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Marketing report: Internal alignment and the bottom line are priorities

27th Mar 2009
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Despite the harsh economic environment, new findings from the CMO Council’s annual Marketing Outlook report present a surprisingly optimistic appraisal of the marketing sector. Budget cuts and job losses are far less widespread than predicted – but marketers will have to continue to build bridges with the sales department and improve relations with IT if marketing is to meet its executive mandates and provide a greater contribution to the bottom line.

By Neil Davey

Twelve months ago the marketing sector was riding high. Marketers were beginning to make the transition from the ‘brand warrior’ mentality – viewing marketing as an offshoot of advertising – to looking at themselves as business drivers and strategic centres. There were some huge budget increases in areas that were very programme-centric, and more experimental budgeting was happening.

But we're now dealing with a very different environment – as evidenced by the Chief Marketing Officer (CMO) Council's latest annual Marketing Outlook study. "There is no more room for 'spray and pray' messaging; there is no more room for random testing of the new coolest way to market," says Liz Miller, the CMO Council's vice president of programming and operations. "A big shift has happened and we don't have the wiggle room to experiment any more. The mandate is to build business."

However, whilst customer anxiety and cutbacks unsurprisingly emerge as major factors influencing marketing budget allocation in 2009, the study has revealed that overall marketing budgets are holding up fairly well and that there are no signs of mass job cuts. At a time of international panic, the marketing industry, it would seem, is not running scared.

"A big shift has happened and we don't have the wiggle room to experiment any more. The mandate is to build business."

Liz Miller, VP of programming and operations, CMO Council

"If you had asked me in early January to predict what was going to come out the tail end of the study, I would have said that marketing budgets are going to be slashed, headcounts are going to be slashed dramatically, and we are going to see firms investing their limited resources into functional tasks that they're very comfortable with: refreshing advertising, refreshing websites, refreshing the brand," concedes Miller.

"The greatest indicator of how companies react to recessions that we've had in recent years has certainly been the crash of the dotcom industry. Websites were getting redone but they weren't shoring up their customer bases. They weren't going out and gaining more market share at the time of the depressed economy, and weren't really buckling down and honing how they created that alignment between sales and marketing to create those cohesive messages. Everyone just slashed their budgets and held their breath."

But the findings of the study reflect a very different response. Half of the marketers responding to the survey report they're either holding firm on budgets or anticipating increases. And while there are some signs of retrenchment, marketers are committed to their personnel and plan to invest in retraining employees for the digital age (62.9% of the respondents), rather than replacing them with new talent (28.6%).

Digital expertise

These efforts to acquire or sharpen expertise in digital marketing competencies reflect increasing confidence in the effectiveness of it as digital begins to comprise the majority of demand generation spend.

"Digital marketing has moved well beyond search as social media and experiential marketing continue to grow and evolve," suggests Dave Couture, a principal with Deloitte Consulting, a sponsor of the report. "Savvy marketers are applying collaboration marketing methods as a central component of their efforts to maximise customer lifetime value in the digital economy."

These efforts to harvest greater efficiency from current operations emphasise the fact that organisations are attempting to sharpen internal processes and alignments within their business instead of instituting broad restructuring plans. Marketers are also paying close attention to their customers and responding to changes in the selling cycle, with an emphasis on building internal efficiencies and strategic cost cutting, increasing customer insight, and strengthening integration with sales to drive revenue and market share.

Indeed, global marketers reported that realigning operational processes and capabilities to better support sales and drive demand was their top accomplishment for the year. "When we look at the data from last year we clearly saw that the number one frustration – and the number one mandate – was to create an alignment and partnership with sales because they felt there was a huge chasm between the two functions," says Miller. "I don’t think that in the past 12 months marketing and sales have sprinkled themselves in magic dust and all of a sudden everyone gets along, but out of necessity comes a need for these two groups to partner or perish – after all, they are quite frankly the number one and two groups held accountable for slumping sales."

"I don’t think that in the past 12 months marketing and sales have sprinkled themselves in magic dust and all of a sudden everyone gets along, but out of necessity comes a need for these two groups to partner or perish."

Liz Miller

Growing or retaining market share is now the leading executive mandate for marketers (47.6% of the respondents), and new partnerships with sales will aid marketing in this respect. However, old divisions still exist and these could still undermine efforts to meet the executive mandates. "They feel that marketing now has to drive opportunity, has to drive business and drive the bottom line – and sales is beginning to welcome that support," continues Miller. "But there is still the challenge of integration of data. Time and time again we are finding marketers are saying that the key challenge to effective programme execution is a continued culture of siloed data and function."

Of particular concern is the finding that only 9% of the study's respondents indicated they would be working more closely with the CIO or IT group – a shocking statistic considering that IT is the team that manages the flow through of data. "Senior marketers clearly need to elevate their game when it comes to integrating IT and data management into their operations and insights," emphasises Donovan Neale-May, the CMO Council's executive director.

Nevertheless, overall the findings represent an industry that remains optimistic – both budgeting and headcount appear to be in a healthier condition than expected, and progress is being made with internal alignment as part of a larger push to ensure a more significant contribution to the bottom line. However, the challenges that remain will mean that the road ahead will continue to be a tough one. "In order to come out of this at the end of 2009 and realise that we are growth drivers and we are moving the bottom line, it is going to take a lot of marketing through the organisation, with olive branches being handed out to everyone," concludes Miller.

"Marketing needs to be connected at the hip to the sales organsiation without question – but they also have to be connected to the CIO."

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