Prove It: 3 Ways CMOs Show ROI as Budgets Decline

May 14, 2018 Alex

A woman’s hand holding a pair of scissors.

For many Marketing Directors and CMOs, the theme of 2018 thus far can be summed up in a two-word phrase: prove it. Have your team’s efforts had a meaningful, measurable impact on business performance? Prove it. Is your spending on martech leading to the greatest potential ROI? Prove it.

And this pressure to “prove it” comes at a time when previously flush marketing budgets have recently been cut, according to Gartner’s CMO Spend Survey 2017-2018. Your budget is lower but the stakes are getting higher—how do you demonstrate value? Good question. Let’s take a look at some of the stats from Gartner’s CMO Survey and discuss what actions smart marketing leaders need to do to get ready for the ROI spotlight.

STAT: Marketing Budgets Declined to 11.3%

Gartner found that marketing budget amounts are declining for the first time in three years, from a high of 12.1% of the company’s budget in 2016 to 11.3% of the company budget in 2017.

ACTION: Make Strategic Snips

Whether you’re in the process of trimming your budget or you know cuts are on the horizon, making smart, strategic snips is the name of the game. Gartner recommends taking a closer look at your martech stack for potential redundancies, as well as reviewing your in-house capabilities against your agency resources, as both tend to be the areas with the greatest opportunities for cost savings.

But don’t assume that firing your agency is your best solution. I realize I may sound a bit biased here, but the reality is that working with the right agency partner can save you money while improving your return on investment. For example, there have been many times that our agency has worked on-site with clients as members of their team, augmenting their in-house capabilities, providing training and developing training materials for existing staff and actually helping hire the staff who would replace us. Strategic cuts are what will make a difference, and if you’re working with a trusted partner they may be able to point out potential areas of savings that you wouldn’t have considered.

STAT: Innovation Remains a Key Focus for 23% of Marketing Leaders

Innovation remains a key focus for marketing leaders according to Gartner, with almost a quarter (23%) of CMOs having 10% of their annual budget set aside for innovation projects.

ACTION: Clearly Define Innovation Goals and Scope

Gartner warns marketers to clearly define what “innovation” means for their company and to ensure that programs that contribute to those innovation goals have a distinct scope, and we wholeheartedly agree—we’ve seen “innovation” turn out to be one of those phrases that can have radically different meanings for different people. If you aren’t careful, the innovation budget can end up being a catchall for shiny technology, projects and initiatives that sound neat but have little to do with meeting the business goals.

CMOs seem to feel less pressure to prove the ROI of projects that fall within the realm of innovation; after all, risk is an inherent part of innovation and failure is an inherent part of risk. However, we’ve found in our own business that it’s important to set goals and metrics for our innovation projects just as we do for projects in other areas of marketing. Though your bar for measuring the success of an innovation project may be on a different scale than other efforts, it’s important that you measure their performance over time.

STAT: Marketing Analytics Spending is 9.2% of Budget

Gartner also found that marketing analytics moved into marketing leaders’ number one spending spot, bypassing website, digital commerce and digital advertising, with CMOs allocating 9.2% of their total marketing budgets to capturing, understanding and optimizing these metrics—not surprising, given the increasing pressure on us to show results.

ACTION: Get Your Metrics in Tip Top Shape

Gartner’s recommendation here is to identify and empower a marketing analytics leader within your team, and to allow that person the autonomy to think beyond the marketing analytics roadmap. I think that’s a great start—but I also think it’s a bit short-sighted to imagine that one person in an organization—especially one in a position senior enough to be making high-level analytics decisions—is going to be an expert in each analytics aspect of every tool within your martech stack.

Instead—and for Perkuto clients I know I’m preaching to the choir here—I’d suggest that your marketing analytics leader consult with a proven marketing consulting firm—where you have the benefit of multiple skilled consultants who literally eat, breathe, sleep and dream in these programs for multiple clients, day in and day out—and perform an audit on your existing marketing automation programs setup, integrations and processes. Is there a chance that you’re basing your marketing decisions on the most accurate, meaningful data possible? Yes! But there’s an even bigger chance that you aren’t. Why risk your ROI and your reputation on bad data (and bad results) when you can get expert guidance on ensuring your analytics are on point?

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