CMO Survey
2018
How brands
win in the
digital economy
CMO Survey 2018
Contents
Foreword
The speed read
Annex: About the respondents
1
2
3
4
5
Marketing in turmoil?
Capitalising on consumer attention
Bridging the gap
Conclusions
Digital trends disrupting marketing
3
4-6
8-10
11-17
18-25
26-32
33-34
35-36
2.
CMO Survey 2018
Foreword
by Nigel Morris
Chief Strategy and
Innovation Officer,
Dentsu Aegis Network
It’s a huge pleasure to launch our 2018 CMO Survey. This research, encompassing the
views and inputs of 1,000 CMOs and C-level marketing executives around the world, gets
to the heart of the challenges and opportunities facing marketers today. Amid huge levels
of debate and soul-searching about the state of marketing, and particularly the impact of
digital technologies, this report provides a snapshot of CMO sentiment. It also sets out some
of the key areas that we believe will be critical if brands are going to be successful in the
context of the digital economy.
My own view is that there has never been a more exciting time to be a marketer. Despite
some of the more negative headlines, marketing works. But it just works differently from
before. To help set some context, I believe three areas of change are particularly important
to understand.
First, while the fundamental principles of marketing have not changed, in terms of the tools
and capabilities with which brands can execute their strategies we’ve seen huge disruption.
The speed of growth and the variety of new channels through which brands can engage
consumers is astonishing. But many brands are guilty of letting the tail wag the dog—of
allowing a short-term preoccupation with digital detract from long-term brand-building. As
with any innovation, these tools need to be considered in the context of a brand’s long-term
strategy and as part of an integrated marketing mix that address all phases of the consumer
lifecycle.
Second, the increasing volumes of consumer data have put marketing at the apex of the
firm’s growth engine. With terabytes of data flowing into the marketing function, there
is an unparalleled opportunity to spot new opportunities for revenue growth. However,
capitalising on that will place new demands on marketers—both in terms of handling data
responsibly as well as developing the skills to help separate data from insight.
Third, marketing is now fundamentally a two-way, continuous dialogue with consumers,
where most brand interactions are initiated by consumers themselves. Rather than simply
pushing messages out of the door, marketers must engage in a conversation of far greater
complexity and, usually, less control. Being able to develop creative experiences that attract
consumers to you, on their terms, will be essential if brands are to remain relevant.
In a demand-led economy, it’s those brands that are best at reorienting their business
and operating models around the consumer that will win. That can take time and money,
both of which are in short supply—CMOs identify a lack of long-term investment as
the key challenge to delivering their strategy. Breaking this cycle of short-termism and
communicating better the business value of long-term brand investment will be critical to
embracing the potential of disruption and winning in the digital economy.
I’d like to thank those CMOs who took the time to share their views with us and I look
forward to continuing the conversation over the coming months and years.
3.
CMO Survey 2018
The speed read
• We believe that there has never been a more exciting time to be a marketer.
Digital technologies may be arming marketers with new tools to deliver their
strategy. But it is the deeper shift towards a digital economy that demands a more
fundamental resetting of a brand’s long-term strategy than many appreciate.
• To help understand how brands can win in a digital economy, we conducted a
global survey of 1,000 CMOs and senior-level marketers from across ten markets
and across industry sectors.
• Our analysis shows marketing in flux, but by no means finished. Most CMOs
expect their budgets to increase over the next 12 months. But the composition of
that spend is changing. Those able to adapt quickly enough to the realities of the
digital economy will be the winners.
• Digital technologies have helped erode barriers to entry and create the conditions
of near-perfect competition between producers and consumers. In this demand-
led economy, growth is emerging from unexpected quarters as brands step out of
their traditional industry.
• Within this context, CMOs are in a unique position as the ‘growth antennae’ of
the business, turning consumer insight into the next commercial opportunity.
Reflecting this, two-thirds of CMOs see driving business growth as their primary
role.
• How can CMOs support business growth? Primarily by securing long-term
consumer relationships (70%) and finding new sources of revenue (63%).
• Data is the enabler that allows businesses to identify new growth opportunities.
If you have the data, you have the advantage. Over the next 2-3 years, CMOs
see the ability to use data to reach real people, rather than proxies or customer
segments, as the number 1 strategic opportunity.
• However, a data breach or misuse of consumer data is also the number 1 strategic
risk, identified by a third of CMOs globally. Furthermore, 60% of CMOs believe
that the European Union’s General Data Protection Regulation (GDPR) will make
it harder to build a direct relationship with consumers.
Barriers to entry are being eroded
Data is unlocking new growth—and risk
Competition for consumers is intensifying
• While the ways in which brands can reach consumers are becoming more diverse
and tech-driven, the challenge is that many consumers are simply not that
interested in ‘traditional’ forms of advertising.
4.
CMO Survey 2018
Capitalising on consumer attention
• The answer lies in creating a model of consumer interaction where each
touchpoint provides a potential route to a transaction, requiring all elements of
the marketing machine to be aligned in real time. How can brands create these
perfect moments of marketing? Five ingredients stand out:
1. Create experiences: Creating ideas and campaigns that connect emotionally
and endure will be critical if brands are to attract consumers to them, rather than
pushing more traditional messaging to them. 71% of CMOs believe this to be the
case.
2. Target real people: 79% of CMOs believe that the use of data to target real
people rather than proxies will be important to maximising the value of consumer
relationships over the next 2-3 years. Adapting to a fluid regulatory environment
and flexing capability across people-based, device and panel data will be key.
3. Rethink media: The definition of media is changing and has moved beyond
distribution channels alone. CMOs also choose to define it more broadly across
technology (48%), content (44%), distribution channels (41%) and data (38%).
Each of these provides a potential source of consumer insight and a more holistic
way of using media to reset strategy. But, while CMOs agree that value from
media investment lies in sales growth (identified by 76% of CMOs), as yet a far
smaller proportion are using this insight to reset their strategy.
