Marketing Budgets: Benchmarks for CMOs in the Era of Less

Despite the seemingly unique challenges of today’s environment, or the threats (and opportunities) of new technologies, certain essential elements of great executive leadership persist. The need for strategic clarity linked to enterprise vision, for winning and maintaining the executive partnerships necessary to sustain buy-in for the value marketing creates, and for strong functional leadership remain both evergreen and vital.

Delivering more with less is table stakes 

Delivering more with less is fundamentally a question of knowing the investments that are most likely to support catalytic value (see Tab 3). Breaking it down to the fundamentals, you need to define what the right “less” looks like, accounting for the consequences of your trade-offs. More with less is about leaning in to your investments, ensuring they deliver the highest possible yield. 

Marketing rarely has the simple profit-driving story that colleagues in sales may have. Marketing tends to face a few extra uphill battles. Maybe those battles look like investing heavily in brand building, with significant top-of-funnel marketing spend that is challenging to measure through to conversion activity. Or maybe as CMO, you have to confront and defend against old stereotypes that have followed marketing over the years — perceptions that marketing is “just advertising spend” and “creative support.” 

This points CMOs toward an important balance they must find between profitability and cost optimization. Yes, marketing budget scrutiny and pressure can motivate strong marketing performance. But at the same time, if your team is already perceived as a cost center, you’re at significant risk of heightened pressure to cut a budget that you may already be using effectively and have optimized.

Improve marketing’s perception with internal stakeholders

Marketing’s role and scope are far from fixed, and the marketing function was a voice of vision during early digital transformation. But marketing has not changed in isolation, and functional relationships and technology interdependencies continue to evolve. As digital ownership has become more diffuse, CMOs have lost ground on enterprise understanding of the power and value of marketing. Over half of nonmarketing leaders believe that marketing has an inflated view of its importance in cross-functional initiatives, and over 40% agree that marketing gets involved where it is not needed.

CMOs must focus on three key areas to improve marketing’s internal perception across the enterprise and protect their marketing budget allocation:

1. Progress your measurement efforts in order to prove the impact of marketing.

2. Develop a strong pursuit of marketing operations (MarOps) to improve the alignment and efficiency of marketing.

3. Deliver powerful impact stories to effectively communicate the value of marketing.

Building a compelling and clearly understood strategic narrative that taps into the soul of the enterprise is imperative. Brand strategy, in particular, can become a powerful bridge to enterprise strategy and the long-term health of the business. Successful CMOs elevate the value of marketing by helping other leaders understand their role in the business and market. They apply “soft” strategies like brand and storytelling systematically — to construct shared meaning, mobilize energy against enterprise goals, and empower their colleagues to steer a course through enterprisewide change and uncertainty.

The focus for many organizations has shifted from growth at all costs, to profitable growth. Many companies have made big investments in growth areas like digital commerce, while perhaps paying less attention to margins. 

And while marketing budgets continue to fall, CMOs are also stuck in an unprofitable “cycle of more,” characterized by more tech investment, bigger remits and unrealistic customer obsession. To solve this, the better approach is catalytic marketing. 

Catalytic marketing

A single catalytic digital experience doubles the likelihood of commercially productive behaviors such as paying a premium or referring other customers to the brand. Just one such experience matters even more than having a large number of memorable brand interactions and rating all of them as high-value.

Customer obsession is leading CMOs astray

In the face of this increased budget scrutiny, many CMOs have doubled down on customer-focused activity as a protective measure. Marketers frequently defend investments by emphasizing how much more they’re doing for the customer: being present everywhere customers are, using more integrated data and larger tech stacks to orchestrate ever more relevant, connected journeys.

This “armor of activity” focuses on making marketing activities expansive and highly visible — perhaps as a way of defending against enterprise doubt, scrutiny or questions about marketing impact. The logic seems to be that if CMOs can show how much they are doing, they can avoid questions about how well they are doing.

When marketers don the armor of activity, customer obsession is often the justification. Customer obsession is a state of hyperfocus on uncovering, generating, tracking and responding to customer signals. While customer understanding or customer-centricity is a healthy dose of these things, customer obsession goes too far — to unprofitable extremes that customers find intrusive.

Catalytic marketing is not about more

As marketers are investing more and more, customers are engaging less and less. Instead, catalytic experiences help marketers do less to get more. Catalytic experiences don’t require additional integrated data, perfect engagement across channels, more technology or a fully optimized engine for journey orchestration. Instead, they require one meaningful opportunity that prompts customers to stop and think, change their perspective on something they thought they knew well or teach them something entirely new.

To drive profitable growth through a catalytic marketing strategy, it’s essential to do the following: 

• Demonstrate clarity by articulating a limited set of core objectives and brand traits and pursuing a small number of strategically important activities.

• Cultivate connections by prioritizing capabilities and management techniques that enable the coordinated, adaptive use of resources, including converged channel management and cross-channel customer experiences.

• Exercise courage by defending choices to constrain remits, pushing back on urgent but less important requests and paring or devolving ownership of noncore tasks or investments