How to Triumph Over Budget Cuts and Prove Your Marketing ROI

As we all know and, unfortunately, have probably also experienced, every dollar in our marketing expenditure must be justified, and we have to prove our marketing ROI or risk budget cuts!

Chief Marketing Officers (CMOs) face the dual challenges of managing budget constraints while also demonstrating the return on investment (ROI) of their marketing initiatives. The rapid evolution of today’s digital landscape only compounds these challenges, demanding strategic agility and an analytical mindset from today’s marketing leaders.

 

Marketing Budget Allocation

Gartner’s most recent  (2023) CMO Spend Survey reported that marketing budgets fell from 9.5% of company revenue to 9.1% in 2023. This confirms the constant pressure on marketing to do more with less.

As a result, most have readjusted their commitments to marketing channels, resources, and programs, and a similar proportion say they are facing significant pressure to cut martech spending.

Gartners' CMO spend report 2023

ROI on Marketing and Digital Specifically

The rule of thumb for marketing ROI is typically a 5:1 ratio, with exceptional ROI being considered at around a 10:1 ratio. Anything below a 2:1 ratio is considered not profitable, as the costs to produce and distribute goods/services often mean organizations will break even with their spend and returns.

However, according to a recent Data & Marketing Association (DMA) study, the average ROI for digital (email) marketing in 2022 was $36 for every $1 spent.

Of course, this figure varies by industry, with retail, e-commerce, and consumer goods companies often seeing higher returns thanks to direct purchase links in their emails.

While B2B companies have a slightly lower ROI, they benefit from the long-term value of relationship building and lead nurturing through email.

These numbers are a testament to the effectiveness of well-executed marketing strategies and the ROI of email. It’s clear that email marketing is thriving in the digital era.

 

A Strategic Approach to Navigating Budget Constraints

Reassess and Reprioritize Marketing Channels

In times of budgetary pressure, the first step for CMOs is to conduct a thorough reassessment of existing marketing channels. This involves analyzing each channel’s performance against key metrics to identify areas where spending can be optimized.

The goal is to allocate resources more effectively, focusing on high-performing channels that promise better engagement and conversion rates.

Embrace Cost-Effective Digital Marketing Strategies

Digital marketing offers a plethora of cost-effective strategies that CMOs can leverage.

Content marketing, email marketing, and social media platforms provide avenues for reaching large audiences at a fraction of the cost of traditional advertising.

By creating valuable content that resonates with their target audience, brands can foster engagement, build community, and drive conversions without hefty ad spending.

Foster Creativity and Innovation

It’s not all bad news! Budget constraints can actually serve as a catalyst for creativity and innovation within the marketing team.

Encouraging team members to think outside the box and develop unconventional ideas can lead to cost-effective marketing solutions that drive significant impact.

Whether it’s guerrilla marketing tactics, viral social media campaigns, or leveraging user-generated content, the key is to differentiate the brand in Click to continue reading

Is the Future of Retail, Physical or Virtual? Is This Just a Reset or Do we Need a Full Reboot?

Will the future of retail be without physical outlets?

I remember having a very interesting discussion with a new client a couple of years ago on exactly this topic. Like many CPG companies at the time, they were considering online retailing. They were already selling a little online but hadn’t seriously considered it until then.

However, with the move of most major supermarket chains to offer online stores too, plus a few successful online-only stores, such as Amazon in the US and Ocado in the U.K. they were reconsidering just how big they could or should grow their online business.

This discussion happened just a few years back in 2017. Today the question is no longer asked. The pandemic has forced most customers to buy online, at least during the various lockdowns. And many have found the experience both enjoyable and useful.

A recent article on CNBC showed that many major chains in the USA had recorded triple-digit growth in online sales in the first half of this year. But they rightly questioned whether the trend would continue into next year.

They concluded by saying that those retailers who had already invested in online sales would fare better than those forced into it by the pandemic. I agree, as the change in customer behaviour was so fast that it was difficult for those retailers who were not prepared, to catch up and move their sales effectively online.

Is the future of retail online sales growth

However, they argued that people would return to bricks and mortar stores once the lockdown eases and Adobe has found some data that may just confirm this. E-commerce growth appears to be slowing, as the below graph shows.

The future of retail shows slowing ecommerce trend

I remember participating in heated arguments in the past, between sales teams and retailers, about online stores. Retailers thought that it was unfair competition and threatened to delist a manufacturer’s products if they sold direct. No wonder my client at the time had been scared to develop this area, as in fact were most other CPG companies.

Just a few years ago, Amazon was said to be muddying the waters by testing their new Fresh delivery and Go bricks and mortar outlets. Walmart retaliated with a competitive online offer of fast service and free delivery. The battle had begun and today we see nothing more than an acceleration of the trend that started almost a decade ago. At least that’s my opinion; what do you think?

 

The case for bricks & mortar stores

An excellent article published mid-2017 in Forbes andentitled “Five Signs That Stores (Not E-Commerce) Are The Future Of Retail” concluded that physical stores are more valuable. Of course, that was three years ago, an eternity especially post-covid! However, it does highlight the importance of scenario planning for preparing an organisation for future opportunities and threats. For me, planning for the future is as simple as taking the consumers’ perspective and understanding what they (will) want.

For example, I’m happy to order my usual brands online and have them delivered, especially when … Click to continue reading

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