4. Close the brand commerce gap: Maximising the potential value of consumer
engagement requires brands to ensure that each point of interaction can
potentially result in a sale. More than two-thirds of CMOs say that integrating
brand engagement and commerce/conversion will be an important way of
engaging consumers over the next 2-3 years.
5. Embrace authentic brand purpose: Nearly 70% of CMOs said that connecting
their brands to social impacts was an important way to engage consumers. As
younger generations take an active interest in the social and ethical performance
of brands in their decision-making, this capability will only increase in importance.
• CMOs confirm that engaging is the most challenging part of the consumer
lifecycle for businesses to deliver against—both today and in the future. Why?
Increasing levels of competition (56%); consumers’ intolerance for advertising
(46%); and information overload (44%).
• As competition intensifies for consumer attention, how can brands capitalise on
moments of interaction that will be increasingly rare and most often initiated by
consumers themselves?
5.
CMO Survey 2018
But a number of challenges need to be addressed
• While the key ingredients of success in the digital economy are emerging, there
are a number of challenges that will need to be overcome if this potential is going
to be fully realised. A handful emerge from our survey:
Making marketing an innovation engine
Only one third of CMOs see their primary role as leading disruptive
innovation—and only a slightly higher proportion see their role as delivering
business transformation. These activities will likely need to grow as priorities
if brands are going to reorient themselves quickly around the needs and
wants of the consumer, reassessing their strategy and changing the business
accordingly.
Securing long-term investment
Nearly half of CMOs identify securing long-term investment as the biggest
challenge to delivering their marketing strategy. CMOs find themselves
managing competing imperatives—not least, the need to deliver short-term
results while also building a long-term brand proposition. Shifting the focus
back to long-term, sustainable brand health will be needed to help engage
consumers and deliver consistently.
Managing the data deluge
While there is more data available today, 61% of CMOs believe it is harder to
extract insight from it. This places a new emphasis on skills and capabilities,
particularly in such areas as data science. Brands are currently focusing on
‘build’ versus ‘buy’ strategies to engage consumers better through data,
including making better use of existing data (57%); hiring specialist talent
(52%) and developing training programmes for existing employees (48%).
Harnessing the ecosystem
The way in which brands engage with external partners and suppliers is
changing. For example, 52% of CMOs will bring more marketing capabilities
in-house over the next 2-3 years, while one third will reduce the number of
marketing agencies they work with. Building internal capability while also
marshalling an increasingly diverse set of service providers will be equally
important.
Working better with marketing agencies
CMOs believe that an explicit focus on efficiency and cost reduction is the
weakest area demonstrated by the marketing agencies they work with—
followed closely by their ability to provide fully integrated solutions across
all elements of the marketing mix. This finding speaks to the need for
agencies to reduce complexity for brands while also maintaining a clear eye
on the competitive cost pressures they face.
6.
CMO Survey 2018
7.
CMO Survey 2018
1. Marketing in turmoil?
2018 has generated plenty of gloomy headlines for marketers
within global brands. It seems like marketers and brands are facing
unprecedented challenges as the digital economy continues to disrupt
the way we engage with consumers. Many commentators have judged
that the traditional marketing funnel is fundamentally broken—at both
ends. There are doubts about the effectiveness of advertising mediated
through digital media platforms and even questions about many of
the assumptions by which marketers have navigated for many years.
We’ve seen high-profile consumer packaged goods companies radically
pulling back how much they spend on ads, the impact of ad tech, big
consultancies entering the industry and advertising fraud and brand
safety.
Ad tech is growing in power
In an economy in which data increasingly means the power to target and
tailor, power is flowing towards those companies which can collect more.
Google and Facebook represent about 60% of the US digital ad market
and have captured about 90% of the growth in spending, as brands look
The past year has seen a number of big name consumer goods brands
make public commitments to cut marketing spend in response to slowing
market growth, increased competition and investor pressure. Unilever,
which has a € billion marketing budget, has announced that it will
halve the number of agencies it uses globally and cut the number of ads
it produces by 30%. Procter & Gamble has decided to halve the number
of agencies it uses while Nestlé has similar plans. While our analysis of
future marketing budgets (see page 10) suggests that these examples
are not representative of companies as a whole, nevertheless they
have been instrumental in fueling a debate about how to increase the
effectiveness of marketing spend.
To understand the changing dynamics of marketing in a digital economy,
we surveyed 1,000 CMOs and C-level marketing executives around the
world (see page 35 to learn more about the respondents). Their insights
help put the current debates surround marketing into broader context
and underline the need to take a longer view on the impact of the digital
economy.
Consumer goods companies are pulling back spend
8.
CMO Survey 2018
to leverage their ability to reach consumers. While there have been concerns raised
about the dominance of their market position and the effectiveness of digital media
spend, many CMOs see building a good relationship with ad tech companies as an
opportunity and central element of their future strategy.
Powerful voices have decried the lack of transparency in media supply chains, lack
of common standards, unreliable measurements, and new forms of fraud such as
using bots to bump numbers. They, and others, have brought into the open a number
of discussions about measurement and effectiveness. Overall, this has helped fuel a
lack of trust in digital media. However, as our analysis shows, CMOs continue to see
digital media platforms as a key element of their marketing strategy.
In 2017, for the first time ever, four management consultancies entered Ad Age’s
ranking of the 10 largest agency companies in the world. In that year, the marketing
services units of Accenture, PwC, IBM and Deloitte had a combined revenue of $
billion. That was only a little less than WPP, Omnicom, Publicis Groupe, Interpublic
and Dentsu. As these companies continue to acquire, they look set to be more
significant features on the marketing services landscape.
Management consultancies are entering the fray
Concerns about digital media effectiveness
Despite the headlines about marketing budgets at larger consumer goods
companies being scaled back, it seems they aren’t representative of the wider trend.
Most CMOs, in fact most sectors, are expecting their budgets to increase over the
next year (see Figure 1), with the technology sector leading the way. More than
40% of CMOs expect their budgets to increase up to 5% and over one fifth expect
them to increase by more than this. Companies of all sizes said the same thing: that
they’re expecting to have more money to spend. And broadly speaking, respondents
at bigger companies are more likely to expect their marketing budgets to increase
than those at smaller companies. Geographically, even in markets facing an
uncertain economic future, CMOs are bullish. For example, in the United Kingdom,
73% of CMOs expect their budgets to increase over the next year, despite lingering
uncertainty about the terms of the UK’s departure from the European Union.
