Digital marketing budgets will increase 17% on average in 2015
Gartner has released its Digital Marketing Spending report, based on a survey of 315 marketing executives located in the US, Canada and the UK, which indicates that of the 51% of companies who plan to increase their digital marketing budget in 2015, the average increase will be 17%.
Respondents represent organisations with more than $500m in annual revenue across six industries: financial services, high-tech, manufacturing, media, retail and transportation, and hospitality. The survey took place in July and August 2014 to gain insight into marketing and digital marketing spending priorities and plans for the future.
The survey found that marketing budgets remained healthy in 2014, with, on average, companies spending 10.2% of their annual 2014 revenue on overall marketing activities, with 50% of companies planning an increase in 2015. Digital marketing spending averaged one-quarter of the marketing budget in 2014.
Customer experience takes priority
Marketers are investing in the customer experience to drive business advantage and profitable revenue growth.
"The amount of the marketing expense budget spent on customer experience in 2014 is remarkably consistent across all key survey demographics, averaging 18%," said Jake Sorofman, research director at Gartner. "The survey also found that the highest marketing technology investment in 2014 is for customer experience. Customer experience is also considered by many companies to be the top innovation project, just edging out product innovation."
Not only are marketing budgets remaining healthy, they are forecast to grow in 2015, with half of the companies surveyed planning an increase in 2015. The larger the company, the higher the marketing expense budget as percentage of revenue - those with revenue of $5bn or more reported 11%, compared with 9.2% for those with revenue between $500m and $1bn. Marketing budgets as percentage of revenue varied widely, with 46% spending less than 9% of revenue, 24% spending between 9% and 13% of revenue and 30% spending more than 13% of revenue. The 50% of companies planning an increase report that their average 2015 increase will be 10.4%. Of those, the ones that report outperforming competitors said their planned 2015 increase would be 13.6%.
Marketing in a digital world
"The line between digital and traditional marketing continues to blur," said Laura McLellan, research vice president at Gartner. "For marketers in 2014, it's less about digital marketing than marketing in a digital world. Hence, marketers manage a much more balanced and integrated marketing mix than in previous years, which were characterised by online and offline silos. The resulting digital experience moves customers toward a more self-service buying model, allowing reductions in sales budgets that were designed around older, physical models."
Sixty-eight percent of respondents said that their company had a separate digital marketing budget. However, it's difficult to gauge just how much companies are spending on digital marketing because the treatment of budgets varies by company, with some having a digital marketing budget in total (32% of respondents), others in detail (36%) and others have incorporated digital marketing into each function of the marketing budget (23%) or none of the above (8%).
Digital advertising takes top spot
As in prior years, the survey revealed that when it comes to allocation of the digital marketing budget by activity, digital advertising takes the top spot. However, there appears to be less difference between this and other activities this year compared with last year, as marketers hedge their bets. Expenditures for digital advertising will grow in 2015, as brands, ad agencies and publishers invest in ways to deliver more-relevant advertising to people.
Fuelling this trend is the use of programmatic media, which allows marketers to target the audience they want and automate bidding rules for ads, based on the business value they deliver. Nevertheless, the survey suggested that in 2015, digital advertising would share its top ranking with mobile marketing.
With digital marketing spending on the rise, respondents were also asked where additional funding was coming from:
"Gartner's 2014 CEO Survey found that digital marketing was the No. 1-ranked CEO priority for technology-enabled business capability for investment during the next five years," said Yvonne Genovese, managing VP at Gartner. "It therefore comes as a little surprise that the digital marketing spending survey found that over 60% of companies that justified an addition to the marketing budget for digital marketing obtained incremental funding from elsewhere in the organisation."
Additional information can be found in the report 'Presentation for CMO Survey 2015: Eye on the Buyer' on the website at http://gtnr.it/1nWqjpL.
