Inflation takes a bite out of marketing spend: CMO Survey

While nearly one-third (30.1%) of U.S. marketers are more optimistic about the economy than they were in the previous quarter, the C-suite continues to retrench and cut costs, according to the 30th edition of the biannual CMO Survey.

A collaborative effort between the American Marketing Association, Deloitte, and Duke University’s Fuqua School of Business, the CMO Survey is based on responses from 314 marketing leaders at for-profit companies across multiple business sectors, including tech, consumer packaged goods, retail and banking. Companies ranged in size from fewer than 50 people, to more than 10,000, with revenues ranging from less than $10 million to more than $50 billion.

More than half of marketers (52%) indicated that inflationary pressures are causing a decrease in marketing spending, up 20% from the previous survey, while 31.4% said they have made no change. The percentage of marketers saying they have increased marketing spend levels remained consistent at 16.6%.

Marketing budget as a percentage of company budget dropped to 12.3% from 13.8% in the previous survey. However, marketing budget as a percent of company revenues rose to 10.9%, from 8.7% in September.

One-third of marketers (32.3%) reported that “superior product quality” has emerged as a consumer priority, a growing trend since the pandemic’s onset. And while “low price” was the fifth ranked consumer priority at the beginning of the pandemic, it is now the second most important among consumers.

“This is likely due to customers becoming more price conscious due to inflationary pressures and uncertainty about the economy,” the survey authors concluded. “Together with the focus on quality, customers want the best of both worlds and may not be willing to pay for better quality.”

The pandemic also continues to broadly impact marketing channels, with 61.2% of companies reporting an increase in the number of channels they use for marketing purposes, and 56.9% reporting a return to pre-pandemic face-to-face channels. These face-to-face channels are “increasing across the board,” the survey concluded, with only 6.7% of marketers saying that their former face-to-face channels have gone completely digital.

On average, companies invest nearly 60% of their marketing budget (59.9%) on short-term marketing efforts, but acknowledged that the ideal mix is evenly split between short-term and brand-building.

The survey found that current company CEOs are less likely to have held a marketing role than they were pre-pandemic, with only 23.5% of companies saying that their current CEO had a marketing background, compared with 35.9% in February 2019.

It also noted that those with a marketing background are less likely to become a CEO, with 26.1% of respondents indicating that it will “never” happen (up from 14.9% in 2019), and 44.6% of respondents saying it was “unlikely” to happen.

In an era of brand boycotts, it’s not surprising that marketers continue to be unwilling to take a stance on political issues, with 70.9% of respondents saying it’s not appropriate.

Asked which companies set the standard for excellence in marketing, respondents cited Apple, Amazon, Nike, P&G, The Coca-Cola Company and Salesforce. The full survey can be found here.

Photo by Campaign Creators on Unsplash

Chris Powell