For Small and Medium Business Owners,” and “The Science of Customer Connections,” Kniazev has been building brands across multiple industries for more than 14 years as he’s led lean and agile marketing teams in high-growth, B2B sectors.
We asked our experts about their best practices when creating marketing budgets and what types of spending they prioritize for maximum ROI. This is what we learned:
2021 marketing budgets were heavily influenced by the global pandemic
Todaro says in lieu of live events, the lion’s share of 2021 spending is on digital advertising, including channels like various social networks and Google AdWords.
“All that face-to-face marketing where there's a tremendous amount of spend... it was gone,” he said. “Some people ran some virtual events… they just aren't the same… It can be difficult to do these things over video when you can't make sure people are in their seats.”
“Primarily I would say digital advertising was the big winner in this pandemic, and that's where a lot of the spend is going,” Todaro said, adding that even within digital advertising there are numerous ways to direct spending. “People spend money on a lot of things, so even in digital advertising, there's a lot there. There’s a lot of content, lists and people buying databases to target new audiences.”
Expect a transition toward normalcy to begin in 2022, with a renewed emphasis on trade shows and events
Todaro also explained that companies are hoping to return to trade shows and other live events by early 2022.
“If designing a 2022 budget, it should include some events, there definitely is going to be a lot of getting people together again,” he said. “People are tired of being at home and they really believe there will be a pull-back toward doing live events and communication that way. In marketing, the most important thing you can do is find out what makes your audience tick. If you have a bunch of extroverts sometimes it's better to have those kinds of mediums.”
Marketing will continue to undergo a digital transformation
Neale-May says it’s vital to invest in digital marketing and a company’s web presence.
“Today your corporate lobby is virtual,” he said. “You have to have a high performing website, content, user navigation, accessibility, be e-commerce capable— things that improve customer conversion, the customer journey and the path to purchase.”
“In a lot of companies, the website is the primary interface for customers,” Neale-May explained. “Think about who your customers are and what channels are reaching them. Invest in data, whether it's sourced from social media or other AI platforms.”
“The market wants to interact with multiple digital channels,” he added. “You've got to be able to cater to folks with that preference of engagement. It's really about the customer experience, which starts with the website.”
There is no one-size-fits-all formula for a successful marketing budget
Kniazev says a marketing budget breakdown depends on factors such as market position and overall strategy.
“For example, a b2b company with a healthy revenue stream and a complex sales process/cycle could focus less on advertising and more on building strategic partnerships, thought leadership content, marketing automation, and database marketing,” he said. “This approach would allocate more budget to activities that assist in building relationships.”
“On the other hand, a b2c eCommerce business which sells inexpensive consumer goods would likely allocate a significant portion of their budget on pay-per-click, banners, on social media advertising and possibly sponsorships— including influencer support,” Kniazev added. “There is no one-size-fits-all approach to budget allocation, and that’s one of my favorite aspects of marketing.”
Neale-May agrees that the makeup of an effective marketing budget plan varies based on multiple factors.
“It all depends on the context, the life stage of communication, the maturity of products and whether you're a new company,” he said. “Marketing budgets start off differently if you're launching a new company than if you are an established company.”
Neale-May elaborated, explaining that the types of spending needed are based on variables such as whether the brand is in a high-growth market or a mature market and what channels are used for acquiring customers.
“Look at the revenue, the value,” he said. “It’s all a matter of determining the life stage, the marketing environment, the competitive dynamics… all of those things are going to impact what you spend and how to spend it.”
Todaro says any marketing channel has the potential to deliver… and the potential to fail.
“It doesn't really matter which channel you use, they're all empty pipes,” he said. “It's what you put into the channel.”
“If you say something to connect with your audience, it will probably work. If it's unclear because you're trying to be too cute, it's probably not going to work. No matter what form, if you don't say the right things, it doesn’t matter.”
Data will continue to drive marketing efforts
According to Statista, the U.S. marketing data market was expected to exceed $30 billion in 2021. Neale-May says platforms will continue to capture more customer data.
“Where and how (marketing efforts) can be customized and personalized… these are all powerful technologies that are available,” he said. “If you are on a website, and they track you, that's more paid media.”
“When tracking online behavior, every purchase begins with some type of web search,” Neale-May explained. “If you're looking for a car, the moment you start looking they are tracking you, constantly suggesting products depending on your browsing and search history. There are more and more ways to use customer data.”
Spending categories offering the best ROI are often those that require little to no financial investment
Todaro expects investments in social media marketing will provide his company with the best ROI.
“When talking about ROI, you're looking for what is the return and what is the investment,” he said. “How much money did I spend, and how much money did I make? The result is that anything free will give the greatest return because it didn't cost anything.”
“That being said, when you send out an email, it costs very little,” Todaro added. “Managing SEO in-house doesn't cost much. Using social channels can reach a lot of people quickly, which is going to produce the best result. When using social, even if there is no outcome, it still didn't cost anything.”
Neale-May, on the other hand, is partial to email marketing.
“Email marketing can be very effective if you've built a qualified list of targets,” he said. “Email is very efficient, and you can do it repetitively. Email marketing is a very valuable way to drive demand. It's measurable, trackable, and has a lot of ties back into social media platforms.”
“Email marketing is a very low-cost tool,” Neale-May added. “If you see every online merchant, the first thing they want is your email address. Some even give a discount if you give your email address.”
Prioritize marketing strategies that lead down a path to revenue
Kniazev says marketing often has a negative reputation as a business expense, but his goal has been to change that perception.
“That doesn’t mean that everything has to be spent on ads and marketing automation,” he explained. “Sometimes brand awareness and credibility are needed and necessary to clear a way to the revenue path, but all marketing activity and expenditure should be justified in terms of how it will help improve the bottom line.”
“Marketing for the sake of marketing, or just “doing what everyone else is doing” often leads down a path of failure,” Kniazev explained. “So, expenditure that points to revenue is the highest budgetary priority, and tools for supporting, measuring and optimizing marketing activities would be my second highest priorities.”
Bigger isn’t always better
Kniazev also says that sometimes being a smaller company can be an advantage, even with smaller budgets and fewer resources.
“My background is primarily in b2b start-ups and high growth companies, and often these are funded without investors or enough funding to go head-to-head with larger competitors when it comes to advertising, for example,” he explained.
“However, larger often means slower. Nimble companies often pivot budget from one activity to another while looking for the best solution, and by moving quickly can often outmaneuver larger competitors by staying on top of market trends, quickly building relationships and navigating the marketing landscape without some of the barriers larger companies have.”
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