Is marketing effectiveness diminishing?
A whopping 72% of leaders and employees believe Marketing is NOT instrumental to their company’s growth. Ouch! That’s the conclusion of Gartner’s Q3 CMO Journal, which contends that Marketing is losing its internal clout as a strategic business partner.
One consequence of this is reduced budgets. According to the Gartner survey, average Marketing spend has reduced from 11.0% of revenue just before the pandemic hit, to 7.7% in 2024. That’s a serious vote of no-confidence in Marketing’s contribution to business performance.
Leaving aside the obvious question of what is expected to drive growth – if not the function whose purpose is to drive sales and brand loyalty – this must give Marketing teams the jitters. Why is their star waning? And can they reverse the damage?
If credibility is to be restored, Gartner prescribes advanced data and measurement to clearly demonstrate business impact. Only with the right metrics can CMOs evidence that Marketing is a driver of profit. Yet most of the data CMOs currently have at their disposal is advertising-related, so they are dependent on it to prove their worth. This is a big part of the problem.
Marketing has become over-reliant on advertising and is afraid to confess that this devourer of budget is less impactful than the accepted wisdom would have us believe. How many of us have tuned out from the unsolicited detritus that lands in the inbox and online feeds? We wilfully watch TV on catch-up to skip the ads. In the outdoor space, we’re too busy listening to our favourite podcast to clock what’s being advertised on the side of a bus stop. We ask friends and family for recommendations, or read the reviews before making a purchase, especially for items with a high ticket-value. The survey respondents know this and see that the emperor’s clothes are wearing thin. Marketing effectiveness is diminishing.
Yet CMOs are still committing 27.9% of the average budget to paid media. It feels like desperation, because they can’t think of a better alternative. At the same time, they don’t have the full picture about what is driving the consumer narrative about the brand and influencing consumer behaviour. Despite significant investment in econometrics – or Market Mix Modelling – there is a gaping hole in the jigsaw. Nobody has reliable, time-series based and predictive data about the impact of earned media coverage to feed into the data sets.
The advertising industry would prefer to keep CMOs in the dark about the business impact of earned coverage. Media coverage in online versions of traditional news outlets, magazines and trade publications is an extremely powerful contributor to consumer response. Only the kind of advanced, robust and statistically valid measurement that Gartner is referring to will allow it to be included in econometric modelling, but adding this to the mix finally exposes the relative contributions of paid and earned media spend.
Paradoxically, when Marketing budgets are tight, PR is one of the first places the axe falls. Seen traditionally as the guardian of reputation and first responder to headline-induced crises, the PR function has yet to realise its own ability to influence commercial outcomes. Even worse, this capacity to deploy PR as a credible alternative to advertising to stimulate growth is drastically under-appreciated in the boardroom.
Advanced data and analytics now allow us to measure the real-world effects of media coverage on brand search, consideration, sales revenue and shareholder value. And (say it quietly) it also drives enhanced results from paid advertising spend. Let’s act quickly to incorporate comprehensive evaluation of earned media effectiveness into the reporting, so Marketing budgets can be reprioritised while the CMO still has a key to the boardroom.
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