Tina Moffett and Shar VanBoskirk
Emily Collins, Kelsey Chickering, Rusty Warner, Stephanie Liu, Jessica Liu, Nikhil Lai, Jay Pattisall, Melissa Bongarzone, Cole Walsh, and Benjamin Nagle
Dial Up Marketing Discipline To Deal With Uncertainty
As the world enters a new phase of volatility — facing global unrest, supply chain instability, and economic turbulence — B2C marketing leaders again must balance business growth and budget. The solution is not universal; you must use the current climate to impel the budget diligence you initiated during the pandemic-related shutdown of 2020. Even within the same industry, market trends may yield different results. For example, while Coca-Cola increased its marketing spend in Q2 2022 to create brand value, P&G cut back on advertising for products impacted by supply chain issues. In the words of Peter ter Weeme, CMO of BCLC, “Times of headwinds force you to be more disciplined. It’s a good time to think about what you stand for as a company and how you communicate that to the market.”
Benchmark Your Budget Growth
Forrester estimated that marketers spent approximately $3.6 trillion on marketing globally in 2021 — 5.6% of their revenue and an increase of 13% from 2020 — rebounding to exceed pre-pandemic levels. And Forrester expects global marketing spend to grow at a 7% compound annual growth rate (CAGR) between now and 2025 to $4.7 trillion. Our spending benchmarks provide a waypoint for you to compare your own allocation for marketing investment. For 2022, B2C marketers allocated their investments toward (see Figure 1):
- Technologies that enable proactive customer relationships. Marketing technology plays a crucial role in helping marketers understand their customers and deliver exceptional experiences. It’s no surprise that, according to Forrester’s Q3 B2C Marketing CMO Pulse Survey, 2022, 75% of B2C marketers planned to increase their technology investment, prioritizing spend on analytics and consumer insights technology, advertising and social technologies, and data and data management technology. Compared to the other marketing categories, technology had the highest percentage of planned budget increase.
- Paid media to ensure the brand is not forgotten. Paid media keeps brands on pace with changing content consumption habits and increasing competition. In 2022, B2C marketers increased budgets as economic tides shifted and invested more in social, paid search, online video/over-the top (OTT), and online display, likely to fulfill short-term conversion goals across trackable and measurable channels.
- Services partners that provide much-needed guidance in uncertain times. Media management, marketing professional services, and creative support are just some of the professional services marketers increased their budgets for in 2022. More dollars are going to integrated agency partners as B2C marketers prioritize operational efficiency and impact.
- Retention marketing methods to strengthen customer relationships. A pandemic-induced interest in loyalty strategies to retain and reengage customers extended into 2022, as marketers redoubled their first-party data collection efforts. Nearly 30% of B2C marketing decision-makers are planning a 5% or greater increase to loyalty/retention marketing budgets for 2022 — in line with their planned increases to digital paid media advertising.
- Bolstering talent resources to meet unwieldy objectives. Headcount commands a smaller share of marketing budgets for 2022, and respondents cited “limited marketing headcount” as one of top five challenges to achieving their marketing objectives. Some companies are still managing through talent shortages due to the so-called “Great Resignation,” and marketing leaders are focused on evaluating the teams’ expertise and passion to ensure they have the right people in place to navigate through uncertain economic times.
Sustain A Confident, Customer-Led Marketing Strategy
When facing hazardous external conditions or internal requests for budget shaving, remember that the best way out of a downturn is to continue investing in marketing. Forrester’s Q3 B2C Marketing CMO Pulse Survey, 2022 data shows that most B2C CMOs at organizations with 500+ employees are planning to heed that advice: 95% of respondents plan to increase their marketing budget in 2023 and, of that, 52% plan to significantly increase their marketing budget. A few priorities deserve all the resources you can spare:
- Defend and rebalance your paid media plans. Surgical shifts and increases of paid media budgets during economic instability will help your brand sustain revenue during hard times and flourish when the economy recovers. Marketing executives say they are planning for increases in paid media across the board but especially in search, online video, and digital audio. Q2 earnings calls play this out: Alphabet reported that search ads topped revenue expectations, while Meta, Snapchat, and Twitter reported second quarter revenue misses indicating cooling social spend. Your media investment decisions will depend on your objectives, but everyone needs a cross-channel communication plan and advanced measurement methods like an omnichannel media analytics framework to maximize return on ad spend (ROAS) across platforms.
- Create authentic content. Advancements in creative technology make it possible for brands to develop audience-first content leveraging data sets of psychological, behavioral, and transactional understanding of consumers. Additionally, 83% percent of B2C CMOs at organizations with 500+ employees said they plan to increase content marketing investment in 2023, according to Forrester’s 2022 data. But consumers are wary of superficial messaging and are grappling with their own uncertainty about the social, economic, and geopolitical climate. Use this time to examine your content development frameworks. Focus on developing content that builds trust and enhances experiences by promoting your brand value and evaluating how your brand is creating lasting connections with its customers.
