Spending on Marketing Analytics Budgets Set to Rise…or Not

. September 6, 2017

According to the latest edition of Duke University’s twice-yearly CMO Survey, the percent of marketing budgets spent on analytics will more than triple over the next 36 months.

Or at least that’s what the top marketing executives surveyed are projecting. If the last five years were a guide, however, an increase of that magnitude would seem a stretch. In August 2012, the percent of marketing budget spent on analytics averaged 5.0% among survey respondents. And it was 5.5%, 7.1%, 6.7% and 6.5% in 2013, ‘14, ‘15 and ‘16 respectively.

In short, for at least the last five years, spending on marketing analytics as a percent of overall marketing budgets has remained essentially flat. Budgets rose during that time, so the dollars are higher. But the balance hasn’t really changed.

Smaller companies do drag down the average. The biggest brands are spending more on measurement. Companies with sales between $500 million and $1 billion, for example, currently spend an average of 6.1% of the marketing budget on analytics. Companies in the $10 billion and up category, however, spend an average of 9.5% and expect that to hit 23.1% in the next three years.

Whether that actually happens remains to be seen. With overall marketing budgets starting to shrink, some organizations may have trouble shifting more to measurement (or even maintaining current levels) – even though they’d improve results by doing so.

Looking Back

In 2014, with measurement accounting for an average 7.1% of marketing budgets, CMO and others surveyed predicted that they’d be spending 12.3% of the marketing budget on analytics by August 2017.

Source: The CMO Survey, August 2017

Didn’t happen. And that’s unfortunate. Other current studies are showing that brands with highly mature marketing measurement capabilities and that spend more of their budgets on measurement produce better results. And they are able to quantitatively demonstrate those results to the rest of the organization. (Also see Making Your Measurement Story more Compelling.)

Higher spending on marketing measurement and analytics shows a direct correlation with better results. In short, the path to greater growth is measurement.

Source: The CMO Survey, August 2017

Analytics for Decision Making

Marketers do appear to be making slow progress toward more use of analytics in decision making. Four years ago, survey respondents said they used analytical insights to make decisions on about 29% of their projects. Today that figure is 37.5%.

Marketers feel most comfortable using analytics to inform their decisions around customer acquisition, digital marketing, social media and segmentation. Areas they struggle to apply analytical insights are multi-channel marketing, customer service and product or service strategy.

Likewise, marketers seem only lukewarm about the impact that marketing measurement is having on overall company performance. On a scale of 1 (no impact at all) to 7 (very high impact), the mean contribution level comes in at 3.9, compared to 3.7 four years ago.

Those are just a few findings from The CMO Survey. For a deeper dive, check out the full Highlights and Insights Report. The Analytics section begins on slide 69.

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Category: Articles, Budgeting, News, Opinion, Research, Research Reports, Strategy

About the Author ()

Daniel Kehrer is Executive Editor of the ANA Data Analytics Center (DAC), a leading voice of thought leadership and education in marketing measurement, data and analytics. He is also the Founder of BizBest Media Corp. and previously headed marketing at MarketShare LLC, an advanced marketing analytics technology company.

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