The "Now-Next-New" Approach to Marketing Resource Allocation

By now, most B2B marketing leaders are well into their planning for 2022, and some of the most important and difficult decisions they will be required to make during the planning process involve the allocation of marketing resources (money, people, time, etc.).

Resource allocation is a challenging part of marketing planning for several reasons. First, regardless of company size, the resources available for marketing are rarely sufficient to enable marketing leaders to do everything they'd like to do. Therefore, choices must be made, and the task for marketing leaders is to deploy their finite resources in ways that will do the most good.

Deciding how to invest limited resources has also become more complex because today's marketing leaders have more options than ever before. The number of marketing channels, techniques and marketing technology solutions has grown dramatically over the past several years.

Resource allocation decisions are further complicated by the need to produce short-term results, while simultaneously laying the foundation for success in the future. Because customer expectations and communication preferences are always evolving, marketing tactics that are highly effective today may be less effective in the future, while tactics and capabilities that aren't important today may become key to future success.

Lastly, resource allocation is challenging because marketing leaders are constantly hearing about new marketing channels, tactics and technologies, all of which are touted as the "next great thing" in marketing.

It's no wonder, therefore, that many marketing leaders say resource allocation is the hardest part of their job.

The 70-20-10 Rule

Fortunately, there's a rule of thumb that marketing leaders can use to address resource allocation challenges. It's called the 70-20-10 rule or sometimes the now-next-new rule, and it's been used for a variety of business purposes. Many companies have used it to manage innovation resources, and Coca Cola reportedly used a version of the rule for years to inform marketing investment decisions.

Here's how the rule works.

The 70 ("Now") - The marketing version of the 70-20-10 rule states that 70% of a company's marketing resources should be devoted to capabilities and programs with a well-established track record of acceptable performance. These will typically include marketing channels, tactics and technologies the company is already using.

The rule doesn't mean that companies should automatically "keep doing what they're already doing." It means marketing leaders should evaluate how well their "bread and butter" tactics are performing and continue investing in those that are delivering acceptable results.

The primary goal of these capabilities and programs is to drive incremental performance improvements in the short term, i.e. the now.

The 20 ("Next") - According to the 70-20-10 rule, 20% of a company's marketing resources should be devoted to emerging marketing channels, tactics and technologies. This category typically includes practices and capabilities that a growing number of  other companies are using successfully and that are or may be nearing mainstream adoption.

Investments in this category frequently relate to capabilities that will become critical to a company's success in the near-term future, or next.

The 10 ("New") - The remaining 10% of marketing resources should be devoted to new channels, tactics and technologies that have just appeared on the scene. These investments enable true marketing innovation to occur, but they are also largely untested activities or capabilities. They may or may not produce significant short-term results, but they have the potential to become productive in the intermediate- or long-term future.

Caveats

As with other rules of thumb, marketing leaders should view the 70-20-10 rule as a guide rather than a precise prescription. The specific percentages in the rule may not be appropriate for every business.

It's also important to recognize that like all business rules of thumb, the 70-20-10 rule is not useful for all resource allocation decisions. For example:

• The rule does not address how resources should be allocated within each major resource category - the 70%, the 20% and the 10%.
• The rule is not designed to guide the allocation of resources between brand building and demand generation activities and programs.
• The rule may not be appropriate if a company's current marketing efforts are significantly underperforming. In those cases, marketing leaders may need to make more drastic changes than the rule would suggest.

Three Keys To More Successful Thought Leadership Marketing In 2022

(If you've decided to add thought leadership marketing in 2022, or if you need to improve your thought leadership program next year, the time to start planning is now. This post describes three steps B2B marketers can take to elevate their thought leadership efforts in 2022.)

It's now abundantly clear that compelling thought leadership content is a vital component of effective marketing for many B2B companies. Numerous studies conducted over the past several years have shown that business buyers are relying more and more on thought leadership content and that it has a substantial impact on purchase decisions. 

