Companies Take a More Holistic Path to Managing Revenue Growth

Changes in the business environment have led many B2B companies to adopt new approaches for managing their revenue generating activities. While the specific approaches vary, they all arise from the recognition that consistent organic revenue growth results from a combination of related activities. Therefore, it's important to treat such activities as components of a larger revenue generation process that must be managed holistically.

The need for a better approach to managing revenue generation and growth has been driven by the convergence of several factors, including:

• The growing power and independence of business buyers enabled by an abundance of easily-accessible information
• The need to provide outstanding experiences at every touchpoint across the entire customer lifecycle
• The growing use of "as-a service" and other types of subscription-based (or subscription-like) business models

Meanwhile, the leaders of most B2B companies are under persistent pressures to provide organic revenue growth that is consistent, predictable and sustainable. To meet this challenge, many B2B companies have changed how they manage the business activities and processes that impact revenue generation.

The Rise of the Chief Revenue Officer

Some companies have responded to the growth management challenge by creating a C-level position that is usually called the chief revenue officer. The specific duties of the chief revenue officer - and the scope of his or her authority - vary across companies, but the CRO is usually tasked with managing most or all of the company's revenue generating functions. This will often include marketing, inside sales/business development, direct outside sales, channel sales and customer success/customer service.

Most of the early adopters of the CRO role were startup or early-stage SaaS companies. I have not seen any reliable estimates of how many or what kinds of companies now have a CRO. However, a LinkedIn search yesterday using the term "chief revenue officer" identified over 250,000 LinkedIn members with that job title.

The Emerging Revenue Operations Function

Some companies have sought to address the growth and revenue management challenge by creating a revenue operations (a/k/a RevOps) function in their organization. The RevOps concept is relatively new, and it's still evolving. So, as we'll see, companies have implemented RevOps in a variety of ways.

In a 2019 study report, SiriusDecisions (now part of Forrester) defined revenue operations as, ". . . a combination of sales operations, marketing operations and customer success operations teams that work together according to a set of defined operating principles to maximize revenue and performance." (Source:  Align to Win:  The Rise of Revenue Operations)

Research has shown that the use of RevOps functions is growing. In a 2019 survey of 2,462 B2B sales and marketing professionals by LeanData and Sales Hacker, 31% of the respondents said their company had a revenue operations group, up from 20% in the 2018 edition of the survey. Moreover, 27% of the respondents in the 2019 survey said they were actively building a RevOps function. That was up from 15% in the 2018 survey.

Both the LeanData/Sales Hacker study and the SiriusDecisions study identified three major models of revenue operations.

• Virtual Alignment - Companies using this model do not have a formal RevOps structure or a dedicated RevOps team. In this model, individuals from each operations team (marketing, sales, customer success) agree to work with each other on a cooperative basis. SiriusDecisions called this model a "coalition of the willing."
• Hybrid - This is a "somewhat centralized" model of RevOps. Companies using this model have at least two operations functions that report to a RevOps leader, while their other operations functions still report to their departmental leader.
• Centralized - This is the most formal structure for a RevOps function. Companies using this model have s designated revenue operations leader in place, and some also have a dedicated RevOps team.

The following table shows the percentages of participants in the LeadData/Sales Hacker and SiriusDecisions studies using each model of revenue operations.

As the table shows, the most popular RevOps model in 2019 was virtual alignment, which reflects the relative newness of the RevOps concept. This also suggests that company leaders want to prove the value of RevOps before they make major changes in their organizational structure. As companies gain experience with RevOps, it seems likely that the use of a more formal and centralized RevOps model will grow.

Is More Needed?

Companies are hiring chief revenue officers and implementing revenue operations processes because they need to take a more holistic approach to managing revenue growth. These are steps in the right direction, but company leaders may need to do more to achieve their customer experience and revenue growth goals. I'll discuss what else may be needed in a future post.

How Quickly Will U.S. Consumers "Move Past" COVID-19?

Back in March, I published a post describing the increasingly optimistic outlook for the U.S. economy in 2021. Then last month, I wrote about the equally optimistic outlook for marketing and advertising spending this year.