Overall, marketing budgets look positive
9.
CMO Survey 2018
How would you expect your marketing budget to change over the next 12 months?
(% choosing each option by industry sector)
Figure 1: Most CMOs expect positive growth in marketing budgets over the next
12 months
Source: Dentsu Aegis CMO Survey 2018
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Increase by more than 5%Increase by up to 5%
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53%
19%
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26%
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14%
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22%
41%
23%
39%
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46%
15%
56%
6%
32%
27%
45%
14%
44%
10%
31%
23%
The composition of this spending, however, is changing. This report paints a picture
of brands in flux. There is considerable rethinking going on, even about the purpose
of marketing itself. The rules of the game are changing. Marketing is not dead—it
just works differently from before, and success requires different skills, strategies,
and attitudes. How so? And what do brands need to start doing differently? To
answer these questions, the next section will look at how digital technologies are
profoundly changing the context in which marketing operates and making it harder
to engage consumers; section 3 identifies the key capabilities that will be needed
to engage consumers; section 4 highlights some of the challenges that brands still
face if they truly want to thrive in the digital economy; and section 5 offers some
conclusions as well as practical questions for CMOs to take away and reflect on.
10.
CMO Survey 2018
2. Digital trends disrupting marketing
There has been much debate in recent years about the impact of the digital
economy on marketing. Some commentators accuse brands of embracing digital for
digital’s sake. Others suggest that brands have not embraced digital enough. Our
view is that the digital economy has fundamentally changed the market dynamics
in which brands operate—and that this will accelerate in the future. Before asking
how to use emerging digital technologies such as virtual and augmented reality
to engage consumers, the larger question brands must address is how they ensure
long-term brand health within an economy that is being transformed by digital.
Some of the key trends that this transformation has generated are explored below.
Digital technology has helped erode barriers to entry, disrupt incumbents and
eviscerate information asymmetries, creating the conditions of near-perfect
competition between producers and consumers. This means that growth is coming
from unexpected quarters as brands step out of their traditional industries into
adjacent sectors. For example, technology companies such as Apple, Google and
Uber are now making forays into the healthcare industry.
In that context, it is perhaps not surprising that CMOs see the primary role of
marketing as being about growing the business (see Figure 2). After all, this has
always been its main objective. But, in recent years, many brands have perhaps
become distracted from this mission by the rise of multiple digital tools and
online marketplaces. As a result, many brands have since appointed Chief Growth
Officers to join the C-suite, either alongside or instead of the CMO, to ensure
that this critical role does not get lost in the noise and complexity of the digital
era. As competition intensifies, the role of marketers as the growth antennae of
their organisations will only gain in importance. However, not all CMOs agree. For
example, in the telco sector, CMOs see the main role of marketing as developing
the overall customer experience, with business growth some way down the pecking
order.
Digital erodes barriers to entry
What do you see as the primary role of the marketing function within your
organisation? (% ranking in top 3)
Figure 2: CMOs see delivering business growth as the primary role of marketing
Source: Dentsu Aegis CMO Survey 2018
Delivering business growth
Ensuring effective brand management
Developing the overall customer experience
Understanding consumer/market trends
Delivering business transformation
Leading disruptive innovation
64%
53%
52%
49%
38%
35%
11.
CMO Survey 2018
In terms of supporting business growth, a higher proportion of CMOs said their role
was about securing long-term customer relationships (70%) than about driving
revenue growth (63%—see figure 3 below). The trend is particularly marked in fast-
moving consumer goods sectors where customer switching is easiest, such as the food
& beverage and technology sectors.
What do you see as the primary role of the marketing function in supporting
business growth? (% ranking in top 3)
Figure 3: Securing long-term customer relationships is primarily how CMOs
support business growth
The volume and precision of consumer data continues to grow. But the ability to
draw actionable insight from that data is what really makes the difference. It enables
brands to build up a more accurate picture of consumers and helps them meet
consumer needs more effectively.
People-based marketing, in other words marketing that enables brands to direct all
marketing messaging to real people (in addition to devices and customer segments/
panels) in a more personalised and relevant way, has emerged as a major area of
focus for global brands in recent months. And it looks set to be a significant source
of growth in the future. Over the next 2-3 years, CMOs see the ability to use data
to reach real people, rather than proxies or customer segments, as the number one
strategic opportunity (see figure 4).
The ability to act upon this does differ by industry, though. For CMOs in the energy,
financial services and tech sectors, the number one opportunity is the potential
for artificial intelligence, machine learning and blockchain to deliver more efficient
marketing spend. Salesforce estimate that just over half of marketers currently use
artificial intelligence, with an additional 27% expected to incorporate the technology
by 2019.
Data unlocks new growth opportunities
Source: Dentsu Aegis CMO Survey 2018
Securing long-term customer relationships
Driving revenue growth
Enhancing margin growth
Driving cost reduction and efficiency
Meeting short-term budgets
70%
63%
59%
44%
40%
12.
CMO Survey 2018
With the increasing volume and sophistication of data-led marketing solutions
comes a downside risk. Headlines over the last year have been full of stories of data
breaches and use of customer data in ways which have unnerved customers and
policymakers alike. Data may be the big marketing opportunity of our times—but
the strategic risk that concerns marketers most, by some margin, is a data breach or
misuse of consumer data (see Figure 5).
What are the biggest strategic opportunities you foresee over the next 2-3 years?
(% ranking number 1)
What are the strategic risks that worry you most over the next 2-3 years?