The latest significant research on this topic is the 2021 B2B Thought Leadership Impact Study by Edelman and LinkedIn, which was released last month. This study involved a survey of 3,593 global business executives across a wide range of industries and company sizes. The survey was conducted in June and July of this year and included respondents from the United States, Canada, the United Kingdom, Singapore, Australia and India.

The new Edelman/LinkedIn study confirms the importance and value of compelling thought leadership content. For example:

• Fifty-four percent of Decision Makers* and 48% of C-level survey respondents said they spend more than one hour per week reading and reviewing thought leadership content.
• Sixty-three percent of the survey respondents said thought leadership is important in providing proof that a company understands or can solve their business challenges.
• Sixty-five percent of the respondents said they had significantly changed their perception of a company for the better because of a piece of thought leadership content.

It's also clear, however, that many companies need to improve the quality of their thought leadership content. In the Edelman/LinkedIn survey, only 15% of Decision Makers* rated the quality of the thought leadership content they consume as very good or excellent, while 30% rated the quality as mediocre, poor or very poor.

Producing thought leadership content that will earn and keep the attention of potential buyers is not easy. Marketing with thought leadership content has many of the same requirements as other forms of marketing. Marketers need to understand who their target market is and what their company's value propositions are. And just like all other forms of marketing, thought leadership marketing efforts should the aligned with the company's overall strategic objectives and plans.

But thought leadership marketing also has some important characteristics that set it apart from other types of marketing. Here are three steps that B2B marketers should take as they develop their thought leadership plans for 2022.

Set High Standards for Thought Leadership Content

The explosive proliferation of content over the past several years has made it more difficult for marketers to create content that will cut through the noise and earn the attention of potential buyers. Thought leadership content can do just that, but only if it constitutes "real" thought leadership.

Several studies have identified the characteristics that make thought leadership content persuasive. While the exact descriptions used in these studies vary somewhat, the research findings consistently show that three attributes define real thought leadership and distinguish it from other types of marketing content.

Relevant - Real thought leadership content addresses topics and provides insights that are highly relevant for the target audience. Of course, all marketing content should be relevant for its audience. What sets real thought leadership apart is that it addresses topics that can have a major impact on the business or professional success of the target audience.

Novel - Real thought leadership content provides information and insights that are genuinely novel. Merriam-Webster defines novel as "new and not resembling something formerly known or used." So to qualify as real thought leadership, a content resource must provide information or insight that adds something new to the body of knowledge about a topic. In other words, real thought leadership provides the audience information they cannot find elsewhere.

Authoritative - It's important for all types of marketing content to be credible, but thought leadership content must meet a higher standard. Because thought leadership content introduces new and novel ideas, it's essential for content developers to support those ideas with sound and persuasive evidence.

Most B2B marketers have demanding jobs, and the never-ending pressure to "feed the content beast" can make it tempting to take shortcuts when developing thought leadership content. But it's vital that marketers not make compromises regarding these three standards.

Set Realistic Expectations

Producing relevant, novel and authoritative thought leadership content almost always requires a significant amount of original research. Original research actually plays two essential roles in the effectiveness of thought leadership content. First, it is required to uncover the new information and develop the new insights that make thought leadership content novel. And second, original research provides the evidence that makes thought leadership content authoritative.

Original research takes time, and that's especially true when it consists of primary research such as surveys, focus groups or interviews. Therefore, marketers need to set realistic goals for the amount of thought leadership content they can produce during any given period of time.

Map the "Knowledge Landscape"

Once marketers have identified a list of potential topics for thought leadership content, it's important to conduct sufficient research to determine where the "white space," if any, exists regarding those topics. 

Marketers can't determine what topics are appropriate for thought leadership content until they know what subjects have already been addressed. To develop thought leadership content that is truly novel, marketers will usually want to avoid topics that have already been covered. 

There are, however, three notable exceptions to this general rule.

