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Remember when marketing executives had to convince their bosses to put time and resources into “that internet thing”? Well, bar a few stubborn hangers-on, it’s apparently safe to say those days are very firmly past.
According to Gartner’s 2015-2016 Chief Marketing Officer (CMO) Spend Survey, 98% of marketing executives from large companies in North America and the UK agree that online and offline marketing are merging.
Respondents represent organisations with more than US$500 million in annual revenue across seven industries: financial services, high tech, manufacturing, consumer packaged goods (CPG), media, retail and transportation/hospitality. The survey took place between May and July 2015 and marks the fourth year that Gartner has surveyed marketers on spending priorities and marketing operations.
There is little doubt that digital marketing is now mainstream,” said Yvonne Genovese, group vice president at Gartner. “Marketers no longer make a clear distinction between offline and online marketing disciplines. As customers opt for digitally led experiences, digital marketing stops being a discrete discipline and instead becomes the context for all marketing. Digital marketing is now marketing in a digital world.”
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Ten per cent of marketers say they have moved beyond digital marketing techniques and are expanding marketing’s role to create new digitally led business models. The blurring of the physical and digital worlds represents opportunities for marketers to apply customer insights to create and test new digitally led experiences and business models. Digital commerce is surging, capturing 11% of the digital marketing budget (up from 8 per cent in 2014) as marketers become more accountable for driving results.
“The rise in digital commerce is an opportunity for marketers,” said Jake Sorofman, research vice president at Gartner. “There was a time when marketing and selling were two distinct disciplines. In many cases, digital merges these two into a single, continuous activity from initial awareness, through engagement, conversion, transaction and repeat purchase. Marketers can now tie spend to revenue. In fact, it’s becoming a mandate.”
Two main factors are driving marketers’ interest in digital commerce: the need to point to tangible results from marketing investments, and the recognition that companies need more than a commerce platform to sell. In the past, we’ve seen digital commerce operations wholly disconnected from the marketing engine. Today, we’re seeing integration between marketing and digital commerce as two parts of a single discipline, where marketers bring everything from content marketing and brand storytelling to advanced analytics and multichannel campaign management to optimise digital commerce across channels.
B2C companies have long been considered more sophisticated in digital commerce, but we’re seeing growing appetite by B2B companies under pressure to reach customers directly with digital commerce initiatives. They are looking to engage customers directly to better understand their needs, preferences and behaviours.
As CMOs face the digital transition, the survey showed that overall marketing budgets are on the rise. This year, 61 per cent of respondents said that marketing spending will be, on average, 11 per cent of company revenue, up from 10 per cent of company revenue last year. That one percentage point change represents a sizable increase — 10 per cent, year over year — in marketing spend.
“Bigger budgets, however, come with sizable expectations,” said Mr Sorofman. “Marketing is expected to drive profitable growth through the acquisition, retention and expansion of the most valuable customer relationships. As customer buying journeys and customer expectations expand, so, too, does marketing’s scope of responsibility. As a result, the marketing remit now often includes driving broad-mandate customer experience, digital commerce and innovation initiatives.”