Marketer's Confidence Index January 2020
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Executive Summary 01 Marketer’s outlook on consumer spending has improved considerably since mid 2019 The Marketer Confidence index is close again to previous heights: 128. Overall marketer’s outlook is much more positive now but this has not translated into expected increases in marketing budgets yet 02 Marketers’ optimism about the influence of the marketing function remains stable Marketers continue to be excited about the increasing possibilities coming from data and in particular AI 03 Over the past year, marketers’ confidence that their teams are doing the right things improved considerably Nonetheless there still is a clear opportunity to improve further with the right operating model 2
Over the past six months markets have become significantly more positive on consumer spending; the Marketer’s Confidence Index now stands at 128 Marketer’s 130 130 131 Investment 128 Confidence Index 126 Climate 60% 61% 64% 67% 67% 65% 66% 60% 65% 123 122 121 121 13% 12% 11% 10% 10% 11% 7% 10% 9% Good Time Jan May Dec Aug Jan Jul Jan Jul Jan Jan May Dec Aug Jan Jul Jan Jul Jan 2016 2016 2016 2017 2018 2018 2019 2019 2020 Bad Time 2016 2016 2016 2017 2018 2018 2019 2019 2020 Past (6 months) Future (6 months) Customer 40% 39% 40% 46% 45% 43% 39% 46% Customer 48% 47% 35% 40% 42% 46% 46% 40% 39% 37% Spending Spending 19% 19% 14% 19% 7% 21% 21% 20% 24% 21% 14% 12% 15% 12% 12% 17% 14% 12% Increased Increased Jan May Dec Aug Jan Jul Jan Jul Jan Jan May Dec Aug Jan Jul Jan Jul Jan Decreased Decreased 2016 2016 2016 2017 2018 2018 2019 2019 2020 2016 2016 2016 2017 2018 2018 2019 2019 2020 Past (6 months) Future (6 months) Marketing 32% 32% 34% 35% 37% 36% 33% 28% 31% Marketing 27% 28% 36% 35% 34% 34% 32% 29% 33% Budget Budget 21% 18% 21% 20% 19% 20% 21% 10% 22% 23% 14% 13% 13% 12% 12% 15% 14% 13% Increased Increased Jan May Dec Aug Jan Jul Jan Jul Jan Jan May Dec Aug Jan Jul Jan Jul Jan Decreased 2016 2016 2016 2017 2018 2018 2019 2019 2020 Decreased 2016 2016 2016 2017 2018 2018 2019 2019 2020 4
Marketers expectations and perceptions about their organizations’ future performance has not changed significantly since mid 2019 Assessment of +53% Expected performance in -8% terms of revenue growth 71/100 Organization’s Customer Centricity Current revenue growth performance Expected performance of revenue growth Assessment of Org’s Customer Centricity Jan May Dec Aug Jan Jul Jan Jul Jan Jan May Dec Aug Jan Jul Jan Jul Jan Jan May Dec Aug Jan Jul Jan Jul Jan (7) Much 2016 2016 2016 2017 2018 2018 2019 2019 2020 2016 2016 2016 2017 2018 2018 2019 2019 2020 2016 2016 2016 2017 2018 2018 2019 2019 2020 1000 better than competitors 16% 16% 14% 13% 9% 7% 9% 9% 9% 7% 9% 8% 18% 19% 18% 18% 11% 20% 13% 14% 12% 13% 12% 16% 15% 14% 17% 20% 22% 26% 19% 25% 27% 26% 28% 17% 33% 30% 30% 60% 60% 59% 31% 34% 35% 31% 53% 55% 56% 53% 53% 35% 26% 50% 23% 19% 20% 21% 22% 20% 22% 16% 23% 15% 13% 27% 28% 15% 31% 29% 34% 14% 13% 12% 33% 31% 29% 12% 10% 29% 9% 6% 13% 10% 7% 6% 5% 7% 7% 7% 7% 8% 8% 7% 7% 9% 7% 8% 4% 7% 5% 6% 4% 8% 15% 13% 10% 5% 6% 10% 11% 12% 8% 8% 4% 6% 4% 8% 7% 9% (1) Much 5% 5% 7% 6% 5% 3% 3% 3% 4% 4% 7% 4% 5% 3% 2% 3% 2% worse than 4% 6% 3% 7% 4% 2% 2% 2% 3% 2% 3% 3% 2% 1% 1% 2% 2% 1% 2% 2% 2% 2% competitors Increased Decreased 1% 0% 0% 1% 1% 1% 0 1% 1% 0 5
Marketing budget allocation remains stable; spending on sponsoring remains the first candidate for budget reductions while increases are most likely to go to media placement Current Marketing Budget Distribution1 Changes to Marketing Budgets2 Reduction of marketing budget would be made in: Product maintenance / support (promotions, Sponsoring 23% packaging) Media placement 21% 14% Creative (all channels) 18% Creative (all channels) Product maintenance/support (promotions, packaging) 12% 25% Market Research/ Insights 11% Innovation / New Innovation/New Product Development 10% Product Development 12% Analytics 5% Increase of marketing budget would go to: 9% Analytics 21% Sponsoring 6% 8% Media Placement Media placement 23% Market Research / Insights Creative (all channels) 18% 11% Product maintenance/support (promotions, packaging) 8% Market Research/ Insights 14% Sponsoring Innovation/New Product Development 17% Analytics 13% 1 Changes from July 2019 wave: no significant changes 2 Changes from July 2019 wave: no significant changes 6
