Despite budget cuts, CMOs still bullish on marketing automation investments

COVID-19’s impact on the U.S. economy has been staggering. The country has suffered record unemployment rates as companies continue to shutter across industries. And while communities and businesses are beginning to re-open with shelter-in-place restrictions lifting, it’s difficult to know what’s next.

“The world turned upside down for all of us in March 2020,” writes analysts Shar VanBoskirk, Tina Moffett, Rick Parrish, and Brandon Verblow in Forrester’s 2020 COVID-19 Crisis Will Stun U.S. Marketing‘ report, “CMOs can’t help but ask: What in the world do I plan for now?”

Forrester’s report outlines three possible recovery scenarios for marketers: A late-2020 recovery, a mid-2021 recovery and a late-2021 recovery. The most likely probability, according to Forrester’s research, is a mid-2021 recovery — but even in the best case scenario of a late-2020 recovery, CMOs will likely lose $222 billion of their budget.

Marketing programs most likely to be cut

“While advertising budgets were immediately slashed in the wake of COVID-19, I saw firsthand that brands virtually stopped making SaaS investments,” said Benjamin Shapiro, a brand development and growth marketing consultant and host of the MarTech Podcast, “I also saw large brands withhold payments to manage cash flow on the backs of vendors. Fortunately, it seems that the cash crunch is ending and B2B SaaS investments are starting to pick up.”

Forrester’s predictions support what Shapiro has seen so far around select SaaS platforms. The research company expects CMOs will reduce spend on marketing technology (including ad tech solutions like DSPs) into 2021, along with marketing services and internal headcount — leaving overall marketing spend at the start of 2022 nearly 30% behind what it was in 2019.

Marketing services will lose as much as $15 billion by the end of 2021, per Forrester’s predictions. Marketing organizations will also lose 30% of their staff, with salaries down 30% this year and an additional 5% next year.

“These steep cutbacks will test customer experience (CX) and marketing program quality,” reports Forrester, “Consistently demonstrating brand promise at scale could be difficult with smaller teams.”

Proof Analytics CEO Mark Stouse says he’s already witnessed marketers moving away from performance marketing investments.

“Performance marketing, and the martech that enables it, was under question before COVID-19 and the experience of the past four months has really confirmed with the analytics have said previously — that touching customers too aggressively and too frequently actually makes it hard for the sales team to sell,” said Stouse.

According to Stouse, marketers are putting more into their branding efforts: “In rocky times, everyone is looking for anything that removes friction and risk from the equation. Those concerns are addressed by brand — awareness, confidence, trust — not by how many emails or texts you can pump out every hour to people who may or may not want to receive them.”

CMOs hold tight to marketing automation platforms

Even with dramatic budget cuts, CMOs will continue to invest in marketing automation platforms based on the Forrester’s mid-2021 recovery scenario. The research firm claims marketing automation with “save martech” from decline. Per Forrester’s predictions, martech will see a 4% decline overall, but marketing automation platforms will grow 3%.

CMOs will reduce investments in demand-side platforms (which are already under threat because of third-party cookie depreciation) and data management platforms, according to the Forrester report, shifting their focus to solutions that deliver efficiency and optimization.

Based on the conversations he has had with guests on his MarTech Podcast, Shapiro says he’s already noticed an emerging theme of marketers focusing on efficiency.

“With budgets and headcount reduced for the foreseeable future, marketers are focusing on conversion rate optimization, lead nurturing and customer retention campaigns,” said Shapiro, “The smart play is to focus on doing what you already do better as a marketing organization and try to reduce the impact of decreased lead volume. Lead conversion efficiency is now an industry KPI.”

Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

Amy Gesenhues

Amy Gesenhues was a senior editor for Third Door Media, covering the latest news and updates for Marketing Land, Search Engine Land and MarTech Today. From 2009 to 2012, she was an award-winning syndicated columnist for a number of daily newspapers from New York to Texas. With more than ten years of marketing management experience, she has contributed to a variety of traditional and online publications, including MarketingProfs, SoftwareCEO, and Sales and Marketing Management Magazine. Read more of Amy’s articles.