Chief marketing officers are much more optimistic about the U.S. economy and their own companies' prospects than they were six months ago, according to a new study by the American Marketing Association and Duke University's Fuqua School of Business.
The latest edition of “The CMO Survey,” which has been conducted by Duke semiannually since August 2008, was based on an online survey of 269 b-to-b and b-to-c marketers between Jan. 31 and Feb. 16. It found that on a scale of zero to 100 (with 100 being the highest), the average level of CMO optimism about the U.S. economy was 63.4, up from 52.2 in August, when the survey was last conducted.
Since the survey was first taken, the level of optimism about the U.S. economy had been gradually increasing—from a low of 47.7 to a high of 63.3 in February 2011—when it took a dive last August in the midst of global economic turmoil.
“In August, the whole debt crisis happened,” said Christine Moorman, author of the study and a senior professor of business administration at Duke.
“European economies were falling apart, the global economy was in turmoil and we saw the lowest [confidence] numbers since the very early periods [of the survey].”
The findings from the latest survey indicate that CMOs believe the U.S. economy is on the road to recovery. When asked to forecast customer outcomes at their own companies over the next 12 months, 62% of marketers said they expect customers to buy more products and services, up from only 33% in August; and 50% predicted an increase in the number of new customers in their markets, up from 41%.
“This is really what the optimism is all about—most of these indicators of consumer activity are up,” Moorman said. “This is a true economic recovery.”
The survey also asked marketers to rank their customers' top priorities.
The No. 1 customer priority was quality, cited by 26.3% of respondents, followed by service (21.4%), trust (18.9%) and low prices (16.4%). In August, low price and quality tied for first place (24.1%), followed by trust (19.3%), and service and innovation (13.7% each).
“When the economy is tightening up, marketers expect their customers to care about price—that was on equal footing with quality back in August,” Moorman said. “Then there was a reversal. Price became less important, quality became more important and services went up. There are additional opportunities for marketers to sell customers services.”
In other survey findings, average marketing budgets are expected to increase by 8.1% over the next 12 months. Marketing budgets are expected to rise at a higher rate for b-to-b companies than for b-to-c companies, the survey found.
For b-to-b product companies, marketing budgets are expected to increase an average of 13.2% over the next year, and for b-to-b service companies, marketing budgets are projected to grow 6.2%. Those figures compare with 3.3% for b-to-c product companies and 4.6% for b-to-c service companies.
The survey also looked at marketing budget ratios (marketing spending as a percentage of total sales) for b-to-b and b-to-c companies.
B-to-c service companies' ratio was the highest (16.6%), followed by b-to-c product companies (13.8%). B-to-b product companies had a ratio of 7.3%, while b-to-b service companies had a ratio of 4.8%.
“B-to-b companies are still lagging consumer companies,” Moorman said, pointing to the percentage of revenue spent on marketing.