Marketers remain optimistic about their function’s influence; they are excited about all the new possibilities of data and AI but mostly that’s not what they want the CMO to know more about Most exciting developments Marketing’s influence in the organization +65% -7% AI Marketing is taking over both Digital and data Continued integration of Mass customization, market research, analytics platforms to optimize marketing efforts analytics and customer technology and data science experience into creating differentiated and appealing customer As companies finally begin to The move from mass experience mature in their technologies customization to and capabilities to manage personalization. This allows data, the push toward Will the power and influence of the marketing function increase 5G and big data customer experience will for more specific and or decrease over the next few years? individualized touch points The increasing ability to micro finally begin to become real. with consumers target consumers What does the CMO need to know more about? The importance of spending Digital marketing The Concept that all on research to achieve data customers are individuals, real 69% 71% driven marketing decision The importance of data individuals, and human 64% 65% 61% 65% 63% 65% 60% collection beings, not computers. making The importance of marketing Improve the customer social media to established customers experience Importance of knowing the 7% 6% 6% 8% 5% 8% 8% 7% Marketing automation Our lack of resources to win in market's preferences and to 9% the market understand the data behind Jan May Dec Aug Jan Jul Jan Jul Jan Analytics their choices 2016 2016 2016 2017 2018 2018 2019 2019 2020 7
Over the past year marketers’ confidence that their team is doing the right things increased but there is a clear opportunity to improve with the right operating model How confident are you that your organization’s marketing team…. Change vs. Not Confident Confident Jan 2019: Has A Clear And Well Understood Brand Positioning In Place To Be 22% 55% +8% Competitive Is Investing In The Customers That Matter 16% 52% +9% Has A Clear And Well Understood Strategy In Place To Be Competitive 24% 51% +7% Is Doing Right Things To Drive Growth 20% 51% +10% Has The Right Capabilities To Be Competitive 25% 50% +6% Understands The ROI Of Marketing Plans 29% 45% +11% Has Right Operating Model (People/Structure/Processes/Tools) To Be 39% 31% Competitive +1% Increase statistically significant 8
Appendix & Methodology
Study setup and respondents What When • Short online survey Fieldwork was conducted from January 8 – 27 2020 • Invites were sent to AMA newsletter subscribers and followers. • For this wave a total of 303 respondents participated. • Reliability interval for core questions up to 4.8% (at 90% reliability) Who Level Organization size Gender B2B – B2C • C-level/ Board 11% Age • 1 – 100 35% • Female 62% • All Consumers 19% • EVP/SVP 3% • Up to 35 32% • 101 – 500 20% • Male 38% • Mostly Consumers – some Business. 27% • VP/Director 30% • 36 to 45 26% • 501 – 1,000 12% • About equally Consumers and Business. 13% • Manager 36% • 46 to 55 19% • 1,001 – 5,000 7% • Mostly Business – some Consumers 15% • Other 19% • 56 or older 12% • 5,001 – 10,000 6% • All Business 27% • Rather not say 12% • More than 10,000 13% 10