• First, a broad topic may have been already discussed, but specific aspects of the topic may not have been thoroughly covered. These particular aspects can be good subjects for thought leadership content if they are relevant and important to potential customers.
• Second, if a topic has not been addressed for a considerable period of time, it can be appropriate to take a fresh look at that topic.
• And third, if a topic has already been addressed but the existing treatments are flawed or incomplete, that can be an appropriate subject for thought leadership content.

*The Edelman/LinkedIn study defined Decision Makers as company executives ". . . who consume thought leadership and are involved in recommending and/or making final decisions on their company's choice of professional service providers or products."

Image courtesy of Erdonzello via Flickr (Public Domain).

The Persistent Measurement Challenge: B2B Findings From "The CMO Survey"

This post will conclude my discussion of several B2B-specific findings from the August 2021 edition of The CMO Survey. In my earlier posts, I reviewed what the survey revealed about the state of marketing spending and the progress B2B companies have made on the digital transformation of marketing. You can find the two previous posts here and here.

The CMO Survey is a semi-annual survey of senior marketing leaders with for-profit U.S. companies. The survey is directed by Dr. Christine Moorman and sponsored by Duke University's Fuqua School of Business, the American Marketing Association and Deloitte LLP. A more detailed description of the survey is included in the first post in this series.

In this post, I'll focus on what The CMO Survey revealed about how B2B marketers are addressing the perennial challenge of measuring the impact and value of marketing.

Proving the Value of B2B Marketing

It's not news that marketers have been under pressure for the past several years to prove the business value of their activities and programs. The CMO Survey found that these pressures are increasing. Fifty-three percent of the survey respondents with B2B product companies said they are feeling increasing pressure from their CEO to prove the value of marketing. For survey respondents with B2B services companies, the comparable percentage was 68%.

The CMO Survey also addressed what metrics companies are using to measure marketing performance. It asked survey participants to distribute 100 points to reflect the degree to which their company is using seven marketing performance metrics. The following table shows how the respondents with B2B companies distributed the points.

The ultimate objective of most marketing leaders is to be able to measure the impact of marketing activities quantitatively, but this can be challenging, particularly when it comes to measuring the long-term impact of marketing. The CMO Survey asked survey participants which of the following three statements best describes how they demonstrate the short-term and long-term impact of marketing.

• "We prove the impact quantitatively."
• "We have a good qualitative sense of the impact, but not a quantitative impact."
• "We haven't been able to show impact yet."

The following two charts depict how the respondents with B2B product companies and those with B2B services companies answered these questions.

These findings clearly show that measuring the business impact of marketing remains a significant challenge for B2B marketers. Fewer than half of the surveyed B2B marketers said they can measure the short-term impact of marketing quantitatively.

Even fewer B2B marketers can measure the long-term impact of marketing quantitatively - only 27.5% of marketers with B2B product companies, and only 36.4% of marketers with B2B services companies. More concerning, nearly a fifth of marketers with B2B product companies (18.8%), and 13.6% of marketers with B2B services companies cannot show the long-term impact of marketing at all.

Measuring the long-term impact of marketing is a difficult challenge for all marketers, not just B2B marketers. Only about a third of the B2C marketers who responded to The CMO Survey said they can show the long-term impact of their activities quantitatively.

Two years ago, Google published an excellent paper discussing "three grand challenges" relating to the measurement of marketing effectiveness. The authors of the paper acknowledged that perfect solutions for those challenges don't currently exist. In fact, the primary objective of the paper was to focus on the areas where existing methods of measuring marketing effectiveness are "running up against the boundaries of the possible."

I discussed the Google paper in three posts, which you can find here, here and here, and I encourage you to take the time to read the entire paper.

Top image courtesy of theilr via Flickr (CC).

