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Economy Shrinking 65% of CMO Ad Budgets, Money Shifts toward Digital

Nearly two-thirds (65 percent) of CMOs and marketing execs say their ad budgets will decrease because of the troubled economy, but more of their money will go toward digital/interactive marketing than before (see charts), according to a survey (pdf) from Epsilon, writes MarketingCharts.

Roughly the same percentage (63 percent) of the 175 CMOs and marketing execs surveyed report that their spending on interactive/digital marketing has risen, while 59 percent report a decrease in traditional marketing spend - view charts.

The study also finds that though CMOs are facing tough challenges in the current economic climate, 94 percent of those surveyed agreed with the statement, “A tough economic period is precisely the time when marketing plays a key role.”

To offsest budget cuts, CMOs are shifting to more targeted and measurable marketing strategies. When asked how their firm determines target market for each channel, 50 percent said they use data-driven marketing techniques: 31 percent stated they use sophisticated modeling tools to analyze existing customer data (behavioral, preference and demographic) and 19 percent said that they analyze past purchase behavior. In contrast, 28 percent said they made “rough estimates based on past experience.”

CMOs have been early adopters of new media with social computing and blogs receiving the most interest, and instant messaging and interactive TV ads least popular.

Key findings:

• Social computing (including word of mouth, social networking sites, viral advertising, etc.) was the most popular emerging channel with 42 percent of marketing executives expressing interest in adding it to their marketing mix.
• Blogs were the second-most-popular emerging channel, with 35 percent of marketers expressing desire to use them and 19 percent already using them.
• Almost one-third of CMOs mentioned podcasting as an area of interest, with 31 percent interested in adding it to their marketing mix and 18 percent already having done so.
• 29 percent are interested in Mobile Devices (phones/PDAs) and 22 percent have added them to their marketing mix.

“In this economic climate, marketing executives are seeking accountability and measurable results,” said Mike Iaccarino, CEO of Epsilon. Data-driven marketing is an increasingly important component of corporate marketing campaigns as senior marketers employ sophisticated segmentation strategies to recruit and retain customers.”

About the survey: The survey was conducted in August 2008. Participants included 175 US CMOs and marketing executives of some of the largest brands in the nation. Some 27 percent of respondents work at companies with $10 billion or more in annual revenues last year.