(% ranking number 1)
Figure 4: Using data to reach real people is the #1 CMO strategic opportunity
Figure 5: A data breach is the #1 strategic risk for CMOs
But data is also a key source of risk
Source: Dentsu Aegis CMO Survey 2018
Source: Dentsu Aegis CMO Survey 2018
The abil ity to use data to reach real people, rather than
proxies or customer segments
The potential of artificial intell igence, machine learning and
blockchain to drive more efficient marketing spend
The potential for emerging digital technologies to deliver better
consumer experiences
Access to new geographic markets and consumer segments
Direct relationships with the ad tech platforms
29%
26%
18%
16%
10%
A data breach/misuse of consumer data
Increasing levels of competition
New consumer interfaces making it
harder to ensure brand visibil ity
The dominance of ad tech platforms
Consumer intolerance for advertising
Increasing trade protectionism in
some markets
29%
19%
17%
15%
11%
8%
A fluid regulatory context
To add to CMOs’ concerns, the regulatory context surrounding people-based
marketing is complex and changing rapidly. Our survey was conducted in the weeks
leading up to the European Union’s General Data Protection Regulation (GDPR)
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CMO Survey 2018
Data protection legislation (. GDPR) will make it harder to build a direct
relationship with our consumers (% agreeing by industry sector)
Figure 6: Most CMOs believe data protection legislation will make it harder to
build a direct relationship with the consumer
Source: Dentsu Aegis CMO Survey 2018
Financial services
Leisure & travel
Telco
Pharma & biotech
Automotive
Capital goods
Food & beverage
Retail
Technology
Healthcare
Energy
Transport
Media
74%
67%
67%
67%
65%
64%
61%
61%
59%
57%
56%
54%
50%
Since GDPR came into force, other jurisdictions have followed suit. Late in June
2018, California enacted what is regarded as the most stringent data protection
regulation in the United States. Other states may follow suit. Overall, the impact of
these developments is likely to have a ripple effect around the world. Why? Because
faced between a choice of having different data protection policies and practices
for consumers in certain parts of the world (which could be costly) or choosing to
adopt more stringent standards on a global basis, many companies may choose the
latter.
In the near term, legislation has contributed to a climate of growing caution among
brands and publishers in the weeks and months since our survey was conducted.
Many are now more risk-averse when it comes to sharing data. The media
ecosystem as a whole is taking time to work through the ramifications of events
in Europe and California. Longer term, however, the direction of travel is clearly
towards accessing the best fidelity of data. Brands must continue to flex their data
capabilities across people-based, device and customer panel data, both to respond
to a more fluid regulatory environment and to exploit fully the clear opportunity
that data presents to drive better insight, efficiency and effectiveness.
coming into force on 25 May 2018. But even before this date, concerns about the
legislation were keenly felt. 60% of CMOs believed that data protection regulation
such as GDPR would make it harder to build a direct relationship with the consumer,
with CMOs from Financial Services particularly likely to believe this (see figure 6).
14.
CMO Survey 2018
Just as the digital economy has helped open up industries to new entrants and
competitors, so too the traditional marketing world has been challenged by new,
tech-enabled insurgents. Some of the biggest tech companies in the world—
Google, Facebook, and Baidu—are also media companies. According to Credit
Suisse, Facebook and Google now account for one fifth of all global ad spend. Ad
tech startups are also making their presence felt, with many developing competitive,
niche value propositions. Meanwhile, management consultancies are entering the
ad industry through the high-profile acquisition of a number of marketing services
agencies.
Reflecting these trends, more than half (54%) of CMOs are planning to increase
their own investments in digital media platforms over the next two or three years.
Nearly half plan to increase the number of marketing specialists they retain,
while almost one third are planning to increase their work with management
consultancies (see Figure 7), underlining the changing dynamics around the
marketing industry and growth in tech-enabled platforms and startups.
Despite scare stories about the demise of the traditional marketing agency, only
one third of CMOs say they will reduce the number of external agencies they will
work with. However, this trend, coupled with the popularity of in-housing marketing
capabilities, does speak to the cost pressures facing brands and the need to
demonstrate effectiveness of marketing spend.
There is a proliferation of new marketing players
Source: Dentsu Aegis CMO Survey 2018
We will invest more into digital
media platforms
We will bring more marketing
capabil it ies in-house
We will increase the number of specialist
marketing contractors we retain
We will reduce the number of external
agencies we work with
We will work more with management
consultancies
54%
52%
48%
33%
29%
Figure 7: Most CMOs plan to invest more in digital platforms and bring
capability in-house
How will your partner/supplier approach change over the next 2-3 years?
(% selecting each option)
15.
CMO Survey 2018
One of the most challenging trends facing marketers within global
brands is the creeping realisation that often consumers don’t really
want to see advertising—at least not in its traditional form. As well as
the spectre of Facebook shifting its algorithm to downplay commercial
content, we’ve encountered increasing evidence that consumers are
overloaded with information.
One possible cause of consumers’ rising intolerance for advertising could
be their own increasing power. Today, it’s easier than ever for them to
find only the product information they need rather than commercial
messages about it. And they can do it only at the time when they need
it. With 91% of people regularly reading reviews online and 80% of
millennials only buying after reading a review, consumers may be less
responsive to paid messages than ever.
Almost half of all CMOs say that consumers’ intolerance for advertising
is one of the key barriers they expect to face when building relationships
with consumers in the next two to three years (see figure 8).
Competition for consumers is intensifying
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CMO Survey 2018
What are the key barriers you face when it comes to building better relationships
with consumers over the next 2-3 years? (% ranking in top 3)
At 56%, increasing levels of competition are the biggest barrier to better consumer
relationships, according to CMOs. With more and more brands competing to build
relationships with consumers, the ability to do something different and stand out
from the crowd is critical. In the next section, we’ll look at how brands can do this.
Figure 8: CMOs see a battle for consumer attention emerging
Source: Dentsu Aegis CMO Survey 2018
Increasing levels of competition
Consumers’ intolerance for
advertising
Information overload
Access to concrete consumer data
Fragmentation of the media
supply chain
Marketing agency capabil ity
Data protection regulation
(. GDPR)
56%
46%
44%
41%
36%
31%
21%
17.
CMO Survey 2018
3. Capitalising on consumer attention
Brands are faced with increasing levels of competition for consumer engagement.