The optimism embodied in the economic and spending forecasts is largely due to a widespread belief that the COVID-19 pandemic in the U.S. will be brought under control in the near future and that this will unleash pent-up consumer demand that will drive rapid economic growth, increased consumer spending, and falling unemployment.

Three recent surveys have provided several important insights regarding the sentiment of U.S. consumers. These surveys explored how consumers are thinking about the overall state and direction of the U.S. economy, their spending plans, and their attitudes about returning to prepandemic behaviors and routines.

Consumer sentiment is obviously important for B2C marketers, but it also matters to B2B marketers. Consumers are at the end of many B2B value chains, and therefore consumer demand influences the revenue growth potential of many B2B companies. Boeing doesn't sell commercial airplanes to consumers, but the willingness of consumers to travel influences how many planes Boeing can sell.

The McKinsey Survey

Over the course of the pandemic, McKinsey & Company has produced an impressive library of resources addressing the public health aspects of COVID-19 and the pandemic's economic and social impacts. McKinsey's research has included periodic surveys of consumers and business executives.

The most recent consumer survey was conducted February 18-22, 2021. In this survey, 41% of the respondents said they were optimistic about the recovery of the U.S. economy, while only 14% said they were pessimistic. The survey defined optimistic as:  "The economy will rebound within 2-3 months and grow just as strong as or stronger than before COVID-19." The remaining 45% of the respondents had a mixed view, believing that the economy will be impacted for 6-12 months or longer and will stagnate or grow slowly thereafter.

Thirty-three percent of the respondents said they were already engaging in "normal" out-of-home activities (returning to stores, restaurants, etc.), and 75% of vaccinated respondents said they expected their routines will return to normal by the end of this year.

Fifty-one percent of the respondents said they expected to spend extra by splurging or treating themselves, and about half of these respondents plan to spend more in the near future.

The Gartner Survey

A January 2021 survey by Gartner paints a similar picture of consumer sentiment, although the overall tone of the survey report is more cautious. The report states:  "CMOs should plan for the possibility that consumers may take longer to resume prepandemic behaviors, even after they have received the full two doses of the vaccine." (Note:  At the time of the survey, the single-dose J&J vaccine had not been authorized by the FDA.)

Gartner asked survey participants how soon they feel their life could return to normal after being fully vaccinated. Forty-five percent of the respondents said in six months or less, 36% said they were unsure, and 15% said in a year.

Gartner also asked survey participants about their willingness to engage in several specific activities after being fully vaccinated. The following table shows the four activities that respondents were most willing to engage in. Note that none of these activities was identified by a majority of the survey respondents. And only 15% of the respondents said they would be willing to stop wearing a mask or go to large public gatherings, even after being vaccinated.

The Pew Research Survey

One of the largest recent surveys addressing the "when will things get back to normal" issue was a survey of a nationally representative panel of 12,055 U.S. adults conducted March 1-7, 2021 by Pew Research Center. In this survey, Pew Research asked participants the following questions:

1. "Just your best guess, how long do you think it will be before most businesses, schools, places of worship and other public activities operate about as they did before the COIVD-19 outbreak?"
2. "Just your best guess, how long do you think it will be before the job situation in the U.S. recovers to about where it was before the COVID-19 outbreak?"

The following table shows how the survey respondents answered these questions.

As the table shows, 57% of the respondents believe it will take at least a year for most businesses and other public activities to return to normal operations, and more than eight out of ten of the respondents (81%) do not believe that unemployment will fall to prepandemic levels for at least a year.

My Take

I wasn't particularly surprised by the caution identified by the Gartner survey, which was conducted in January. At that time, the vaccine rollout was just getting started, and the number of daily new cases of COVID-19 was still high. I suspect if Gartner conducted the same survey today with the same survey panel, the results would be quite different.

I was somewhat surprised that a majority of the respondents in the Pew Research survey believed that most businesses and public activities won't return to normal operations for at least a year. The Pew survey was conducted in early March, by which time the number of daily new cases of COVID-19 in the U.S. had declined significantly, and it had become clear that the vaccine rollout was going well.

