What you need to know

• Marketers - in the US at least - are maintaining optimism about their economy and planning for growth, according to the latest biannual The CMO Survey from Duke University, Deloitte, and the American Marketing Association.
• The amount CMOs direct to marketing technology will spike almost 50 per cent over the next five years, increasing from about 19 per cent to 30 per cent of total marketing share.
• But spending on CRMs, while still growing, is decelerating.
• Current martech is not being well utilised and not delivering great results
• And 25 per cent of marketers do not think/feel/ or are willing to admit they spend anything on martech.

Spending on marketing technology is set to spike again over the next five years, growing from 19.9 per cent of marketing budgets this year to 30.9 per cent by 2029. The figures are contained in the latest bi-annual The CMO Survey by Duke University, Deloitte, and the American Marketing Association,  the 32^nd iteration of the study since 2008.

However, not all boats will rise with the tide at least in the short term, according to Christine Moorman, the T. Austin Finch, Sr. Professor of Business Administration, Fuqua School of Business, Duke University, and the report author.

Growth in spending on Customer Relationship Management (CRM) and customer experience are predicted to slow in the next 12 months. Even though the overall level of spending on CRM remains positive, Moorman described the drop in the growth of CRM investments from 6.2 per cent to 3.9 per cent (37% lower) as "dramatic".

Beyond martech, the survey reveals the same is true for brand building, where spending growth is set to decline from 5.5 per cent to 3.9 per cent.

When it comes to measuring the value of martech, key insights from the Duke University report include;

• The most commonly used metric to evaluate the effectiveness of martech systems is lead generation (76.2% of companies), followed by sales (67.9%) and lead conversion (64.9%). 
• Customer metrics such as customer acquisition (41.1%), customer satisfaction (38.1%), customer lifetime value (28%), and customer loyalty (27.4%) lag in use as does pipeline acceleration (22.6%). 
• Martech impact on company performance is evaluated as 4.7 on a 7-point scale where 1=not at all and 7=a great deal. 
• Its impact is strongest on company marketing strategy and least on operations strategy. Nearly half of all marketing leaders report a gap between actual martech payoffs and their hopes for these payoffs. 
• This gap is evaluated at 34 per cent of expectations. The largest share of companies audit their martech tools yearly.

All of this is happening in the context of marketing budgets declining as a share of total company budgets over the last two years as inflation and higher interest rates began to bite. Conversely, marketing budgets as a percentage of total revenue actually ticked up this year from 9.2 to 10.1 per cent.

Growth outlook

Optimism about the US economy ticked up marginally but a little bit of hope goes a long way, and marketers are feeling good about growth.

According to Moorman, “Marketing leaders report their largest revenue markets are growing at a rate of 12.1 per cent per year on average. Companies operating in service markets are growing at nearly twice the rate [16.7 per cent] compared to product markets at 9.4 per cent. Focusing on their own companies, average revenues are growing faster than markets at 16.4 per cent with B2B companies growing faster [19.1 per cent] than B2C companies [11.5 per cent].”

For those CMOs in the happy position of working for brands outpacing their markets, strategy differentiation, go-to-market capabilities and strategy execution are cited as the top reasons for success. On the flip side, companies growing slower than markets had marketing leaders citing underfunded strategies, not having the right go-to-market capabilities, and undifferentiated strategies as the top reasons for the lag.

Duke University's report suggests overall marketing spending is set to rise this year, increasing by 4.7 per cent, a healthy boost on the 2.5 per cent rise last year. Within that though, digital marketing spending growth is expected to cool to 8.0 per cent, down from 8.9 per cent actual growth in the last year.

The Ferrari Conundrum

When it comes to martech, the long-running complaint by marketers is they have a Ferrari in the garage but no one to drive it is likewise reflected in the data. “Marketing Leaders report their weakest performance is on hiring staff to manage martec and on integrating martec across other data systems in the company,” according to Moorman.

Moorman said, “When asked how they would spend an extra $1 million of marketing budget, marketing leaders reported they would be most likely to use it to hire and develop talent.”

Say what now

There is one discordant finding in the survey. Roughly a quarter of those surveyed indicated they don't use martech. Given it's hard to imagine a company these days without at least a website, and likely some form of email list, something is not right. It could simply be a rogue result. But there are likely other explanations.

As Scott Brinker editor-in-chief from Chiefmartec who has his own research due out shortly noted on LinkedIn, "But while it’s easy for a martech nerd like myself to be snarky about this, the sad truth is that this result represents a significant failure of the martech industry. These CMOs answering “no” — Carthusian monks aside — simply don’t recognise the digital channels and operations they’re most certainly using as marketing technology."

Utilisation shortfalls

Issues around utilisation are reflected in the poor returns marketers feel they are getting from their martech spend. According to the report, “The focus in managing martech is reported to be on optimising existing tools, identifying tools for stronger customer experience, and identifying tools that can be linked together to form powerful capabilities.”

Martech impact on company performance is evaluated at 4.7 on a seven-point scale, where one is not at all, and seven is a great deal.

Only 56.4 per cent of all martech tools purchased are being used, said respondents, while nearly half of martech leaders report a 34 per cent gap between actual martech payoffs and their hopes for these payoffs. 

“Marketing leaders report their weakest performance is on hiring staff to manage martech and on integrating martech across other data systems in the company," according to Moorman.

Generative AI

Given past experiences, it’s little wonder marketers are reticent about investing too rapidly in generative AI. While AI more broadly is generally seen to have delivered benefits such as improvements in sales productivity and customer service, only 10 per cent report they using large language models, and 39 per cent say they are not. The remainder are either evaluating or piloting the technology.

“For leaders who are integrating generative AI into their marketing organisations, challenges abound, with the most vexing being minimising bias and investing in necessary hardware," the Duke University report stated.

“However, even for core strategy challenges, such as ensuring generative AI produces a good fit for their brand and a good fit for their target markets, these receive only average ratings for how well AI is being managed.”