Marketer’s Confidence Index questions and calculation The Index is constructed of: 2 questions asking about the past: 3 questions asking about the Future: Past 6 month Costumer spending Future 6 month Costumer spending Do you think that overall customer spending in your industry in the past six months What about the next six months? Will overall customer spending in your industry has increased, decreased or stayed the same? increase, decrease or stay the same? Increased Decreased Stayed the same Increased Decreased Stayed the same Past 6 month Marketing Budget Future 6 month Marketing Budget In the past six months has your organization’s marketing budget increased, What about the next six months? Will your organization’s marketing budget decreased or stayed the same? increase, decrease or stay the same? Increased Decreased Stayed the same Increased Decreased Stayed the same Calculation Investment Climate For every question we determine the NET of the positive minus the negative If you think about your organization doing large investments in new projects on top responses (so the % Increased minus the % decreased). of your usual investment, such as investing in product innovation, do you think now is a good or a bad time to make those investments? - These nets are then weighted as follows and turned into an index number - Questions about the past: 40% (weights: both 20%) A good time A bad time Neither a good nor a bad time - Questions about the future: 60% (weights: 22.5% / 15% / 22.5% respectively) 11
Other questions in the survey (1/2) Current performance in terms of revenue growth (Slide 5) Current Marketing Budget distribution (Slide 6) Could you please rate your own organization's current performance versus your Could you give us a sense of how your organization’s marketing budget is currently competitors in terms of Revenue growth? assigned between 1 Much worse than competitors 7 Much better than competitors Slider scale where a respondent allocates 100 points across all items Expected performance in terms of revenue growth (Slide 5) Changes to Marketing Budgets – Reduction (Slide 6) What about the next six months? Will your organization’s performance in terms of If you suddenly had to reduce your organization’s marketing budget by 10%, where Revenue growth improve, decline or stay the same? would you make the reduction? Increased Decline Stay the same Slider scale where a respondent allocates 10 points across all items with budget Assessment of organization’s Customer Centricity (Slide 5) Assessment of organization’s Customer Centricity (Slide 6) On a scale of 0-100, with a rating of 100 being a perfect score, how customer If you think about your organization doing large investments in new projects on top centric would you say your organization is right now? of your usual investment, such as investing in product innovation, do you think now is a good or a bad time to make those investments? By “Customer Centricity” we mean the degree to which your organization puts the customer at the heart of everything you do. Slider scale where a respondent allocates 10 points across all items 0 – 100 slider scale 12
Other questions in the survey (2/2) How confident are you that your organization’s Marketing’s influence in the organization (Slide 7) marketing team… (Slide 8) Thinking about the next few years, do you think the power and influence of the How confident are you that your organization’s marketing team… marketing function within your organization will increase, decrease or stay the same? 1 Not at all confident 5 very confident Don’t know Increased Decline Stay the same Results shown as top2 and bottom 2 responses Most exciting developments (Slide 7) What are the most exciting new developments in the area of marketing that will have a huge impact over the next few years? Open ended Biggest threat to the marketing function (Slide 7) What is the biggest threat for the marketing function today? Open ended 13
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