Current data from the CDC regarding vaccination progress, current data from the TSA regarding the number of people flying, and the latest quarterly earnings reports from several large U.S. retailers indicate to me that the "return to normal" is progressing even faster than many of us anticipated.

Top image courtesy of Robert Couse-Baker via Flickr (CC).

Why It Pays To Be Empathetic and Benevolent

Empathy became one of the hottest topics in marketing last year. Yesterday, I performed a Google search using the term empathy in marketing for the period of March 1, 2020 through March 31, 2021. The search returned over 5.5 million results.

Marketing thought leaders and practitioners have long recognized that empathy plays a valuable role in marketing, but the COVID-19 pandemic elevated the importance of infusing marketing actions and communications with empathy. In a global survey of marketing decision makers conducted last fall by Salesforce, 81% of the respondents said their prioritization of providing customers with empathetic, personalized messages had increased because of the pandemic.

Social scientists generally define empathy as the ability to recognize, understand, and share the thoughts and feelings of another person. To develop empathy, marketers need to put themselves in their customers' shoes in order to understand and feel what their customers are thinking and feeling. With these insights, marketers will be better able to create content and messaging that will resonate emotionally and rationally with customers.

Empathy is also vital for effective B2B marketing because empathetic marketing communications will signal that a company is worthy of a customer's trust. And trust is the single most critical component of strong, long-lasting customer relationships. To be clear, empathy alone cannot create trust, but empathetic communications will make customers more inclined to extend their trust.

How Trust Arises

Trust has been widely studied by psychologists and other social scientists, so we have a sound understanding of what creates a willingness to trust and how trust develops. Most social scientists agree that an individual's willingness to trust another person or an organization - and the level of trust that will develop - largely depends on the perceived trustworthiness of the other person or organization. Most scientists also agree that the trustworthiness of a person or organization is primarily based on three factors - ability, integrity, and benevolence.

Therefore, the willingness of a potential buyer or an existing customer to trust a vendor depends on whether - and to what extent - the vendor exhibits these three antecedents of trustworthiness. In the trust context, ability and integrity mean what they normally do, but benevolence has a special meaning. The essence of benevolence is putting the interest of another person or organization above your own.

Ability, integrity, and benevolence are equally important for the development of trust, but benevolence is the most potent source of differentiation because it is the rarest of the three trustworthiness attributes. Benevolence is rare, not because most companies are intentionally "malevolent," but because the importance of benevolence is usually underappreciated.

The Importance of Benevolence

There isn't a lot of recent research regarding the role of benevolence in business relationships, but a 2016 survey of 2,400 consumers by MECLABS Institute shows why benevolence is so important. For this study, MECLABS divided the survey participants into two equal groups. One group (the "satisfied customers") were asked to think about a company they were highly satisfied with when answering the survey questions. The other group (the "unsatisfied customers") were asked to think about a company they were very unsatisfied with.

When the unsatisfied customers were asked which of thirteen statements were true about their experience with the company, the most frequently selected statement was:  "The company does not put my needs and wants above its own business goals." In this survey, 60% of the satisfied customers said the company often or always puts their needs before its business goals, compared to only 16% of the unsatisfied customers.

This study also demonstrated how benevolence contributes to important and valuable business outcomes. MECLABS asked survey participants how likely they were to take several actions, and the following table shows the stark differences between the responses of satisfied vs. unsatisfied customers.

The MECLABS study showed that the "value chain" of benevolence works like this:  Benevolence contributes to a perception of trustworthiness, which enhances the development of trust. And trust contributes to a higher level of customer satisfaction, which leads to improved business outcomes.

So, practicing benevolence isn't only "the right thing to do," it's also a powerful driver of business performance. And empathetic marketing communications are a vital link in the customer trust value chain.

Top image courtesy of EKG Technician Salary via Flickr (CC).