Digital Transformation Comes of Age: B2B Findings from "The CMO Survey"

This is the second of three posts discussing some of the B2B-specific findings of the August 2021 edition of The CMO Survey. I included a detailed description of the survey in my first post, so I won't repeat that description here.

The "Part 1" post discussed the economic outlook of B2B marketers and the state of marketing spending in B2B companies. In this post, I'll discuss what The CMO Survey reveals about the state of digital marketing in B2B companies.

The Digital Transformation of B2B Marketing

The general view is that B2B companies have been somewhat slower to adopt digital marketing than B2C companies. While this view may have been accurate in the past, The CMO Survey provides compelling evidence that many B2B marketers* have now fully embraced digital marketing techniques.

For example, survey respondents with B2B product companies said they are currently spending 50.6% of their total marketing budget on digital marketing activities. And respondents with B2B services companies reported devoting 61.9% of their budget to digital marketing. These percentages are comparable with those reported by survey respondents with B2C companies.

The COVID-19 pandemic accelerated the shift to digital marketing, and this shift is reflected in the growth in spending on digital vs. non-digital marketing. The following chart show how overall marketing spending and spending on digital marketing changed in the twelve months preceding the survey in B2B product companies and B2B services companies.

 

B2B marketers expect their investment in digital marketing to continue growing. The CMO Survey asked participants to estimate how their spending on digital marketing will change in the twelve months following the survey, compared to the twelve months preceding the survey. Respondents with B2B product companies said they expect their spending on digital marketing to increase 12.6%, while respondents with B2B services companies expect an increase of 16.0%.

Digital Marketing Maturity in B2B

The CMO Survey also revealed that B2B companies had made substantial progress on their digital marketing transformation efforts in the twelve months preceding the survey. The survey asked participants to rate their level of digital marketing transformation maturity using one of the following four categories:

• Nascent - "Early steps to design and visualize transformation"
• Emerging - "Build non-integrated digital elements"
• Integrated - "Fully integrate digital investments across company"
• Institutionalized/Established - "Leverage digital investments to drive and evaluate marketing decisions"

The survey asked participants to rate their current level of maturity and also to identify where they stood one year prior to the survey. The following chart shows how marketers with B2B product companies responded to these questions.

As this chart shows, the percentage of B2B product companies at the "lowest" maturity level - nascent - declined significantly over the twelve months preceding the survey, while the percentages of companies at the three higher maturity levels all increased.

The pattern is the same for B2B services companies, as the following chart shows.

Collectively, these findings show that B2B marketers are strongly committed to digital marketing strategies and tactics and are making significant progress on the path to digital marketing transformation.

In my next post, I'll discuss what The CMO Survey reveals about how B2B marketers are dealing with the perennial challenge of measuring marketing performance.

*The CMO Survey does not state that it uses a representative sample of B2B marketing leaders. Therefore, the survey findings cannot be projected to the entire population.

Top image courtesy of Dominic Smith (Cerillion) via Flickr (CC).

B2B Findings From "The CMO Survey" - Part 1

The findings of the August 2021 edition of The CMO Survey were published last month. The CMO Survey is led by Dr. Christine Moorman and sponsored by Duke University's Fuqua School of Business, the American Marketing Association and Deloitte LLP.

This is the first of three posts that will discuss some of the B2B-specific findings from The CMO Survey. The August survey results are based on responses from 282 senior marketing leaders at for-profit companies based in the United States. Over two-thirds of the respondents (69.8%) were affiliated with B2B companies, and 94.1% were VP level or above. The survey was in the field August 4-25, 2021.

The CMO Survey is conducted semi-annually, and it provides a wealth of information. Dr. Moorman and her colleagues typically produce three reports for each edition of the survey.

• "U.S. Highlights and Insights Report" - This is a relatively brief and graphically-rich report that provides mostly top-level results, along with an analysis of those results and major marketing trends.
• "Topline Report" - This report provides response data at the aggregate level for all survey questions.
• "U.S. Firm and Industry Breakout Report" - This is the most detailed report. It provides response data by four primary economic sectors (B2B product companies, B2B services companies, B2C product companies and B2C services companies), fifteen industry sectors, company size and volume of internet sales. This report is typically quite lengthy, but it provides the most granular view of the survey data. 