As the internet has reduced barriers to entry, consumers have had access to
greater choice in many markets. Combined with almost frictionless switching and
substitution options, increasingly transparent pricing, and the opportunity to buy
anywhere at any time, the landscape has become easier for new, digitally enabled
entrants to challenge incumbent companies, even if they have smaller marketing
budgets. No wonder CMOs name increasing competition as the primary challenge
they face. It is possible to succeed in this environment. But it means brands will have
to do some rethinking.
Against this backdrop, it should come as little surprise that most CMOs say that the
part of the consumer lifecycle which they find hardest both today and in 2-3 years is
engaging—creating awareness among consumers through different media channels
and campaigns (see Figure 9).
Which phase(s) of the consumer lifecycle do you think is the most challenging
for your business to deliver against (a) today and (b) over the next 2-3 years?
(% ranking number 1)
Figure 9: CMOs recognise that capitalising on consumer engagement will get
increasingly hard
Perfect moments of marketing
Source: Dentsu Aegis CMO Survey 2018
0%
Now In 2 - 3 years
10%
20%
30%
40%
Engaging i .e : Creating awareness among consumers
through different media channels and campaigns
Activating i .e : Motivating people to consider your
brand/products
Converting i .e : Turning interest into commitment
as a customer
Transacting i .e : Facil itating a transaction
Retaining i .e : Building loyalty, developing
brand advocates
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CMO Survey 2018
That converting, transacting and retaining are to become more challenging speaks
to the overall lifecycle that CMOs envisage. While there may be a near-term focus
on reaching as many consumers as possible, in future that will need to turn into
ensuring that they become loyal, paying customers. But it also perhaps speaks to
the need to consider each phase of the consumer lifecycle not sequentially, but
simultaneously.
Today, potential customers are discovering brands from targeted adverts on social
media platforms like Facebook and Twitter, from news stories which link directly to
brand sites, or online in other ways. As soon as they arrive at a brand site, potential
consumers expect both to be inspired and to be able to make a purchase. The gap
between brand inspiration and commercial interactions has closed. Today, the
focus is on creating perfect moments that delight, inspire and activate audiences,
potentially provoking them to buy online, in the moment.
This is a different approach from old assumptions about how marketing works: that
an advert raised awareness of a product, and only then would a consumer think
about where they had to go to buy it. Instead of pushing messages out on their own
terms, today consumers get messages when and how they want to, which will often
be a platform on which they can make a purchase in response to the moment of
discovery. This puts the onus on brands to ensure that their sales machine is ready to
go at that point, to maximise the value of that interaction.
This hyper-competitive environment will be a reality for the foreseeable future.
Given that, what should brands do differently to compete? The good news is that
plenty of brands and marketers are figuring out strategies to compete in this new
environment. Here are five.
How can brands stay relevant?
19.
CMO Survey 2018
One of the reasons it’s so hard for an ad to stand out is that consumers know
what an advert is. And it’s not automatically something which gets their attention
because the rules of the game are so well established. To secure attention, you have
to break those rules.
One of the ways some of the most forward-thinking marketers do that is by using
creativity and technology in new ways. In the past, discussion of creativity remained
within relatively well-defined parameters such as the copy, the artwork, and the
story. Today, creativity also entails questions about which media to use, which
technology to use, and how to combine them to deliver innovative and memorable
brand experiences. Augmented, virtual and mixed realities, alongside the internet of
things, are expanding the creative canvas. Integrated solutions are enabling more
personal, engaging and immersive experiences. Within this context, marketers must
work on creating experiences as well as ads.
For example, KFC has been in China for 28 years, but recently undertook a project
to digitise its 5,000 restaurants in the country. It partnered with Baidu, WeChat and
Alibaba payment services to allow customers to stream music by scanning codes
from their food tray, preorder meals, and play games. The objective was to create a
memorable moment that delighted the customer.
Today, creativity is about what people see, feel, touch and experience about a
brand. The ability to connect emotionally with consumers can help brands cut
through the noise. 71% of CMOs recognise that generating ideas that connect with
people emotionally are what will make them stand out and maximise the value of
consumer engagement over the next two to three years.
1. Create experiences
20.
CMO Survey 2018
One of the most striking findings of the survey was the excitement
around the ability to target specific individuals, not just proxies or
segments. Data now enables marketers to get a rich understanding of
their target market as individual people. Not only can this significantly
improve conversion rates, it also increases the relevance of ads that
people see. For example, Castle Chevrolet used Facebook ads to target
users technology (15%) and food & beverage (14%) their showrooms as
well as those who lived near Castle’s top competitors. The ads featured
a map showing exactly how close Castle’s dealerships were to the
audience. The three-month campaign provided an eye-watering 23x
return on advertising spend.
As consumers grow weary of traditional ads and are rightly intolerant of
messaging that is not tailored to them, the vast majority of CMOs (79%)
agree that effective use of data to target real people, not proxies, will
be important to maximising consumer engagement over the next 2-3
years. Of course, this capability represents a very different approach
to marketing for many CMOs. But the good news is that the majority of
CMOs say they have the influence they need over their company’s data
strategy (see figure 10). It looks like the need to use the right data to
build relationships with potential consumers as individuals is understood
across the C-suite.
2. Target real people
21.
CMO Survey 2018
As a marketing leader, I have sufficient impact on the direction and delivery of our
data strategy (% respondents agreeing)
Figure 10: Most CMOs believe they have sufficient impact on their company’s
data strategy
Source: Dentsu Aegis CMO Survey 2018
Capital goods
Financial services
Pharma & biotech
Telco
Technology
Retail
Healthcare
Leisure & travel
Food & beverage
Media
Transport
Energy
Automotive
90%
89%
89%
85%
84%
80%
80%
76%
76%
73%
72%
69%
66%
22.
CMO Survey 2018
The concept of media is evolving beyond distribution channels. A broadly similar
proportion of CMOs see media as encompassing technology, content and data
alongside the more traditional distribution channels (see figure 11). This speaks to
the broader set of touchpoints through which brands can reach potential customers
but also increases the richness of insight that they are able to derive from them.
