CMOs Need to “Budget Bold” for 2024

At the beginning of 2023, many CMOs were lamenting that the anticipated recovery from the COVID-19 pandemic didn’t look like it was going to happen this year. In May, the annual Gartner CMO Spend and Strategy Survey reported 71% of CMOs felt they wouldn’t have enough budget to fully execute their strategy. In addition, 75% were facing pressure to cut technology spending, and 86% were planning significant changes that would enable them to do more with less. Inflation and recession risks were top-of-mind, creating what Gartner called a “cost-of-living crisis” for marketing, especially in the areas of technology, media and talent.

Fast-forward to today, however, and the prevailing mood has become a bit more upbeat. Although inflation was still higher than normal, it was considerably better than in 2022, and the United States managed to avoid a widely anticipated recession (at least, for the time being).

Optimism Outweighs Potential Headwinds — For Now

According to the B2B Marketing Benchmark report, co-published mid-year by LinkedIn and Ipsos, 6 out of 10 CMOs said their budgets had increased in the past year, with more than 2 in 3 anticipating bigger budgets in 2024. These sentiments aren’t unique to the United States: the ratio of CMOs expecting budgets and spending to rise were largely consistent across North America, Latin America, Europe and the Asia-Pacific region.
 
The sole exception to this trend was the tech sector, which reported more of a marketing pullback than other segments. Where industrial operations fit in these findings isn’t clear from the report. Our recent client interactions suggest they fall somewhere in between — not sure whether to move cautiously forward or conservatively fall back.

Heading into 2024, there’s still a lot of uncertainty to keep us awake at night. Geopolitical instability continues, from conflicts in the Ukraine and the Middle East to trade tensions with China. Political polarization in the U.S. shows no sign of abating, especially with a presidential election coming up next November. Recession became a reality in Europe and elsewhere mid-year; while it’s still not inevitable in the U.S., the prospect continues to weigh on many decision-makers and could lead to budget cuts as the year progresses.

In times like these, the natural impulse is to hesitate and “play it safe” by pulling back on marketing spending. Our advice on that can be summed up in a single word:
Don’t.

Uncertainty = Opportunity

However much big companies might want to slow down spending when things get tough, the smart ones know they offer the chance to make a bigger splash and gain ground. That’s why many of the world’s most successful B2B brands have a history of increasing marketing efforts during economic downturns, including Microsoft, IBM, Oracle, Cisco Systems, Adobe and the B2B financial services division of American Express, just to name a few.

The math is simple: if you’re outspending your competitors wisely, you’re going to gain ground — and that’s even easier when they’re pulling back. So if everybody’s pulling back, it’s time to push forward. Even if they’re not, ongoing spend is essential to ensure you retain and grow your presence in the market.

Although it may not be easy to get internal buy-in for this kind of strategy, B2B CMOs have several advantages this year. The first is that B2B companies typically don’t see as big of an impact from macroeconomic factors. Although microeconomic conditions in their specific industries may cause disruptions, B2B typically runs on a longer-term scale, with more stable client bases that can smooth out economic bumps.

In addition, the LinkedIn/Ipsos findings suggest the influence of the CMO has grown within the C-suite within the last two years. Roughly 2 in 3 CMOs and CFOs agree that the importance of the CMO has increased. Interestingly, CFOs (60%) are more optimistic than CMOs themselves (49%) in the marketing team’s ability to drive revenue.

Spending Smart in 2024

Even if you’re not one of the lucky CMOs anticipating greater budgetary flexibility in the coming year, you can still gain ground by allocating your resources wisely, especially if you’re competing with more hesitant rivals. We see four areas of opportunity ahead:

1. Continue Your Digital Evolution

Every CMO enjoys the ease of extracting measurable data from digital marketing. It’s just there for the taking. If your system is sophisticated enough, you can drill all the way down to the details of the sale. The pressure to generate quick results and justify every tool remains strong, so we fully expect CMOs will continue to bet big on digital. 

And that’s fine — up to a point.

Although the connection between digital marketing and lead generation can’t be ignored, the ROI statistics can be deceptive. When an Amazon ad shows up in a Google search, does the e-commerce giant win the sale because they bought the most pay-per-click ads, or does the strength of their overall brand awareness and reputation lend them more weight? Both factors matter when it comes to lead generation.