The CMO Survey does not state that it uses a representative sample of senior marketing leaders at U.S. for-profit companies. Therefore, the survey findings cannot be projected to the entire population.

In this series of posts, I'll be discussing the responses of B2B marketers exclusively unless otherwise indicated. The percentages and other numerical values in these posts are the mean of survey responses, also unless otherwise indicated.

Marketer Optimism Reaches Pre-Pandemic Levels

On average, the optimism of B2B marketers has returned to pre-pandemic levels. The survey asked participants to rate their level of optimism regarding the overall US economy on a 100-point scale, with "0" being least optimistic, and "100" being most optimistic. The following chart shows how B2B marketers rated their optimism in the five surveys conducted since August 2019.

It also appears, however, that marketers' optimism may be moderating. The August survey asked participants if they were more or less optimistic about the overall US economy compared to the previous quarter. The following table shows how B2B marketers responded.

Marketers' optimism appears to be reflecting the trajectory of overall economic growth in the US. According to the Bureau of Economic Analysis, US real GDP grew at an annualized rate of 6.3% in the first quarter of 2021 and at an annualized rate of 6.7% in the second quarter.

The Conference Board is currently forecasting that real GDP will grow at an annualized rate of 5.5% in the third quarter and by 3.9% in the fourth quarter. For the entire year of 2021, The Conference Board expects real GDP growth to grow by 5.9%, slowing to 3.8% in 2022.

The State of Marketing Spending

The CMO Survey includes several questions pertaining to the state of marketing budgets and spending that usually receive a good bit of attention. The survey asked participants to estimate what percentage of their company's total revenue is represented by marketing expenses. The following chart shows how marketers from B2B product companies and B2B services companies responded to this question in the surveys conducted since August 2019.

In a recent post, I discussed some of the findings of Gartner's CMO Spend Survey, 2021. The "headline" finding of that research pointed to a significant decline in marketing budgets as a percentage of company revenue. Gartner found that the mean percentage of total company revenue allocated to marketing in 2021 is 6.4%, down from 11% in 2020. The mean percentage for B2B companies represented in the Gartner survey was 6.2%.

The above chart also shows a decline in marketing spending as a percentage of company revenue in the August 2021 edition of The CMO Survey, compared to the previous four surveys. The decline occurred in both B2B product companies and B2B services companies.

In its survey report, Gartner treated the decline in the proportion of marketing budgets to company revenue as evidence that marketing budgets have been cut - or at least that they haven't recovered from cuts that occurred last year. I don't believe the survey data supports that conclusion.

As a ratio metric, the percentage value is obviously affected by both components of the ratio. A company's marketing budget may have been increased in absolute terms, but the proportion would still fall if company revenues grew enough in the same time frame.

The CMO Survey provides a more direct measure of changes in marketing spending. The survey asked participants to estimate by what percent their overall marketing spending changed in the twelve months preceding the survey. The following table shows how B2B marketers answered this question in the five surveys conducted since August 2019.

This table clearly shows that marketing spending in the survey respondents' companies slowed or declined in the June 2020 and February 2021 editions of the survey. However, marketers in both B2B product companies and B2B services companies reported increases in spending in the latest survey.

My view is that this is one of those issues where averages aren't particularly meaningful. In fact, The CMO Survey found that changes in marketing spending varied substantially across industries. For example, in the August 2021 edition of the survey, respondents with banking, finance and insurance companies reported a mean increase of 20.2% over the preceding twelve months, while respondents with manufacturing companies reported a mean increase of only 3.6%

In my next post, I'll discuss more of the B2B findings from the August edition of The CMO Survey.

Top image source:  The CMO Survey