One implication of this broader concept of media is that it opens up new sources
of value to the business. Today, the clear majority of CMOs measure the value of
media in terms of sales growth (see Figure 12). For example, , a direct-to-
consumer luxury footwear brand, increased sales by 20% following the introduction
of weekly previews of new styles on Instagram Live. Many brands also see brand
enhancement as key source of value, alongside cost reduction and reach/frequency.
saw traffic to its website increase by 51% following introduction of the
product sneak peaks.
A far smaller proportion, however, see the value of media in strategic planning.
Moving forward, we might expect this to increase as marketers realise that the
value of media is not just in outward broadcasting. It is also in the inbound messages
and data it generates. Online strategies generate data which offers an exceptional
level of insight which can be used to plan subsequent strategies and reinvent the
business around the needs of the consumer. Sales growth will always be key—but
marketers who fail to use an increased set of insights to contribute to strategic
planning will be missing a trick.
How do you define ‘media’ within your organisation? (% selecting each option)
3. Rethink media
Figure 11: CMOs now have a broader definition of ‘media’
Source: Dentsu Aegis CMO Survey 2018
Technology
Content
Distribution channels
Data
All of the above
48%
44%
41%
38%
17%
23.
CMO Survey 2018
How do you measure the value you derive from your investment in media?
(% ranking in top 3)
One key way CMOs are finding to stand out and create those precious moments
is by creating interactions which unite the moment of inspiration and engagement
with the moment of conversion. ‘Brand commerce’ unites the two.
CMOs are moving from pushing out messages on their own terms to accepting
that consumers are receiving their messages when and how they want to, so
the conversion ‘machine’ has to be ready at that point. In other words, once your
creative work has created that magic moment of discovery, the opportunity to buy
needs to be aligned to maximise the value of that interaction. For example, apps
such as Markable enable users to take a picture of any outfit and, using image
recognition software, purchase the outfit with the click of a button. And Snapchat
has partnered with SeatGeek to enable in-app ticket buying, so that if you see
content for a particular show that you like you can buy tickets there and then.
This ability to turn spur of the moment engagement into a commercial transaction
is at the heart of brand commerce. It’s perhaps no surprise, then, that more than two
thirds of CMOs say that integrating brand engagement and commerce/conversion
will be important in the next 2-3 years. This view is particularly prevalent in the
energy sector, where more than 80% of CMOs believe brand commerce will be key.
Figure 12: CMOs see the value of media in sales growth—but strategic planning
is a big opportunity
4. Close the gap between brand and commerce
Source: Dentsu Aegis CMO Survey 2018
Sales growth
Brand enhancement
Cost reduction/efficiency
Reach & frequency
Strategic planning
76%
62%
51%
49%
44%
24.
CMO Survey 2018
Brands can also increase consumer engagement by embracing brand
trust and transparency, and aligning themselves with their positive
social impact. Unilever’s Paul Polman has demonstrated this with brand
sustainability, and brands like Ben and Jerry’s and the Body Shop have
been doing it for years. Nearly 70% of all CMOs said that connecting
their brands to positive societal impacts was an important way to engage
consumers. Only 13% disagree. The consensus is that in an attention-
light world, brands can garner attention and loyalty by tapping into
target consumers’ strong feelings about social, political, and economic
issues. Needless to say, such moves are fraught with risk. Consumers
punish any signs of inauthenticity or opportunism. But the opportunity is
large. Done right, this alignment can build incredible brand loyalty and
drive consumer engagement.
For example, global drinks brand Smirnoff developed a campaign that
addressed the issue of gender equality, focusing in particular on female
representation in the electronic music scene. The results of the campaign
showed the value of tapping into the social zeitgeist: in the United States,
purchase intent increased by % and in the United Kingdom unaided
brand awareness increased by %.
5. Embrace authentic brand purpose
25.
CMO Survey 2018
4. Bridging the gap
There are clear routes that marketers can take to maximise the value of
attention and reorient their businesses around the consumer. But building
these capabilities isn’t straightforward. To do so effectively and build a
more future-proof strategy that can help deliver long-term brand health,
companies need to take action on a number of fronts.
Firstly, brands need to start thinking about marketing not just as a way to
grow the business, but as a way to change the business. In recent years,
traditional business models in everything from taxis to razors have been
disrupted. Marketing a slightly upgraded product in a way which gives
them an emotive punch is at the heart of many of these innovations. In
short, marketing can drive disruptive innovation. Companies like Dollar
Shave Club have disrupted established business models in the shaving
and grooming sectors, as Uber has done with urban transportation.
While these brands’ success is due largely to their business models, the
emotional affinity they’ve built with their customers is down to their
marketing. Ten years ago, nobody would have imagined that a technology
company could make taxis cool. These brands demonstrate what
marketing can achieve when it thinks disruptively.
Many companies have responded to innovators such as these with
a sense of urgency about the need to become disruptive innovators
themselves, even if only to avoid being the target of similar disruption in
their sectors. However, it seems that this attitude has some way to go
before it becomes the new normal. Only about one third of CMOs see
leading disruptive innovation as marketing’s primary role and agreement
on this question varies significantly by industry (see Figure 13).
Making marketing an innovation engine
26.
CMO Survey 2018
What do you see as the primary role of the marketing function within your
organisation? (% ranking ‘leading disruptive innovation’ in top 3)
For example, CMOs from the telecommunications, energy and technology sectors
see leading disruptive innovation as a key role of marketing—speaking perhaps to
the high levels of innovation already being witnessed within those sectors. At the
other end of the spectrum, CMOs from transportation sector are the least likely to
see disruptive innovation as a primary role of marketing, reflecting the challenges
of breaking new ground in such a high-legacy sector. Geography also appears to be
a factor: nearly half of CMOs in the United States cite disruptive innovation as a key
role, while only a quarter of CMOs from the United Kingdom agree.
