CMOs Keep Watchful Eye On The Budget Line

by Karl Greenberg, May 21, 2008, 5:00 AM

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If we are in a recession, you wouldn't know it by marketing budgets. Most CMOs surveyed last month by the CMO Club said their budgets haven't been cut. Yet.

In fact, the 100 chief marketers who volunteered to answer survey questions online said managing marketing budget cuts linked to a recession is among the top issues keeping them in Tums. What are the others? Talent management, customer engagement and trust, and product/brand differentiation.

Pete Krainik, CMO of QD Technology and chairman of the CMO Club, divulged the survey findings in a CMO Club confab Tuesday, at which marketers questioned everything from survey parameters to context.

For example, when Krainik said that per the survey, interactive media are "sacred" versus traditional TV and print media budgets, at least one marketer in the room pointed out that the vast majority of media dollars are still spent on TV and traditional media, trade shows, etc. "Interactive media is cheap," he said.

Another marketer suggested companies like his that have adopted automated metric systems make them a bit like a patient with a Jarvik heart: It's not like one can disconnect oneself from the pump and go back to the old way. "Once you have gone to automated metrics, you can't go back. We have made a huge investment in these things. When you shut them down you lose it all."

Respondents acknowledged the importance of social media when asked which would be the marketing budget-line items they would most likely cut if compelled. Half said television and print advertising; 16 said trade shows, and 11 said events marketing. Which line items would they be least likely to cut? Search engine marketing activities; online advertising, PR and the company Web site, in that order.

Twenty-two percent of respondents are CMOs of $1 billion brands; 37% are at $25 million-to-$999 million brands; 30% are at sub-$25 million brands. Also, 29% are at tech firms; 16% at financial services; 14% are in legal, and 16% at consumer and retail companies.

Most respondents said their businesses had not been impacted by the recession, and 71% said their marketing budgets were stable. Of the 29% who said their budgets were trimmed, only 33% of those--14% of the total respondents--said the cuts were due to business slowdown related to recession.

The last section of the survey asked what kinds of advice CMOs give to other CMOs for improving marketing effectiveness during a recession. The four key responses: Marketers should put efforts in segmentation and direct response versus branding; focus on metrics and campaigns one can measure; focus on customer retention, engagement and up-sell; and, not surprisingly, leverage online and new social networks more than traditional mass marketing vehicles.

Finally, what are the looming issues, economy notwithstanding? Krainik says the overwhelming leader was headcount and resource effectiveness. "How do I keep good people and how do I get those people educated," he said. Second is customer engagement and trust. "The responses were very personal," said Krainik. "One of the issues that came up was 'how can I influence customer trust from the CMO position?'"

Differentiation was fourth: how does one cut through the clutter in messaging, programs and service delivery?

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