GDP growth has skyrocketed in 2021, notching 6% increases in both Q1 and Q2. Yet, a recent Gartner survey shows that despite the economic rebound of 2021, CFOs are putting increased pressure on marketing spend. As a result, marketing budgets have shrunk to 6.4% of company revenue, down from 11% in 2020.
How are marketers coping with this seemingly upside-down world?
A recent survey from Mediapost provides a few hints. For one, there has been a major shift to digital spending over the past year and a half. Given the migration of consumers from traditional channels to digital ones that accelerated during this time, it was inevitable that the money would follow. This Mediapost survey also highlights the larger role of marketing operations, which is now second to only digital as a percent of marketing spend. This is the result of more marketers examining their brand and marketing processes, MarTech stack, and data and analytics to increase impact and to prove the ROI of their efforts.
We spoke with senior marketers Paul Matsen, Chief Marketing Officer at The Cleveland Clinic; Paul Suchman, Chief Marketing Officer at the multi-platform audio content and entertainment giant, Audacy; and Russ Meyer, Senior Director, Brand Strategy & Innovation at CVS Health to understand how they are navigating this new landscape. They graciously allowed us to pick their brains on how they are maintaining and even accelerating marketing’s contribution despite the tight fiscal environment.
These conversations yielded detail on these three major trends.
1. Marketers across different industries are spending more on digital than in the past
All three marketing executives share this sentiment: The shift to digital is not merely a pandemic response. It’s here to stay.
Russ Meyer and his team at CVS Health saw significant shift in online retail compared to in-store sales in 2020. Given the public health landscape at year’s end, they knew COVID would continue to affect their business in 2021. So, CVS Health leaned into its digital spend in 2021 in anticipation of a continued changing relationship between e-commerce and brick-and-mortar shopping.
For Paul Suchman, the pivot to a digital-first mindset was driven by Audacy’s ambitious growth mandate. To grow the addressable audience across all demographics, Audacy needed to meet consumers where they are increasingly going for live and on-demand audio – online. This means creating digital content and digital experiences, that complement and support over the air programming, to get Audacy’s market facing brands, personalities, and exclusive content in front of more eyeballs. Because the pandemic continues to stall the return to live tradeshows and conferences, Audacy’s trade event dollars, while initially focused on digital conferences, are now being redirected back to live events and towards bespoke, thought-leadership focused client experiences.
For the Cleveland Clinic, this shift to digital has been a goal for a while. Paul Matsen said: “There has been a long-term process of moving our spend to digital for ten years. Our mantra has been to challenge ourselves on our spend, asking ‘Is it digital? Is it mobile? Is it measurable?’ All of this is to say, the area of growth in their marketing budget, has been digital channels, like for patient acquisition for both paid search and social.”
Clearly, despite constricted marketing budgets, these executives have pivoted to more cost-efficient digital tactics and strategies and these shifts are likely to be lasting changes.
2. There’s a mandate to improve marketing operations through benchmarking, data management, and measurement of marketing spend
Marketing operations funding is on an upward trajectory as a percent of marketing spend. But how exactly are those dollars being allocated?
Audacy has been aggressively investing in their MarTech stack for the past few years, as the company embraces a period of rapid growth across their entire portfolio. By improving targeting and attribution tools, their CMS system, and marketing automation technology, Audacy has made rapid advances in the scale, speed, efficiency, and outcomes of customized acquisition and retention campaigns targeted to key audiences.
CVS Health is also focused on marketing operations as an offshoot of carefully optimizing and measuring marketing spend. “We’ve got a system now where we’re pretty rigorous about being able to measure return on ad spend. We’ve been able to put a framework in place for measuring the creativity of the work and the impact of that creativity on return on ad spend. And I would say more than anything, that’s really where you can start to see the impact of marketing in a way that maybe we couldn’t 5 or 6 years ago,” said Russ Meyer.
For The Cleveland Clinic and many healthcare systems, patient acquisition understandably consumes a large share of marketing dollars. These organizations are elevating their marketing operations in part by making the challenging decision to shift away from traditional media and into digital patient acquisition channels. Paul Matsen said: “It was a difficult decision at first, because it meant taking money away from traditional activities like outdoor media and some print media promotions, but these were all unmeasurable activities. We started by reallocating marketing dollars that we already had, because we were seeing the effectiveness of programs like paid search, paid social, and response television.”
Paul Matsen also led the creation of Cleveland Clinic’s marketing benchmark study within the healthcare industry. Healthcare systems contribute their data on a “blind” basis to a third-party database. This data is entered into specific categories and empowers their team to compare spending on a “blind” basis to the industry and is also used to facilitate conversations with the Finance Team during the annual budgeting process. This resource helps us “maintain a discipline in maintaining our efficiency as a marketing and communications organization,” said Paul Matsen.
3. Now more than ever, marketing’s impact on brand strength and bottom line is clearer than ever
What does this increase in digital spend and the work Marketing teams are doing behind the scenes to improve their marketing operations mean for the bottom line of their companies?
The benchmark program at the Cleveland Clinic has been so successful that now Paul Matsen’s team partners with non-marketing departments across global medical institutes and hospitals to find opportunities for incremental patient-acquisition spend and make the case for more marketing spend.
Based on CVS Health’s success in reshaping marketing operations, its digital marketing analytics experts are now “constantly looking at the campaigns we’re running and assessing the impact of that on the business because we can see all those numbers almost in real time. Not only are we measuring it, but we’re able to now make decisions about the work based on those measurements and what we know from past behavior,” said Russ Meyer. This enables their teams to measure the success of different and adjust accordingly.
The Marketing team under Paul Suchman are equally ambitious and successful in their evolution. Following a recent rebrand of the company, they strived to create a more unified experience at every touchpoint at which advertisers engaged with Audacy. As part of that evaluation process, they had to enhance virtually every sales and marketing asset, infusing them with the company’s new positioning, messaging, and powerful visual identity. The final product? A stronger, differentiated and sustainable story for Audacy to tell in the market—and quantifiable increases in direct opportunities, more strategic conversations and ultimately, revenue. Equal emphasis is being put on the consumer experience too with investments in technology, content and the listener experience across all channels.
Clearly, these organizations’ efforts to evaluate and optimize their everyday brand and marketing operations have been a success and we are excited to see where it takes them from here.
Are you interested in learning more about how other companies have dealt with budget changes and improved their marketing processes? Check out our Centura Health case study.