The marketers who think and act disruptively will be critical to keeping pace with
the consumers of tomorrow. Companies which don’t reorient themselves around the
consumer will be overtaken by those which do.
Figure 13: CMOs from the telco, energy and tech sectors are most likely to see
disruptive innovation as part of marketing’s primary role
Source: Dentsu Aegis CMO Survey 2018
Telco
Energy
Technology
Capital goods
Food & beverage
Financial services
Retail
Pharma & biotech
Leisure & travel
Healthcare
Automotive
Media
Transport
45%
44%
44%
40%
36%
34%
34%
33%
33%
31%
27%
27%
26%
27.
CMO Survey 2018
The second part of the strategy successful marketers will take to win is making
sure their departments have the budget to innovate, experiment creatively and
technologically, and build emotional connections with their potential customers.
Securing this kind of long-term investment is a challenge. Nearly half of all CMOs
say it is a serious concern (see Figure 14) and represents the biggest obstacle they
face in delivering their marketing strategy.
What are the key internal challenges you encounter to the delivery of your
marketing strategy? (% respondents ranking in top 3)
The challenge of securing long-term investment is felt most acutely by smaller
companies—53% of marketers from companies with revenues of under $1 million
identify this, the highest proportion out of the different revenue cohorts. Finding
better ways to communicate to the board the long-term value of marketing
investment must be a key priority if CMOs are going to break the cycle of short-
term budgeting.
For all companies, this challenge may also be exacerbated by the fact that CMOs
tend to have a shorter tenure than any other member of the C-suite, averaging just
4 years in the United States, for example, compared to 8 years for the CEO and 5
years for the CFO.
Securing long-term investment
Figure 14: Securing long-term investment is the biggest challenge CMOs face to
delivering their strategy
Source: Dentsu Aegis CMO Survey 2018
Securing long-term investment
Lack of integration across all elements
of the customer experience
Lack of internal talent
Inabil ity to transform the business
quickly enough
Competing agendas with other
C-suite leaders
Lack of integration from the
marketing agencies we work with
Insufficient control over digital investments
or programmes across the company
48%
44%
43%
40%
40%
35%
25%
28.
CMO Survey 2018
There is now more consumer data available, but it’s harder to extract insight from it
(% agreeing)
Figure 15: CMOs from the retail sector are the most likely to struggle to extract
insight from data
Source: Dentsu Aegis CMO Survey 2018
Retail
Pharma & biotech
Financial services
Telco
Food & beverage
Capital goods
Leisure & travel
Technology
Energy
Automotive
Healthcare
Transport
Media
74%
72%
71%
70%
64%
62%
61%
61%
56%
52%
49%
46%
45%
Managing the data deluge
Third, successful marketers will learn or hire the skills they need to make the best of the
deluge of data to which they now have access. Today, it is easier than ever to gather a
great deal of data on target markets. Access to data is increasingly moving from being
a source of competitive advantage to being a basic necessity. That in turn moves the
source of competitive advantage to other skills such as knowing what data to ask for in
the first place, the ability to derive a meaningful interpretation from it and to generate
exceptional creative content based on the insights it provides. Nearly two-thirds of
respondents agree that although there is more consumer data available today, it is
harder to extract insight from it. This is particularly acute in the retail sector and other
consumer-facing industries (see Figure 15).
29.
CMO Survey 2018
Unsurprisingly, more than half of global CMOs are working on making better use
of their customer data. About half say they are dealing with the data deluge by
hiring specialist talent or developing training programmes for existing employees
(see Figure 16). In the coming years, the deluge of data to which marketers have
access will be a risk, but it will also hold out the opportunity of targeting the right
consumer at the right time with a message which both resonates and converts them
into a customer.
What steps are you taking to increase your ability to utilise data in order to target
consumers more effectively? (% choosing each option)
Figure 16: CMOs report that they are focusing on ‘build’ rather than ‘buy’ data
strategies
Source: Dentsu Aegis CMO Survey 2018
Making better use of existing consumer data
Hiring specialist talent
Developing training programmes for existing employees
Joint ventures/partnerships
Purchasing consumer data
Acquisit ions/mergers
Not applicable/we haven’t taken any such steps
57%
52%
48%
39%
37%
25%
3%
30.
CMO Survey 2018
A third of CMOs say they intend to work less with external marketing
agencies over the next 2-3 years. It’s likely that these clients will bring
some of these responsibilities back in-house. Just over half say they are
considering doing so in the years to come. This trend is most noticeable
in the telco and automotive sectors. The sectors least likely to do so are
food and beverages, and the leisure and travel sector.
At the same time, though, nearly half of CMOs intend to work more with
specialist marketing contractors over the next 2-3 years, which will likely
constitute smaller startups and organisations. And more than half plan
to invest more into digital media platforms, especially in the financial and
retail sectors.
The marketing ecosystem around brands is changing. CMOs are striving
for the optimal configuration of capabilities, both within and outside
the boundaries of their company. This shift puts the CMO in the role of
orchestrator, undertaking and being responsible for a variety of different
partnerships and relationships with organisations of varying size and
experience. It also will require significant levels of internal development
as some marketing activities are brought back in-house. The challenge
for CMOs will be to recalibrate all of these resources quickly in response
to rapidly changing dynamics, while also maintaining a long-term view of
how best to unlock business value and innovation.
Harnessing the ecosystem to access the best skills and
capabilities
31.
CMO Survey 2018
As far as the marketing agencies you work with are concerned, how well do you
think they demonstrate the following attributes? (% choosing each option)
Figure 17: Providing fully integrated solutions and focus on efficiency are the
weakest attributes of the marketing agencies CMOs work with
Source: Dentsu Aegis CMO Survey 2018
Business partnering to drive
execution over the long term
Explicit focus on efficiency and
cost reduction
Performance-based contracts l inked
to specific business outcomes
Fully integrated solutions across
all elements of the marketing mix
Strong Above Average Average Below Average Weak
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
In terms of how brands work with marketing agencies, overall CMOs are fairly
positive about how well agencies demonstrate key attributes that are needed
for a successful partnership. The only area where the majority of CMOs are not
positive relates to the ability of agencies to deliver fully integrated solutions across
all elements of the marketing mix (see Figure 17). Performance varies by industry,
though. Nearly two-thirds of CMOs from the financial services sector believe that
their agencies are above average or strong when it comes to providing integrated
solutions—by contrast, just 31% of CMOs from capital goods companies agree.