- Streamline your technology and service provider partnerships. Technology helps marketers generate customer insights and reach the right customers. B2C marketing leaders will slightly increase technology investments in 2023, prioritizing tools like marketing resource management and performance measurement, in order to ensure process, resource utilization, and marketing and media cost efficiency. Develop integrations across marketing technologies to foster interoperability for data sharing, analytics, and marketing execution. Service partnerships can provide the support and continuity to ensure that integrations and new tools are effectively deployed and leveraged. Use Forrester’s blended partner model and martech reference model to categorize your partners and applications in order to identify connections and co-innovation points.
Trim Practices Prone To Waste
Some legacy line items interfere with the flexibility and authenticity you need to weather the current economic climate. Permission granted to scrutinize and prune these subsequent investment areas:
- “Copy-and-paste” media planning. Media dollars go to waste when buyers (brands) and sellers (companies selling media) fail to reach advertising objectives because consumers are leapfrogging across different platforms, evading precise tracking and timely ad serving. Eradicate a copy-and-paste mentality from the media planning process. Audit your channels, tactics, and audience targeting to identify and trim out underperforming executions, including legacy targeting or ad-serving hiccups like whether ads are unintentionally hitting third-tier sites that could weaken ad performance and reach. Invest in more reliable consumer data to help sharpen your audience targeting strategy and shift budgets to higher-yielding tactics that are delivering proven financial value.
- Data broker relationships. Marketers have known for years that the quality of third-party data is poor and getting worse as regulators and tech companies like Apple plan to tamp down on unchecked data sharing. Reevaluate your third-party data partnerships on two criteria: whether they add value to your customer relationships and whether they offer a realistic, futureproof solution. The clock is ticking on background data collection and sharing, and a proposed federal privacy bill would create an opt-in requirement before data can be passed to third parties. As consumers grow increasingly privacy aware and lawmakers savvier, now is the time to reevaluate the upside versus privacy risks of those relationships and find some cost savings.
- Organic and paid social media. Once a source of seemingly endless ROAS, social media mainstays are losing some of their luster. Performance declines due to data deprecation, algorithmic changes, concerns about mis- and disinformation, and the emergence of next-gen competitors like TikTok lessen their appeal. Prioritize individual social media channels based on overarching communications objectives and which phases in the customer lifecycle are most crucial for your brand. Balance efficiency-driving channels (Meta) with culture and community-driving activations (TikTok and Reddit). Shift organic content development from channels with high advertising maturity (Meta) to emerging channels, like TikTok, on which an organic presence still pays off.
Experiment To Identify Innovative Avenues For Customer Connection
Experiments can validate assumptions on new media channels, programs, technology, or content and can help justify even more marketing budgets. Forrester recommends running small-scale experiments to discover new opportunities without sacrificing precious marketing dollars. Specifically, focus your experimentation on:
- Emerging media channels that expand and entertain audiences. Carve out a portion of your budget for emerging channels that capitalize on younger consumer media consumption habits or that create new kinds of experiences that are more engaging and measurable. For instance, TikTok’s high velocity interactions put awareness initiatives in hyperdrive, while connected TV (CTV) and OTT’s ability to connect identifiers with sales conversions deliver specific revenue-based outcomes. Some emerging channels — like the metaverse — are still developing, so use consumer adoption and readiness to guide your tests. Metaverse precursor platforms, like Decentraland, Epic Games, Roblox, and The Sandbox, offer plenty of experimentation opportunities and open doors to new audiences now.
- Collaborative, agile-friendly tools that manage and coordinate resources. As marketers work toward greater speed-to-market and adaptability, they need technology solutions that will allow cross-functional teams to share insights, progress, and goals quickly and easily. Consider borrowing tools from agile software development, such as JIRA or Asana, for project management. These tools make marketing operations nimbler and reduce redundant processes that prevent proactive customer engagement. Experimentation platforms with capabilities like feature flagging, A/B testing, and direct user testing allow teams at companies like Harry’s Razors to make strategic bets without making product investments riskier.
- Machine-driven creative optimization approaches that scale authentic expression. Relevant, creative expressions of a brand’s essence and the way it meets customer needs creates a strong emotional bond. Test technologies that can help develop content and creative that amplifies the emotional connection between a brand and consumer. Data-driven audience segment insights can help inform messaging, design, image, and copy matrices. Start by asking your advertising technology (adtech) partners if their solution has data-driven creative planning and optimization capabilities such as automated predictive creative content performance capabilities.
Forrester’s Q3 B2C Marketing CMO Pulse Survey, 2022, was fielded in July 2022. This online survey yielded a total of 153 respondents in B2C organizations in the US employed in marketing/advertising at the department VP level and above in companies with 500+ full-time employees. In this wave, there was a quota of 40 responses from the consumer products industry. The Pulse explored topics such as technology, leadership, budgets, loyalty, personalization, and others. InnovateMR fielded this survey on behalf of Forrester. Survey respondent incentives included points redeemable for gift cards or charitable donations.