• by Jack Loechner , Staff Writer @mp_research, January 23, 2008

Marketing Performance Critical; Agency Resource Functions Scrutinized

According to a CMO Council survey of 800 senior marketers, 37.6 percent of respondents say annual budgets will not change in 2008, while 33.1 percent expect to increase spend by up to five percent, and almost 10 percent say their budgets will grow between six and 10 percent. Only 7.6 percent expect to see budget increases greater than 11 percent. Last year 52.6% of global marketers had budgets that equaled less than 4% of revenue and 35.4% indicated they spent the equivalent of 4 to 10% of revenue on marketing.

The Chief Marketing Officer (CMO) Council reached out to more than twice as many marketers than it did in the previous year,  gaining insights from 825 respondents (compared to 350 for the 2007 report) at companies doing business in every region of the world.

While marketing performance measurement dashboards topped the list of solution needs in 2007, the focus for 2008 is far more revenue and demand-based with email campaign management and customer relationship management solutions leading the procurement intentions list.

The allocation of budget dollars is moving away from advertising and public relations towards customer-facing and lead and response generation spend in 2008. Heading the list of spend areas for 2008 are events and trade shows, direct marketing, sales support and online marketing. Further down the list are advertising and PR which were far better placed in 2007.

The online study, conducted in partnership with eRewards and co-sponsored by Deloitte Consulting LLP, Marketo and TechTarget, includes significant findings such as:

While some 79 percent of respondents believe Marketing is making significant or reasonable progress in improving the perceived value of the function, 21 percent of marketers are either still trying to gain traction or are stalled and losing credibility in their organizations.

53 percent of survey respondents say quantifying and measuring the value of marketing programs and investments remains the top challenge in the year ahead. Those marketers gaining ground in raising credibility and stature point to the following factors as key to underscoring marketing's value:

• Impactful branding and communications
• Awareness and reputation gains
• Building internal relationships with sales & finance
• Improved customer relationships
• Quality of leads and opportunities

Important organizational and operational changes planned for 2008 include:

• Adding new competencies and capabilities
• Improving accountability of the marketing organization
• Deploying content and web site management solutions
• Implementing marketing ROI and/or resource allocation capabilities

Senior marketers identified the top six areas of investment to include:

• Email campaign management
• Customer relationship management (CRM)
• Marketing performance measurement dashboards
• Customer intelligence and solutions
• Search engine marketing (SEM)
• Sales and marketing integration tools

The 12 leading areas of marketing dollar allocation in 2008 are expected to be:

• Strategy and branding
• Events and trade shows
• Operations
• Direct marketing (including telemarketing, mailings, email)
• Sales support
• Online marketing (web site, SEO, SEM, viral, podcasts/blogs, communities)
• Advertising
• Market research
• Systems
• Merchandising and promotions
• Public and analyst relations
• Customer data integration and analytics

Marketers reported significant agency turnover in 2007 with advertising (41 percent), web design (38 percent) and public relations (26 percent) firms most frequently changed in 2007. Special markets (e.g. ethnic), demand generation, hosted services/solutions and sales promotion had the lowest incidence of substitution. Performance issues were the most prevalent reasons for swapping out agencies in 2007. These included:

• Lack of innovation
• No value-added thinking
• Poor creative
• Quality of work
• Results and deliverable

45 percent of marketers expect to change an agency resource function in 2008 with web design and development topping the list, followed by direct marketing, advertising and public relations.

Senior marketers rank the following six competencies as key areas of staff development and recruitment in 2008:

• Marketing or customer analytics
• Strategic planning and business development
• Product marketing
• Database marketing
• Vertical market expertise
• Customer intelligence

Venting on the biggest sources of aggravation and frustration, says the report, senior marketers pointed to the following conditions as top of their list:

• Organization culture
• Senior management mindset
• Insufficient budget
• Having to do more with less
• Politics and power plays
• Being too reactionary and tactical

Please go here to access the complete PDF report online.