Explicit focus on efficiency and cost reduction is also an area of concern, with CMOs
in the automotive and health care sectors in particular reporting weak agency
performance. As agencies and brands both adapt to digital disruption and shifting
industry contexts, figuring out new ways of working together will be essential.
Rethinking how to work with marketing agencies
32.
CMO Survey 2018
5. Conclusions
That the digital economy is disrupting marketing is self-evident. But
it is the depth of that disruption that many risk under-estimating. The
digital economy is not just about digitising products and services. It is
fundamentally changing the economic context in which brands operate—
eroding barriers to entry, collapsing information asymmetries, stoking
competition and putting the consumer firmly in control.
The transition to this demand-led economy is happening at such pace
that many brands are struggling to keep up. This does not mean that
brands don’t matter—far from it. They matter now more than ever before.
It’s just that the way they will win in the future is very different from
today.
Our survey paints a picture of a cadre of CMOs who are not just resilient,
but also creative, confident and, in some cases, bullish about the future
of marketing. The good news is that the key elements of future-proof
marketing are emerging. Creating perfect moments where experience
and transaction combine, all in real time and at the behest of the
consumer. The bad news is that there remains a number of hurdles to
overcome. Not enough CMOs see disruptive innovation as a core element
of their role. Data protection regulation is seen as a barrier to building
better consumer relationships, rather than a lever that can help engender
trust. And securing long-term investment remains a critical barrier for
CMOs’ plans as they find themselves under pressure to deliver short-term
returns.
Future success lies in creating perfect moments that short-cut the
traditional marketing funnel. This means constantly realigning business
and operating models around changing consumer needs, reinventing
marketing as a driver of innovation. It means building new capability
and marshalling a wider marketing ecosystem. And it means combining
overcoming perceived trade-offs between the short and long term, or the
tactical and the strategic.
A complex future demands an integrated marketing machine that works
in harmony. Marketing isn’t dead, as some doomsayers have declared. But
it will work differently in the future. Understanding how and evolving in
response is essential if brands are to win in a digital economy.
33.
CMO Survey 2018
Ten questions for CMOs
1
3
5
7
9
2
4
6
8
10
Am I leading disruptive innovation across the business, not
just within the marketing function?
Do I have the right configuration across the marketing ecosystem
to maximise the value of in-house and external capability?
Do I have sufficient capability to extract game-changing
insight from increasing volumes of consumer data?
Are we set up so that every appropriate consumer
touchpoint can result in a transaction?
Am I using authentic brand purpose as a driver of
increased consumer engagement?
Am I leading a process of constant business
transformation around the consumer?
Am I measuring a combination of long-term brand health
and short-term business growth?
How do I use our consumer data to increase the impact of
creative experiences?
Am I using media as a tool of strategic planning, in addition
to increased sales/reach?
How do I decide which emerging digital technologies will
drive meaningful consumer engagement?
34.
CMO Survey 2018
Annex: About the Respondents
Of the 1,000 responses we received, around 70% are from the C-suite. About 10%
of the respondents are Vice Presidents of Marketing, and 20% are the Heads of
Marketing.
Of our respondents, 68% say they “have most of the responsibility for making
decisions about marketing.” About a third (32%) say they share that responsibility.
Retail (16%), technology (15%) and food & beverage (14%) are the most well
represented of the 13 industry sectors from which we drew our sample of marketing
executives (see Figure 18).
We ensured that there was an equal mix of respondents from each country we
surveyed. Each of the following represent 10% of respondents: Australia, China,
France, Germany, Italy, Japan, United Kingdom, United States, Russia, Spain.
Firms whose annual revenues are greater than $1 billion constitute nearly one third
of our respondents. Those with revenues between $500 million and $1 billion make
up nearly 20% of respondents with a similar proportion from firms with revenues
between $ million and $500 million (see Figure 19).
Role
Responsibility
Sectors
Geography
Revenue
Figure 18: Survey respondents by industry sector
Source: Dentsu Aegis CMO Survey 2018
Automotive
Capital goods
Technology
Energy
Financial services
Food & beverage
Healthcare
Leisure & travel
Retail
Media
Pharma & biotech
Telco
Transport
Other
15%
6%
4%
15%
4%
8%
14%
4%
5%
16%
2%
2%
3%
4%
35.
CMO Survey 2018
39% of respondents are from companies with more than 1000 employees; just
under a quarter of our respondents employ 501 to 1000 people (see Figure 20).
Employees
Figure 20: Respondent breakdown by company employee headcount
Source: Dentsu Aegis CMO Survey 2018
<50
51 - 100
101 - 500
501 - 1000
1001 - 2500
2501 - 5000
>5000
18%
24%
17%
10%
12% 10%
8%
Figure 19: Respondent breakdown by company annual revenues
Source: Dentsu Aegis CMO Survey 2018
<$1 m
$ - $50m
$ - $100m
$ 0 - $500m
$ - $1bn
$1bn - $5bn
$5bn - $10bn
$10bn - $15bn
>$15bn
6%
7%
16%
21%
5%
8%
5%
19%
36.
Ad Spend June 2018
Part of Dentsu Inc., Dentsu Aegis Network is made up of ten global network
brands—Carat, Dentsu, dentsu X, iProspect, Isobar, mcgarrybowen, Merkle, MKTG,
Posterscope and Vizeum and supported by its specialist/multi-market brands.
Dentsu Aegis Network is Innovating the Way Brands Are Built for its clients
through its best-in-class expertise and capabilities in media, digital and creative
communications services. Offering a distinctive and innovative range of products
and services, Dentsu Aegis Network is headquartered in London and operates in 145
countries worldwide with more than 45,000 dedicated specialists.
About Dentsu Aegis Network
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