Commentary

Marketing Morphing From Expense to Revenue; Measured on ROI

According to the Economist Intelligence Unit’s survey of high-level marketing executives worldwide, more than 80% say they need to restructure marketing to better support the business. And 29% believe the need for change is urgent.

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Marketers believe that change will occur in six areas, suggests the report:

  • Marketing will increasingly be seen as more of a source of revenue. The proportion of companies where marketing is viewed as a cost center will dwindle and the number where it is seen as a driver of revenue will grow. In three to five years, survey respondents say, approximately four of five companies will classify the marketing function as a revenue driver.
  • The customer experience is increasingly seen as a key to competitive advantage in every industry. Slightly more than one-third of marketers polled say they are responsible for managing the customer experience today. However, over the next three to five years, 75% of marketers say they will be responsible for the end-to-end experience over the customer’s lifetime.
  • A marketer’s greatest achievement is an engaged customer, says the report. Because an engaged customer keeps coming back, engagement is defined most often in terms of sales and repeat sales. 63% of marketers polled say that engagement is manifested in customer renewals, retention and repeat purchases. Adding in the 15% who see engagement in terms of impact on revenue, a full 78% of marketers see it as occurring in the middle or later stages of the classic funnel. 22% view engagement in terms of love for a brand; important, but part of marketing’s legacy skill set.
  • 39% of marketers want new blood in the two areas of digital engagement and marketing operations and technology. A close third, and not significantly different, 38% want skills in the area of strategy and planning.

Three of the four most widely cited investments are aimed at reaching customers through different channels: via social networks, on mobile devices and on the old standby of e-mail. The fourth, analytics, is needed to knit together data from multiple channels into a coherent and actionable portrait of the consumer.

Where marketing organization is most likely to increase its investment in technology over the next 3-5 years (% respondents)

  • Social marketing   37%
  • Mobile marketing   28
  • Marketing analytics   25
  • E-mail marketing   23
  • Advertising management   22
  • Content marketing   20
  • Creative and design   19
  • Marketing resource management   19
  • Website personalization   19
  • Marketing automation/Integrated marketing   18
  • Content management systems   15
  • Search marketing   14
  • Website testing and optimization   10

Two trends to watch, says the report: real-time personalized mobile, and the Internet of Things. Just over half of marketers expect the Internet of Things, where ubiquitous, embedded devices with unique IP addresses constantly convey real-time data, to revolutionize marketing by 2020. Almost the same proportion cites the power of real-time personalized mobile communications as the trend with the biggest impact.

Future Trends That Will Have The Biggest Impact On Marketers By 2020 (% of Respondents)

  • Internet of things   51%
  • Real-time mobile personalized transactions   50
  • Wearable technology   29
  • Virtual/Augmented reality   26
  • Privacy backlash   13

According to the research, marketers see four trends:

 A Broader View Of Customer Experience

A positive customer experience across all touchpoints is increasingly seen as a company’s most valuable asset. And, more than any other function, marketing is responsible for managing it, across the customer life cycle and across channels, from initial awareness through loyalty and advocacy.

Metrics For Revenue And Engagement

Effectiveness trumps efficiency, especially in a time of rapid change. Metrics will become broader and more comprehensive, focusing on top-line revenue and overall engagement more than efficiency and brand awareness.

Top Areas Of Investment Over The Next 12 Months (% of Respondents)

  • Shift to digital marketing and engagement   30%
  • Customer acquisition programs   29
  • Managing the customer lifecycle   27
  • Measurement of marketing ROI   27
  • Acquiring appropriate skills   24
  • Data analytics   19
  • Connecting data silos   10

 The Talent Hunt

There is a need for tech-savvy marketers. But it’s not enough by itself. CMOs want people with the ability to grasp and manage the details (in data, technology and marketing operations) combined with a view of the strategic big picture. Creative is still important (especially in B2C), but it is a legacy skill and no longer a focus of demand, says the report

The Ecosystem In The Future

Marketing technology is proliferating through the cloud to the point where almost all companies, even the smallest ones, use multiple systems operating within an overall marketing operating system. Despite expectations of consolidation around a few dominant enterprise suppliers, marketers believe that the number of systems in their companies will grow.

Biggest Challenges Over The Next 12 Months (% Of Respondents)

  • Sufficient budget   39%
  • Measurement of marketing return on investment (ROI)   29
  • Shift to digital marketing and engagement   27
  • Customer acquisition   24
  • Appropriate skills   22
  • Responsibilities for the customer lifecycle   17
  • Connecting data silos   9

The report concludes by opining that what marketers need today is the ability to observe and interact with customers 24/7 to understand their needs and deliver what they want at the time they want it. Theoretically, this is not far-fetched, says the report. The foundations of the Internet of Things and real-time personalized mobile messaging, the two trends survey respondents highlighted as having the biggest impact on marketing by 2020, have already been laid. But practice is more difficult, says the report. Customers no longer come in solely through the front door. They engage at different stages, wandering in and out of a store with no walls.

For additional information from Marketo about the Economist Intelligence Unit please access the PDF file here with charts and graphs.

 

 

 

1 comment about "Marketing Morphing From Expense to Revenue; Measured on ROI".
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  1. Juli Schatz from Image Grille, February 26, 2015 at 9:16 a.m.

    Reports like these are almost completely useless to a businessperson. How will it help me better market my business by knowing "Where marketing organization is most likely to increase its investment in technology over the next 3-5 years"? What's more, a lot of this is pretty obvious - of course more businesses will be investing in social media - what else would they do? I'm not too interested in knowing what other marketers will do - what I want to know is, what should I be doing to increase my business?

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