Marketing budgets are expected to increase by 8.7% in 2020. Surprisingly, this marks the highest increase in two years. So what are the marketing budget trends for next year? The latest CMO survey provides insights on how top marketers are planning for 2020.
A Year in Review
2019 has been a turbulent year. With ongoing political unrest and periodic economic wobbles, many CMOs and companies have navigated 2019 with caution. Comparing GDP forecasts with actual performance, Deloitte has shown that 2019 has had significant ups and downs.
Here are some takeaways from the latest CMO survey:
- Budgets are expected to grow 8.7% next year.
- Two thirds of marketers are busy focusing on the present rather than planning for the future.
- Artificial Intelligence (AI) is on the rise; marketers expect to see AI taking a bigger role in the future.
- Mobile is taking up 12.8% of marketing budgets. It’s predicted to take up over 20% in five years time!
- Customers attitudes show that price is less important than service and quality.
Money, Money, Money, Money…Money
The headline here is that, again, marketing budgets are expected to increase. Building 2019’s 6.3% increase, 2020 marketing budget will be as high as 8.7%. These increases reflect an eight year high (8.9% in 2017).
What does this mean for 2020 marketing? In general it shows that marketers are getting more recognition as a revenue driver. As such, they are getting a bigger slice of the budget. It also shows that despite this years’ economic wobble businesses are not yet reducing spending, or taking a more defensive posture when it comes to budgeting. You’ve got to spend money to make money.Two thirds of marketers are busy focusing on the present rather than planning for the future. Click To Tweet
Hiring and Firing
One area of marketing affected by economic instability is recruitment. Over half (53.8%) of marketers are planning to hire new staff in what’s left of 2019, but that’s down from close to 60% last year. Could this be due to nervousness about the future? Perhaps. Optimism about the economy has risen slightly since February (59% from 5&%), but it is still lower than this time last year (66%). Which, despite budget increases, may lead to more cautious 2020 marketing spending.
One interesting statistic to come out of the recent CMO survey is related to political messaging. 2019 was full of politically-charged headlines. 2020 is predicted to have more of the same, especially in light of the upcoming election seasons. Yet companies are shy about publicly taking sides.
As a result, 73% of marketers report that they plan to keep politics out of their messaging in 2020. For perspective, this percentage is down from 82% in February 2018. This potentially indicates two things:
- As politics has become more polarized over the last year and a half, many businesses now feel like they need to take a stand and talk about their politics publicly.
- More brands are sensing an opportunity to use politics as a way to better engage their customers. In some sectors, the firearms industry for example, being politically vocal reinforces their brand identity.
Even so, we recommend that — unless you’re in a very specific niche — its best to be very careful on how your brand speaks on political issues. Either way, it seems that talking about politics may no longer be the taboo it once was.
Time for Analytics to Have its Day in the Sun?
Analytics and data are king. Because of this over the last three years there has been a steady increase in how much marketers are spending on analytics. From making up 4.6% of marketing budgets in 2016 to 7.2% now, analytics is getting more money than ever. Despite this analytics is still not being seen as a direct impact on performance by most marketers. However, this dissatisfaction could be in part due to a perceived lack of the ‘right’ tools. With 40% of marketers suggesting they need better tools to help monitor analytics and improve performance. Whatever tools people are using, Analytics is getting almost double the budget it was 3 years ago.
If you’ve been keeping abreast of Google’s recent algorithm update (Bert), you’ll probably oversaturated on commentary about the future of AI. But over the coming years we’re going to be hearing much more about it. AI’s role in digital marketing has been gradually increasing over the last few years. As technology advances it’s sure to take more routine or complex computing tasks and enabling deeper analysis. For example, Google Ads users will have noticed recent changes to bidding rules; automated bidding is major feature of the PPC platform.
Marketers report that they’re using AI to do 27% more tasks than they were last year. They expect this figure to rise to 60% by 2022. Tools like predictive analytics and automatic personalization are what these marketers are most looking forward to.
Another seemingly never ending upward trend is mobile usage. The amount of budget dedicated to mobile devices quadrupled in the last five years to 12.8% in 2019. For 2020 marketing, CMOs expect this trend to continue over the next five years until it hits 21.8%. This illustrates how important mobile devices are now, and how much more important we believe they’re going to become. Since 2011 mobile internet usage has grown by 504%, so it’s no wonder it’s getting a bigger share of our marketing budgets. Whether this will continue remains to be seen. At some point the smartphone will reach a saturation point, but it doesn’t seem we’re there yet.
The next area of business that is seeing a record high is online sales. At 13.4% online sales are reaching a decade high, and up by almost 5% from February this year. B2C companies are leading the way when it comes to selling products over the internet, with their average of 29% of all sales going online.
If you’re curious how B2C companies are driving sales through their website, you might be interested to see how they break down their advertising budget: Search – 16%, Display – 10% and Print – 15%. The interesting number to us is the print figure, showing how important it is to use a mixture of offline and online tactics.
2020 Marketing: Surveying the CMO Survey
We think that the main takeaways from this edition of the CMO survey are related to AI, mobile devices and spending. The role that Artificial Intelligence plays in daily life is anticipated to explode as companies get to grips with harnessing its power. For marketers AI is already shaping Search and PPC advertising, with Google embracing machine learning techniques to hone their two biggest tools. As the technology becomes more widely used, expect to see more predictive content and higher levels of customization/ AB testing on websites.
The other area of focus is obviously mobile. Over the last few years we have seen our clients devote a lot of budget towards making their websites function as well on mobile as they do on desktop devices. Mobile experience will continue being important for the foreseeable future.
And last but not least, budgets. If budgets are growing, this bodes well for the economy and predicted growth. As with anything in business, it pays to be cautiously optimistic. With 2020 as an important election year, we may be in for an unpredictable ride…