How has the pandemic changed marketing? What has shifted and what has stayed the same?
Results from the 26th edition of The CMO Survey published in February 2021 and the Special COVID-19 version published in June 2020 reveal several important trends. Read on for our top 10 COVID updates for the marketing profession:
Pre-pandemic, The CMO Survey showed optimism hovering around 60 points (on a scale of 0 to 100). In the midst of the pandemic, the Special Covid Edition in June 2020 showed optimism plummeting to 50.9, with the only lower result coming in February 2009 during the Great Recession, when we recorded 47.7 points. February 2021 responses averaged 66.3 points — a 30.3% increase and the third highest value in the history of The CMO Survey.
Marketing’s star has risen as the pandemic wears on with companies across the board assigning greater importance to marketing. The CMO Survey reported in June 2020 that 62.3% of companies saw the role of marketing increase in importance over the last year. In February 2021, that number jumped to 72.2%. B2B Services companies saw the highest increase (76.6%), along with mid-sized companies by number of employees (92.3%) and revenues (88.0%) and companies with more sales from the internet (80.0%).
Surviving the pandemic meant holding on to existing customers and building brand value that connects with customers — the top two objectives rated by marketing leaders in June 2020. While these objectives remain key, two others increased dramatically in the February 2021 survey: acquiring new customers (+48.6%) and improving marketing ROI (+105.6%), pointing to a shift away from survival towards competing and making money. Additionally, acquiring new customers skyrocketed in effectiveness with marketers reporting a 6.3% increase in customer acquisition performance over the last year, up from reported losses of -9.2% in June 2020.
The pandemic necessitated a rapid digital transformation in many companies. Following this requirement, the top two marketing opportunities in both June 2020 and February 2021 were “building better digital interfaces” and “transforming go-to market business models.”
As the pandemic and the digital build progressed, two back-end infrastructure opportunities have also emerged. Specifically, 42.8% of marketers reported investing in automation technology to improve customer communications in February 2021, up 25% since June of last year, and 42.5% of marketers now report investments in data integration, up a whopping 71% since June 2020.
With stay-at-home orders in place across the country, internet sales soared during the pandemic. While hovering around 12% of sales from 2015 to 2019, internet sales saw a new high in February 2020 at 13.5% and then jumped to 19.3% in June 2020 and 19.4% in February 2021. Internet sales are highest for B2C companies and larger companies (measured by number of employees and revenues). All indications are that many of these new online routines will stick and, when coupled with stronger digital investments noted in point #4, marketers should continue to focus on delivering value through this channel.
February 2021 observed the biggest decrease in marketing spend in CMO Survey history at -3.9% for the year. At the same time, digital marketing spending increased 11.5%, radically changing the nature of marketing investments for the year. Twelve-month projections for overall marketing spending reflect the second largest forecasted value in survey history at +10.1%. Consistent with this, marketing expenses as a percent of firm revenues reached 13.2% — the highest level recorded in the history of The CMO Survey and a 35% increase over the 8.6% recorded in February 2020.
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Marketers reported a 17.8% loss in sales revenue in June 2020 due to the early months of the pandemic. Now a year into the pandemic, marketers report a gain of 0.3% over the last year — essentially flat for the year. Considering profits, marketers reported a 14.7% loss in profits in June 2020 while now reporting a 2.6% gain for the year.
Companies reported that 8.2% of marketing jobs were lost between February 2020 and February 2021, reflecting levels similar to the 9% loss reported in the June 2020 survey, indicating levels did not worsen over the last six months. Of these losses, 28% were senior manager roles. Several other indicators point to more job optimism. In June 2020, the largest portion of marketers (24.0%) anticipated these jobs would “never return,” but this number decreased to 13.1% in February 2021. While only 19.9% expected jobs to return “1-2 years from now” in June 2020, that number has increased to 40.2% in February 2021.
Job additions have also occurred in the last year. A 9% overall increase occurred with 18% of these being senior managers. Looking across job losses and gains, gains were slightly higher (net job change = 0.9%), but this metric varies by sector, with B2C Product companies showing the largest net gains at 5.4%. Among industry sectors, Education (9.9%) and Healthcare (9.2%) rose to the top on net gains. In other sectors, job levels stayed constant, but the mix of marketers changed as reflected in the presence of both gains and losses. Marketing hiring projections are optimistic, reaching 7.6% planned increases for 2021 compared to June 2020 when marketers projected a hiring decrease of -3.5% for the year.
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Pre-pandemic growth strategies were focused on market penetration (current products/services for current markets) with marketers allocating 54.0 out of 100 points to this strategy, with product and service development, market development, and diversification used less often (receiving 20.5, 14.8, and 9.3 points, respectively). In February 2021, market penetration further increased to 56.8 points and moved away from diversification, at only 8.7 points. B2B Product companies aligned most with this shift, with 26% more marketers reporting penetration as a growth strategy and 43.7% fewer marketers reporting diversification as an option. Conversely, B2C Services was the opposite of the trend, with 17.7% fewer marketers reporting penetration and 31.7% more reporting diversification as growth strategies.
Pre-pandemic, marketers reported their companies were changing products and services to reduce the negative impact of marketing on the ecological environment. However, when the pandemic hit, this focus decreased from 73% of respondents citing this as their key strategy to 53% in June 2020 and rising only slightly to 55% in February 2021. In line with this, marketers shifted their sustainability focus to changing marketing promotions with 58% respondents in June 2020, up from 49% in February 2020. February 2021 levels dropped to 45%. The only other factor that increased in importance is “changing brand,” which grew from 10.7% in June 2020 to 15.5% in February 2020.
Why don’t marketers focus more on sustainability? Forty-seven percent of respondents reported that the cost of sustainability is the largest factor interfering with doing more, while 43% of companies reported COVID-19 as the second largest barrier.
While the pandemic is far from over, marketers are reporting their companies have made it through the storm and see sunnier skies ahead. As more of the economy opens up, time will tell how successful pandemic strategies were and how marketers truly faired. Stay tuned to future editions of The CMO Survey to see how everything pans out.