Marketers say Artificial Intelligence has a positive impact on performance

While the overall marketing investments are expected to be positive, spending for Customer Relationship Management, Customer Experience, and Brand Building, are all predicted to grow less in the next 12 months compared to last year.

The 43% drop in Brand Building investments (from 9.6% to 5.5%) is particularly “dramatic,” says Christine Moorman.

“One reason for this may be that marketers report a similar level increase in brand value, suggesting investments may be softened to ensure their ROI,” Moorman said. 

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AI use in marketing

In the past three years, 94.1% of marketers started integrating AI in their processes, 60.4% just in the last 12 months.

Roughly half of marketing leaders reported using AI for content personalization and content creation. In content creation, more than 50% used AI for blogs, website content, social media, and email content.

Overall, marketers reported a positive impact of AI technologies on sales (+6.2%), customer satisfaction (+7%) and marketing overhead costs (-7.2%).

The survey points to several ways that marketing organizations could deepen their use of AI in marketing.

“Marketers can increase use of AI to improve marketing ROI by optimizing the content and timing of digital marketing, for programmatic advertising and media buying, for predictive analytics for customer insights, and for targeting decisions,” Moorman noted. “These are all currently underutilized, with only one third of marketing organizations using AI for these purposes.”

Digital strategies

A larger share of companies are in deeper stages of their digital transformation than a year ago.

Although spending for influencers, mobile, and social media took a hit compared with last survey, CMOs predict investments in all three categories to grow significantly in the next 3-5 years (respectively: +109% to 12.2% of marketing budgets; +72% to 26.9%; and +65.8% to 24.3%).

Despite these announced investments, marketers reported these channels contributed only modestly to their companies’ performance, a skepticism that might be explained by their scarce reliance on experiments to quantify the impact of marketing actions on customers (only 36% reported running such experiments).

“Marketing budgets will continue to be increasingly digital,” Moorman said. “Stronger use of AI and experiments that allow for insight into what is causing marketing investments to succeed or fail will be necessary for these budgets to pay off in companies.”

Diversity, Equity, and Inclusion spending slows down

With economic uncertainty, DEI initiatives took a hit this past year. This year’s growth in marketing spending on DEI initiatives dropped 10.7% compared with a year ago, down to 2.3% annual growth. Fewer marketers reported that DEI is expected to be a priority over the next few years (less than 50% said DEI will be a priority). Overall, marketers said DEI has a weak impact on stock returns, sales, customer retention, customer acquisition, employee attraction and retention.

“One reason for weaker DEI investments is that companies have not yet established a process to review and/or evaluate marketing decisions from a DEI perspective,” Moorman said. “We have been measuring the presence of this process since 2021 and it remains modest at 3.3 on a 7-point scale where 1=not at all and 7=very highly. In fact, it is lower than it was in 2021 when it registered at 3.6. Without such a process in place, it is unlikely that DEI efforts in marketing will succeed.”

Moorman noted that the top three social issues brands act for or against are LGBTQ+ equality, COVID-19, and racial equality— with roughly 50% of brands acting on each of those issues. Actions related to abortion (+580%), firearms (+227%), and climate-related issues (+70%) had the largest increases since 2021 as these hot-button societal issues have intensified in the last few years.

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Marketing jobs

Marketing departments’ size grew this past quarter more than the previous quarter (5.5% versus 3.4%), but this growth rate is slower than last year (12.2% and 15.1% increases in the 2022 surveys). CMOs reported that 20.2% of marketing activities are outsourced, a percentage that is expected to increase by 5% next year.

“This growth is likely being fueled by the range of digital innovations that are infiltrating marketing, Moorman said. “Marketing organizations may need help to get up to speed efficiently.”

At the same time, marketing hires for more standard roles are predicted to grow faster next year, fueled by stronger budgets, the survey shows.

Disintermediation trend

Companies continued to add Direct-to-Consumer (D2C) channels, reinforcing a 10-year trend that sees firms rely less on ‘channel partners’ (like distributors, affiliates, etc.). There are industry outliers to this trend, though: Manufacturing, Consumer Packaged Goods companies, and large companies ($1B-10B+) continue to heavily use channel partners.

Marketing performance

Companies’ performance proved strong relative to the pandemic, with profits and sales growing or remaining positive this quarter. Customer retention, customer acquisition, and brand value also strengthened this past year, with brand value increasing dramatically (+54%) from 6.3% growth last year to reach 9.7% in this survey.

Moorman linked the aforementioned marketer optimism to these performance trends noting, “Marketing leaders seem to be focused on the quality of their returns and not worried about shrinking budgets. AI and digital strategies are also likely boosting their outlook on the future,” she said.

Another reason for marketers’ brighter outlook may lie in the reported increase in collecting, sharing, and using more customer information to shape and evaluate marketing strategies—levels that have all increased over the last five years. “Nearly 30 years of scholarly and practitioner research shows that these types of information activities have a positive effect on company financial performance,” Moorman said.

Founded in 2008, The CMO Survey is administered twice a year. For more results and a historical archive, check https://cmosurvey.org/