12 Oct State of Marketing During COVID-19 Pandemic
Insights From the 2020 CMO Survey
When major disruptions occur in the marketplace, most people are caught off-guard. Leaders like to anticipate and prepare rather than react. But only few of us could have anticipated how our lives would be upended this year and there is still no end in sight.
Other than the seasonal flu, before COVID-19, we have had three major outbreaks this century, 2002-2004 SARS, 2009 H1N1 and 2014-2016 Ebola. However, life went on without a hitch in this country. So, I expected the same would likely happen this time too. I could not have been more wrong. As non-essential businesses closed, hospitals became battlegrounds, and we hunkered down in our homes, I started wondering how market dynamics were changing and will the impact be fleeting or will last post-pandemic.
I received some of the answers from a CMO Survey, conducted from May 5-27, 2020, which “provides the marketing profession with an understanding of how marketing activities, spending, jobs, and performance have been influenced by the upheavals of the past three months.” The results were based on 274 responses from upper management in for-profit businesses. The survey was sponsored by Deloitte LLP, Duke University’s Fuqua School of Business, and the American Marketing Association.
Since such quantitative information is difficult to come by, I thought I would share major findings with you. Here are important things to know:
- Marketing departments were not prepared to face the economic shock of this pandemic and most just reacted and improvised as things unfolded.
- Unsurprisingly, 97% of survey respondents say that due to the pandemic there is lower person-person marketing activity.
- Price elasticity of products has increased with 43% of the respondents reluctant to pay full price. However, marketers believe this trend will be reversed within a year as greater normalcy returns.
- Customers value trusted relationships above price considerations. This is a continuing trend that is expected to last because focus on brand relationships has increased by 47% since 2009.
- Online sales now account for 19.3% of sales which is a 43% increase over just three months ago as about 85% of customers are now open to digital offerings and experiences. This has led to 60.8% of survey responders to shift budgets to augment digital interfaces visited by customers. The important insight is that marketers do not believe this shift will be reversed post-pandemic.
- Marketers foresee an 8.4% increase in digital marketing spend in the next year even as overall marketing budgets are expected to shrink.
- Since February, social media spending has increased from 13.3% to 23.2% of total marketing budgets.
- The major focus of marketers now is not new customer acquisition but building brand loyalty and customer retention.
- Increasing investments in mobile are not translating into better sales performance as home-bound consumers are using laptops and desktops for purchases since they are easier to use.
- 9% of marketing jobs have been lost and fewer (-3.5%) marketers will be hired next year than last year.
- In future hires, the most important traits are soft skills, such as ability to pivot as circumstances change, creativity, and comfort with ambiguity.
- Training budgets dropped by 26% in the last year.
- In terms of developing future marketing strategy, >80% of marketers are consulting internal resources such as co-workers and management. A shrinking number, 50-60%, are performing customer research, analyzing competitor behavior, or studying website analytics.
- Marketers are playing defense as customer acquisition has taken a backseat to customer retention and building brands.
- Only 30% of marketers were contacting leads to earn new business and just 44% were pushing for ideas on new products and services. Similarly, only 31% of marketers were pursuing new partnerships.
- As marketers are improvising more, there is just not enough time or appetite to experiment if their actions would lead to the desired outcome. Only 29% reported studying and understanding the impact of their decisions.
It appears that marketers are in a read and react mode relying on what and who they know rather than the usual careful calibration of internal and external forces and developing strategy based on careful examination of aggregated data. The focus is primarily on survival and defending your territory, reputation, and market share. New ideas, disruptive technologies, and Hail Mary’s will have to wait for more “normal” times.
— Brad Saeed, president of BTS Consulting