What the 20% Fall in Marketing Budgets Means to CEOs

Posted by: Rachael King on July 10, 2009

Here’s the first of what we expect will be semi-regular guest posts from George Colony, CEO of Forrester Research, who for 30 years has been advising CEOs on the impact of technology on business. He also blogs at The Counterintuitive CEO:

Forrester put out a report last week that showed that marketing budgets in large global companies are down 20% this year. Spending on TV, print, radio, magazines, and other branding and advertising is down a breathtaking 60%+. More contemporary channels like social computing and Web sites are seeing only modest cuts, with many companies reporting that they are actually increasing spending in those areas.

What should the CEO take away from this?

1) The report showed renewed focus on return on investment measures for marketing — this is a healthy development that will help you post-recession. ROI analysis will eliminate, or at least minimize future marketing nonsense.

2) Social marketing is here to stay. It’s time for you to understand it.

3) Budget cuts are forcing marketing to use more internal information technology (IT) and business technology (BT) resources. This is driving long-delayed collaboration between marketing and IT/BT — critical to your future brand building. As I’ve said for years: When you give the Web site to IT/BT, they will screw up the customer. If you give it to the marketers, they will screw up the technology. There’s only one path forward — the two groups have to work together. Use some political capital and grease these skids.

4) Here’s a nit — but something you should bring up with your CMO. The report revealed that marketing was cutting deeply in online display ads (those ads you see in Web sites) — too deeply in Forrester’s opinion. We believe that this could endanger sales and brands as the economy recovers. Make sure that your marketing team is being judicious, not self-immolating.