How CMOs justify ad spend at a time of tighter budgets

Loose change spilling out of a jar.

Now that marketing budgets are back on the rise, according to the latest IPA Bellwether Report , marketers will be needing to justify advertising spend more than ever. While video is leading the charge and becomes the first category back into clear growth (+3.5%, Q1 2021 up from -3.3% in Q4 2020), budgets are still far tighter than ideal, so every penny needs to count.

The outlook for the year ahead already looks more promising, with many businesses expecting marketing budgets to be revised upwards. A Gartner survey reveals 62% of CMOs expect total media spend to bounce back, with a particular focus on digital, and once again video and social are likely to lead the recovery. Over 90% of marketers feel video is more important in light of the pandemic, and 70% of those that think the situation will impact their video budget for 2021 expect it to increase. Spend on social media advertising is also predicted to rise almost 16% in the UK this year, with strong growth forecast through to 2025.

So how can CMOs justify spend in these channels to their C -suite colleagues? There is a feeling the pandemic has moved marketing to the centre of the C -suite’s growth agenda as it drives digital transformation and leads the customer journey, but getting approval from the CFO to increase digital ad spend is still a tall order. The answer lies in clear and transparent marketing metrics that enable CMOs to demonstrate performance and quantify the value of digital efforts.

Here are three ways CMOs can get the C -suite on board with digital media investment at a time of tighter budgets.

Optimise technology spend

Spend on technology currently accounts for over a quarter of marketing budgets, exceeding the amount spent on media, in-house teams or agencies. Yet according to Gartner research, marketers use little more than half of their existing technology’s capabilities. CMOs can make better use of tech spend by focussing on measurement, either by using previously untapped functionalities in the platforms they already invest in, or by switching to newer tools available to analyse and quantify marketing impact. Utilising these more effective solutions, such as measuring performance in real time, can help marketers to optimise campaigns across multiple channels.

Being able to demonstrate an improvement in campaign performance without necessarily increasing tech spend can help CMOs justify extra budget for other areas such as high-performing media. ​

Measure beyond standard variables

When analysing advertising performance with a view to optimisation, marketers naturally tend to focus on components that are relatively simple to measure, such as format, audience or placement. To really understand how ads are received and improve results, CMOs need to think beyond standard variables.

Creative is a prime example. Often seen as too subjective to optimise, creative is rarely measured despite being a leading driver of advertising effectiveness. But with the development of new technologies, it is now possible to monitor every user interaction with individual creative elements, in every ad on every channel. These individual creative elements can be pitted against campaign objectives to see how they impact performance, delivering actionable insight for creative optimisation across multiple channels.

Recommendations can be generated at an exceptionally granular level. For instance, a marketer could discover that video ads with two scene changes in the first three seconds drive higher click-through rates than those with no scene changes during this time. Tiny creative details can have a dramatic impact on ad performance, so this level of insight can make the difference between hitting or missing campaign KPIs.

In a rapidly evolving environment, where consumer behaviours and needs are changing quickly and unpredictably, real-time measurement and optimisation are more important than ever. If CMOs can show the C -suite they are continually assessing and adjusting all elements of ad campaigns – including creative – to deliver the right message at the right time, making the case for increased investment will be far easier.

Showcase full transparency

Effectively measuring and optimising campaigns to maximise performance is all very well, but to get the C -suite on board with budget expansion, CMOs must be able to demonstrate these practices in a clear and transparent manner.

This could include generating fully customised performance reports and recommendations for past, present, and future campaigns, that can be used to make the case for increased investment. It could also mean making real-time dashboards accessible to C -suite members so they can see for themselves how small variations in ad campaigns can make a tangible difference to performance.

The role of marketing is being elevated within the C -suite, and the outlook for budgets is improving, but increased scrutiny of how resources are spent is still inevitable. To justify​ digital advertising spend in this environment, CMOs need to focus on performance measurement; optimising tech spend, thinking beyond standard variables and transparently showcasing results to demonstrate and quantify the value of digital campaigns.

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