Data Scout is Localogy’s series that curates and draws meaning from third-party data. Running semi-weekly, it adds an analytical layer to the industry data that we encounter in daily knowledge building. For Localogy original data, see the separate Modern Commerce Monitor™️ series.
Advertising is one of the most recession-prone sectors. But as we face current retraction in the global economy — and an uncertain near-term fate — there are some confidence signals for the advertising industry. Specifically, Gartner expects consumer-based ad spending to grow 78 percent in 2021.
This comes from the firm’s 2020-2021 CMO Spend Survey of 432 CMOs. Gartner bases the above projection on a few factors including live market signals, and the results in the survey itself. Keep in mind that survey respondents have a vested interest in positive results so take it with approprate salt tonnage.
That said, what did the survey uncover? Here are our highlights and takeaways:
— Looking at the present, 13.5 percent of 2020 marketing budgets went to digital advertising, the largest category. This includes paid digital campaigns such as display and video (doesn’t include search).
— That was followed by social (11.3%), websites (10.4%), SEO (9.9%) and others that can be seen in the chart below.
— 44 percent report mid-year budget cuts, 44 percent of respondents canceled events, 41 percent delayed campaign launches, and 37 percent reduced marketing-related headcount.
— 11 percent expect budgets to face cuts of more than 15 percent going forward; and 73 percent expect COVID-19 near-term impact on marketing activity to be short-lived. 57 percent believe marketing activity will return to “business-as-usual” in the next 18 to 24 months,
— Looking forward to 2021 CMOs believe that marketing budgets will increase. That includes social media (78%), mobile (71%), websites (71%) SEO (69%) affiliate marketing (65%), paid search (64%) email marketing (63%) offline advertising (58%) and event marketing (57%).
Stating the obvious, CMOs are largely confident in the aggregate. There were some vertical breakdowns in the study that show a less positive outlook, such as CMOs in the travel & hospitality industry. But that expected outcome aside, the striking thing about these results is confidence levels and expected budget growth.
Though it wasn’t examined in this study, one outcome we project is shifting budgets. In other words, putting aside total budget growth or decline, we believe there will be category-spending share shifts within marketing budgets. Marketers of all sizes may be forced to think differently with their marketing mix.
This will of course depend on the product category, but could involve shifting budget towards digital advertising that enables more granular location targeting. For anyone with a local physical presence, for example, messaging for dynamic business details (e.g. hours of operation) needs hyperlocal relevance.
The strategy is also flipped in some cases in terms of click-streams and calls to action. The goal for many advertisers will now be to channel consumers towards eCommerce outcomes, rather than messaging or brand engagement that’s meant to drive offline conversions… at least for the current time period.
Outside of the pandemic time window, there could be long-term effects too. Even when things return to normal, the above process may force new perspectives when CMOs are shaken out of their business-as-usual comfort zones. That could mean discoveries that translate to permanently-altered playbooks.
A lot is uncertain, but the attitudes of CMOs who make big spending decisions are telling. All of the above is relevant to localized marketing, though some of the study relates more to large-brand marketing. As always, these dynamics are a leading indicator for what we can expect in the SMB marketing world.