Marketing leaders from for-profit U.S. companies report a rise in marketing technology adoption, while also signaling uncertainty on how to leverage the full potential of these technologies for performance gains.
The 32nd edition of The CMO Survey also found that only 10% of companies are already using large language models in marketing activities, despite generative AI already having a positive impact on companies in terms of lower overhead costs (7%), better customer satisfaction (6.1%) and sales productivity (5.1%).
However, several challenges are in the path of a full integration of technology and generative AI in marketing, the survey highlights.
The CMO Survey, directed by Professor Christine Moorman of Duke University’s Fuqua School of Business, is a partnership between Duke University, Deloitte, and the American Marketing Association. This edition collected responses from 292 marketing leaders, 94% of whom hold positions at VP-level or higher.
Marketing technology and generative AI
Companies are spending 19.9% of marketing budgets on marketing technology (Martech), but this percentage is expected to grow to 30.9% in five years, the survey found.
This projection is reported despite the fact that only 56.4% of purchased Martech tools are being used. Further, nearly half of marketing leaders identify a significant gap between marketing technology payoffs and their hopes for these payoffs.
The survey also revealed that the weakest performance is on ‘hiring staff to manage Martech’ and on ‘integrating Martech across other data systems in the company.’ “If Martech is going to pay off, these people and data integration problems must be solved,” said the survey’s director, Professor Christine Moorman of Duke University’s Fuqua School of Business.
In terms of generative AI, companies are using generative AI in only 7% of marketing activities. Consistent with this, only 10% of companies are using Large Language Models (LLM), 39.0% still have not used such tools, and 51% of companies are evaluating or piloting these models.
“This data shows there is a massive opportunity for further adoption of AI by companies and a transformational opportunity for marketing,” Moorman said.
However, companies who are integrating generative AI in their processes reported significant hurdles such as, “minimizing bias” and “investing in the necessary hardware,” the survey found. In addition to that, “even ratings for core strategy challenges, such as ensuring that generative AI is a good fit for the brand and a good fit for the target markets, are only average, indicating the tools need to be optimized better for performance,” Moorman said.
Sustainability in marketing
Spending on sustainability or climate issues increased to 1.9% of marketing budgets from 1.2% a year ago. These budgets are predicted to grow to 4.5% in five years. However, one-third of companies are not using marketing to address climate-change risks, the survey found.
Of those companies leveraging marketing to address sustainability issues, more than half are doing so by “changing products and/or services,” while 42.9% are “changing partners” and 40.3% are “changing marketing promotions. Only 25.6% of companies are adopting climate-related metrics, up from 18.7% two years ago.
“This spending and use levels have improved,” Moorman said. “However, in terms of specific actions around changing products, services, partners, and promotions, we are still not witnessing levels as high as those reported in February 2020, before the pandemic.”
Marketing spending, leadership, jobs
After a high in 2022, the downward trend of marketing budget as a percentage of company budget continued this year (13.8% versus 10.2%).
“Even with a maintained sense of optimism about the U.S. economy, inflationary pressures are still leading to a decrease in marketing spending. The decrease remains consistent with the second half of 2023 with 45% of marketing leaders reporting these spending pressures, but lower than one year ago when this level was 52%,” Moorman said.
In particular, the areas hardest hit are Customer Relationship Management investments (from 6.2% to 3.9%) and Brand building (5.5% to 3.9%).
The survey also found marketing organization growth decreased to 3.9% from 5.5% in Fall 2023, although marketers expect an uptick to 4.4% next year.
In terms of marketing leadership responsibilities, while brand, digital marketing, and advertising are still the main functions of marketing leaders, they also reported a decrease in the level of responsibility they hold on these and other functions, relative to a year ago.
However, marketers said companies value their role (5.1, on a scale 1-7), showing an increase in the value of marketing during the post-pandemic years, especially for smallest companies and in B2C Product companies. Results indicate that this impact includes a positive influence on stock market valuations.
“The fact that marketing is viewed as a value-creating function in companies is clear,” Moorman said. “However, the cross-functional work of marketers is changing, as digital transformations influence who, what, and how strategy decisions are being made.”
Marketing performance and forecasts
“Marketing performance remains robust,” Moorman said. Profits surged compared with last year (8.3% versus 5.6%), customer retention and brand value also grew over the previous years (9.9% and 6.3%, respectively.)
Among sectors, smaller companies showed the strongest the strongest performance across all the metrics.
But macroeconomic forecasts are showing mixed signals, the survey found. While optimism about the U.S. economy remains high (67 on a 100-point scale), inflationary pressures are making a dent on marketing spending, marketers said. Companies in the B2B and B2C service sector, in particular, are experiencing the highest spending cuts due to inflation.
“Inflationary pressures remain real, but marketers appear to be identifying efficient ways of using spending to reach and convert customers, even as the spending belt remains tight,” Moorman said.
Which companies are setting marketing standards
The spring editions of The CMO Survey ask marketing leaders to nominate companies they judge as setting the standard of excellence in marketing. Apple was the overall winner for the sixteenth straight year, while industry winners included Amazon, Nike, the Proctor & Gamble Company, State Farm Insurance, and Microsoft.