When times are tough, costs must be cut and spending must be justified. Yet, outcomes must continue, business as usual. This conundrum puts CMOs between a rock and a hard place. How do you deliver results with a tighter budget? More importantly, how can you tie those results to your budget effectively?
The majority of CMOs are turning to a little metric called return on investment (ROI). As macroeconomic uncertainty results in tighter budgets, marketing spend is under more scrutiny than usual. Every dollar spent needs to be correlated with a healthy return, and fast — 77% of CMOs say they’re under pressure to prove increased short-term ROI on marketing campaigns.
In this blog, we’ll break down why ROI matters right now, what a focus on ROI changes about marketing activity, and how to start delivering ROI despite the current economic climate.
CMOs Must Track & Prove ROI Faster Than Ever
In the face of a looming recession following several years of pandemic-related upheaval, a laser focus on ROI is a pretty natural response for company leadership. After all, when so much is uncertain, doubling down on the things that are working is a no-brainer.
This certainly seems to be the case. Nearly 37% of marketers report that tracking ROI is becoming increasingly front-and-center, especially for larger organizations. Indeed, ROI has risen to the top of company leaders’ priority list.
Marketers report the top metrics for their CEO, CFO, and board members are:
- ROI: 48.4%
- Delivering business outcomes: 39.9%
- New customer acquisition: 35.8%
Couple this with shifting customer behavior due to inflation, and it’s never been trickier for CMOs to deliver on leaderships’ expectations. As recent Gartner research has identified, the burden to deliver ROI falls heavily on the CMO’s shoulders.
“In order to meet the enterprise mandate of driving growth amid continued disruption, CMOs must act decisively to prioritize their investments and their strategy for the year ahead ,” said Ewan McIntyre, Gartner Marketing’s Chief of Research.
The Impact of an ROI Focus on Marketing Objectives & Outcomes
Prioritizing ROI impacts CMOs’ decisions around marketing activity and outcomes in a variety of ways. Beyond the pressure to deliver ROI in the short term, the current environment has led marketing leaders to worry about their strategy as a whole. 31% of marketing leaders are concerned they’ll have to curb creative campaigns, with an additional 30% worrying they’ll have to operate more reactively instead of proactively.
This new focus on tying marketing activity to clear-cut returns can be new territory for many marketing activities, presenting challenges for marketers and CMOs alike. For example, when analyzing marketing campaign effectiveness, only 28.4% of marketers report measuring ROI to do so. In fact, 45.7% of marketers say their brand is “too focused” on ROI.
Clearly, there is a large disconnect between the metrics the CEO and CFO want to see and what marketers believe is important. In bridging that gap, CMOs have their jobs cut out for them.
In today’s climate, an ROI focus means CMOs have to more or less accomplish all of the following:
- Work smarter with a tighter budget in order to deliver the same outcomes as before.
- Help the CEO and CFO understand what ROI means for marketing, and help marketers understand what ROI means according to the CEO and CFO.
- Ensure a focus on ROI doesn’t distract from impactful marketing activities where ROI is difficult to measure, in both the short and long term.
In short, doing all this with fewer resources is a tall order for CMOs and the organizations they lead.
How To Retain Budget, Maximize Marketing Activity, & Prove ROI
One of the most important things CMOs can do to successfully lead their marketing organizations through uncertain times is learning how to strengthen value calculations that prove marketing’s importance. Although it may seem counterintuitive, this often means moving beyond ROI as an end-all metric and making the case to evaluate budgets on various other inputs instead.
For example, the ROI of your marketing tech stack can be difficult to tie directly to pipeline numbers, yet it’s essential to marketing activities that do influence revenue. Likewise, long-term strategies may not have an immediate ROI, but they do pay off with time. Striking the right balance between what’s essential for both now and later can be difficult on your own.
Learn More About Inverta
Inverta acts as a player, coach, and trusted advisor when it comes to helping CMOs measure and deliver ROI. Our new campaign-in-a-box solution can build short-term wins while we set up your organization for future success.
- Interested in how Inverta can help coach you through a campaign planning strategy? Contact us here.
- Learn more about our new campaign in a box solution – click here to access.