What’s more, data without insight has limited value. This point was emphasized in a recent B2B Martech guide co-published by B2B Marketing and Torpedo Group, which states that machines are often only as good as the humans operating them. Replacing people with technology isn’t the answer; talented people who know how to use it are still critical.

These sentiments are echoed in the B2B Marketing Benchmark report, which found that while 3 in 4 marketing leaders plan to start or continue using generative AI (the industry’s shiniest new toy), fewer than 2 in 10 claim to have an extremely good understanding of how to use it.

2. Build Your Brand

Although a growing number of B2B CMOs are recognizing the value of brand building, the largest share of marketing budgets (67 to 80%, depending on who you ask) is still focused on short-term sales activation, defined as efforts designed to get immediate response. While that type of success looks great on this quarter’s books, it’s unsustainable on its own — and leaning too heavily on it ultimately will diminish the value of a business. 

Why? Because most B2B customers aren’t ready to buy today. And by the time they are, the vast majority will already have decided with whom they want to do business. What’s more, a short-term approach in an industry with sales cycles that typically last two years or more makes no logical sense whatsoever.

Recent analysis by Brand Finance suggests nearly $1 trillion of business value remains untapped by B2B brands, which continue to lag their B2C counterparts when it comes to brand building.

You’ve heard us talk before about the relationship between a brand’s share of voice (SOV), or its share of all category advertising expenditure, and its rate of growth. Research by Les Binet and Peter Field confirms what B2C marketers have known for more than a half-century: brands that set their SOV above their share of market (SOM) tend to grow, while those that set SOV below SOM tend to shrink.

We’ll cover SOV in greater detail in an upcoming feature. For now, suffice to say that SOV data is easier to access and measure than ever before. When you run overarching brand awareness hand in hand with activation (Binet and Field recommend a 50/50 split), you’re able to see direct ROI because you can evaluate how much attention you’re getting compared to your competition.

3. Get More Creative

Another common theme running through many of the sources we’ve mentioned in this article is that when it comes to creativity, a lot of B2B content, well — sucks. 

Many B2B companies still seem to believe that all they must do is build that better mousetrap. Too much B2B marketing focuses primarily on the features of products, ignoring the benefits they can deliver — and more importantly, why the customer should care. As a result, an estimated 71% of B2B ads generate no sales. 

According to research by the B2B Institute, what’s actually working is powerful creative, which can drive 10 to 20 times more sales. What’s more, B2B buyers are just as motivated by emotion as B2C buyers (hint: many of them are the same people). Merely by tracking its own internal data last year, LinkedIn found that brands with higher emotional engagement acquired an average of 198 times more followers and had a 44% higher average click-through rate (CTR) than the rest of the companies on their platform. That suggests big opportunities for B2B companies that boost their level of creative commitment.

4. Measure Everything

Whatever tactics or plans you use in the coming year, make it a priority to measure their value. In addition to the benefits of knowing what’s working and what isn’t, hard numbers can provide valuable support when justifying marketing spend to the C-suite.

Digital lead generation platforms provide tools that make it easy to monitor response in real time. As a result, we recommend that you start measuring digital efforts almost immediately after launch. It also enables you to test the waters with tactics like A/B testing with minimal effort, potentially strengthening the campaign.

SOV and other brand awareness programs are going to take longer to be effective and the measurement is more involved. Depending on the program and the complexity of the measurement process, evaluating the effectiveness may take longer as well. Is it worth the wait? The world’s top-performing B2B brands seem to think so.

The B2B Martech guide also recommends “reframing” ROI beyond the traditional definition of revenue from external sources. It suggests CMOs also need to consider the internal ROI that results from greater efficiency and effectiveness. Does a given marketing investment save you time, cost less than other alternatives, or free up resources that can be reallocated to client acquisition? Is it essential to your efforts in some other way? Direct financial gain isn’t the only way to make the case for ROI.

Whatever You Do, Don’t Hold Back

Boldness and brand-building can be hard sells during unpredictable times, but history offers numerous examples of rewards that were worth the effort. The latest data suggests many CMOs and other C-suite stakeholders agree. 

External success will go to B2B organizations willing to capitalize on the opportunities the coming year will present. This will depend in large part on the internal success of CMOs who are willing to use their growing influence to encourage more creativity and brand-building efforts. That may feel risky until you have solid proof of ROI. But the bigger risk you’re likely to face in 2024 is missing out on one of the most favorable environments for growth we’ve seen since before the pandemic.

Not sure how to turn uncertainty into opportunity for your organization? Give us a call.