Digital marketing budgets will rise by 10% in 2014, following a double-digit percentage increase in 2013, according to a survey of marketing executives by Gartner, Inc. The survey found that, on average, companies spent 10.7% of their annual 2013 revenue on overall marketing activities, with digital marketing spending averaging 3.1 percent of revenue.
These findings are included in Gartner's "Digital Marketing Spending" report that's based on a survey of 285 individuals located in the U.S., but answering mainly for their entire organization (only 21% reported U.S.-only data). Respondents represent organizations with more than $500 million in annual revenue (average revenue $4.4 billion) across eight industries: financial services and insurance, high-tech, communications, manufacturing, media, retail, government and healthcare. The survey took place from July through September 2013.
"Marketing leaders are securing bigger budgets to define markets, develop offerings, and attract, acquire and retain customers," says Yvonne Genovese, managing vice president at Gartner. "Digital marketing is taking an increasing share of the marketing budget with annual digital marketing operating budgets totaling 3.1% of a company's revenue in 2013, as compared with 2.6% in 2012, representing a 20% increase."
Eleven percent of respondents said they spent more than half of their marketing budgets on digital activities in 2013 compared with only 3% in 2012. Digital marketing represented an average of 28.5% of the total marketing budget in 2013, as compared with 25.5% in 2012. A further survey finding was that 77% of companies have a chief customer officer (CCO) or the equivalent.
"Customer experiences with a brand or organization span so many channels — both online and off — that customers have come to expect consistent experiences, no matter where an interaction initially takes place," says Laura McLellan, research vice president at Gartner. "Customer touchpoints include websites, mobile apps, social profiles, directory listings, on-site search, email interactions, communities, call center and more; hence, the increasing popularity of the role of the chief customer officer to help guide the customer right through the buying cycle and beyond."
Eighty-one percent of organizations were also found to have a chief marketing technologist in 2013, up from 70% in 2012.
"Tracking and responding to audience intent and delivering contextually relevant experiences to influence a complex purchase path is among the great challenges faced by digital marketers today," says Jake Sorofman, research director at Gartner. "This requires a marketing technology leader who understands the requirements and issues associated with joining together disparate data sources and technologies, and who has a vision for future marketing requirements."
When it comes to budget allocation, marketing leaders support a diverse, and increasingly complex, marketing mix. The survey found that 12.% — the biggest share of their digital marketing budget — was allocated to digital advertising in 2013, just as in 2012. However, marketers continue to wrestle with digital advertising's effectiveness. Industry associations, advertising agencies, media, technology, and metrics providers and brand advertisers are all working to address this concern by improving attribution models and cracking down on phony Web traffic.
Design, development and maintenance of the corporate website account for the second-largest share of digital marketing budgets as the increase of inbound marketing channels such as social networks, customer forums and the blogosphere creates more traffic on the corporate website. Digital commerce, social marketing and mobile marketing — three activities that increasingly overlap — are closely tied for the third-largest share of digital marketing budgets. In 2014, marketers plan to make long overdue expenditures for mobile marketing tools and techniques.
"Until now, many marketers have taken a cautious approach to mobile because it involves so many variables such as different operating systems, devices and carriers," says Michael McGuire, research vice president at Gartner. "Now that more than 50 percent of American adults are smartphone owners, marketers are compelled to develop mobile strategies that ensure their products and services can be found, and purchased, by consumers on the go."
More detailed analysis and additional survey results are available in the free report "Digital Marketing Budgets Increase, Reflecting Focus on Customer Experience." The report is available on Gartner's website at http://www.gartner.com/dmspend.