Check out Conquering Barriers to Activation: The Strategic Chief Marketing Technologist
Unfortunately, many CMOs are finding themselves on the frontlines of the much-discussed (and uneasily anticipated) economic headwinds of this year. Between employee layoffs and budget cuts in the face of increasing revenue targets, a perfect storm has landed right on the CMO’s doorstep.
If you’re a CMO, the question now remains: What marketing strategies will pave the way for success now and in the future?
To make your existing resources go further, find new growth opportunities amid shifting consumer expectations, and hit revenue targets, something needs to change. In this blog, we’ll break down the challenges CMOs are facing, what top CMOs are doing differently, and how you can think about growth in 2023’s unique market.
Challenges CMOs Are Facing in 2023
While budget inevitably does play a factor in marketing outcomes, strategic planning and execution become even more important during times of uncertainty. Indeed, the problem for many CMOs lies in their organizational processes, core skills, and implementation rather than their wallets.
What good is adding a new martech tool to your belt if you don’t even use your old tools to their full capacity? (Asking for a friend…well, asking for a lot of friends, actually.) Accordingly to Gartner, marketers used just 42% of their martech stack overall in 2022—a decrease from 58% in 2020.
As more and more tools are emerging, it’s important to remember that your biggest source of untapped potential might be sitting right there in your URL bar. If you’re unsure where to start to get more bang for your buck, try auditing your existing tech stack.
Underdeveloped Skills & Support
There’s a simple reason a greater portion of marketers might be underutilizing their tech stack: they don’t know how. A majority of martech leaders (64%) agree that their teams lack both the technical skills or support required to operate and increase the usage of their martech stack. Plus, as more marketing organizations are taking on the ownership of their tools, this presents a real challenge for internal teams.
Couple this with the talent acquisition and retention issues of late (28% of martech leaders have difficulty identifying and recruiting martech talent), and CMOs have a real problem on their hands.
Where’s the ROI?
Finally, a pervasive problem facing CMOs this year is proving the ROI of their tools and processes. Gartner estimates that, despite marketing budgets allocating 31% of resources to marketing operations (MarOps), 72% of MarOps pursuits aren’t resulting in success.
If CMOs are going to be serious about growth during an era of budget squeeze, ironing out the challenges of ROI for the martech stack AND operations is key for success.
The Solution: A Shifting CMO Role, New Focus, & Smart Growth
If anything, 2023 has demonstrated just how far the CMO role has changed in the last few years. Whereas success used to be more nebulous and targeted to a few small marketing areas of focus, today’s success is much more narrowly defined.
Jim D’Arcangleo, Chief Marketing & Growth Officer of AWeber, says the CMO role of today encompasses much more, including:
- Utilizing dozens of channel options with dozens of media players
- Owning GTM plans from end to end, including client engagement and upsell campaigns
- Purchasing the right tech to enable the strategy
- Ensuring the efficiency and effectiveness of all marketing activity with the data to prove it.
Where CMOs Should Focus Now
So, with all the changes, where is the best place to focus? Bryan Law, CMO at ZoomInfo, believes that it’s in creating a shift in focus from driving volume to driving value instead. That means aligning with sales across metrics, target accounts, campaigns, and outreach.
How can CMOs do this?
- Be consistent and distinctive in your marketing approach to capture mindshare.
- Invest and leverage the right technologies that enable alignment and eliminate silos.
Short-Term Wins, Long-Term Focus
Ultimately, Lisa Ames, CMO at Norwest Venture Partners, gives a word of caution to CMOs making adjustments in 2023 to not get near-sighted. While a focus on ROI-driven performance with short-term demand gen is important, it should be balanced with a long-game effort to improve brand building and market trust.
Between inflation and a recession, customers will be holding on to their wallets a bit more tightly, and brands who can build long-term value during this time of uncertainty will come out better for it in the end.
Final Takeaways: How Inverta Helps CMOs
At the end of the day, CMOs can jumpstart growth in 2023 if they make a few key adjustments to their strategy and teams today. That might look like jumpstarting your existing team by investing in skill development so your martech has additional use cases, doubling down on proving ROI in the areas where you know it works, or bringing on a marketing consultancy to fill in the gaps.
At Inverta, our team of seasoned marketers can help with everything from martech evaluation and implementation to resource augmentation.
Learn More About Inverta