Use a "Barbell" Strategy for Better B2B Marketing

Many professional investors use a "barbell" strategy when constructing their portfolios. The barbell strategy was popularized in the early 2000's by Nassim Nicholas Taleb. Taleb has been a derivatives trader and a hedge fund manager, but he is best known as the author of The Black Swan and several other books regarding randomness, probability, and uncertainty.

The essence of the barbell strategy is investing simultaneously in extremely low-risk assets (such as U.S. Treasury bills) and extremely high-risk assets (like stock options or IPO's), while avoiding middle-of-the-road choices. The assets at the ends of the barbell have very different characteristics, and the investments are made with very different objectives in mind. Proponents argue that over time, a barbell strategy increases the odds of achieving superior overall returns.

The Barbell Strategy for B2B Marketing

A barbell is also an apt visual metaphor for B2B marketing. As the following diagram shows, the two components of the B2B marketing barbell are brand marketing and demand generation marketing. We now have persuasive evidence that companies must excel at both to produce superior marketing results.

The barbell metaphor is appropriate because brand marketing and demand generation differ in several major ways. Most importantly, they have fundamentally different objectives.

The objective of most brand marketing programs is to evoke changes in the minds of potential buyers. For example, such programs are often designed to:

• Make potential buyers aware of the brand (company or product)
• Cause potential buyers to remember or think of the brand when a need or buying situation arises
• Cultivate favorable perceptions of the brand in the minds of potential buyers 

In contrast, the objective of demand generation programs is to elicit a behavioral response from potential buyers who are engaged in - or are at least ready to begin - an active buying process.

These dissimilar objectives call for different marketing tactics and messaging, and the following table highlights some of the important differences. For example, because brand marketing is primarily intended to influence the feelings and perceptions of potential buyers, the messaging usually needs to have a more emotional appeal. Demand generation messaging, on the other hand, usually works better when it is more rational.

Many companies have traditionally used separate teams for brand marketing and demand generation. This approach enables them to develop the specialized knowledge and skills needed to perform both marketing disciplines more effectively. Unfortunately, this approach often leads to the development of organizational silos that result in a disconnect between the company's brand marketing and demand generation efforts.

In a recent article, four McKinsey & Company consultants argued that this disconnect can have important negative implications. They wrote:  "For many companies, this split is inhibiting growth aspirations. Budget and impact conversations often become contentious:  performance marketers tout their ability to drive clicks while brand builders argue for longer-term investments . . ."

Some marketing thought leaders have argued that the solution to this problem is to integrate brand marketing and demand generation to create a single, so-called "full funnel" marketing discipline. The risk with this approach is that the specialized knowledge and skills required to excel at each discipline will be diluted.

The better solution is to improve the coordination of brand marketing and demand generation programs by improving the relationship between the two teams. Once again, a barbell provides a useful visual metaphor. Every barbell has a bar, and the following diagram depicts the major components of the bar that connects brand marketing and demand generation.

As the diagram shows, there are four keys to elevating the relationship between brand marketing and demand generation teams.

Recognized Interdependence - Brand marketers and demand gen marketers must recognize that the two functions are deeply interdependent, that they need each other, and that coordinated efforts are essential for success.

Shared Understanding - Marketers in both disciplines need to have a shared understanding of the fundamental factors that make up the marketing environment. This includes the brand purpose, the positioning of the brand (i.e. core value propositions), and the structure of the market (size, competitive landscape, customer buying processes, etc.).

Ongoing, Self-Directed Collaboration - Brand marketers and demand gen marketers need to work collaboratively on an ongoing basis, and this collaboration needs to occur naturally and spontaneously, at all levels of both functions, whenever and wherever it's needed.

Linked KPI's - Because of the significant differences between brand marketing and demand generation, it's not feasible for the two functions to use the same exact set of performance metrics. However, the two functions should share some KPI's, and it's particularly important to measure the impact of brand marketing on the performance of demand generation programs.

Top Image Courtesy of Lance Goyke via Flickr (CC).

Four Essential Attributes of Outstanding B2B Customer Experience

 Merkle B2B and two of its constituent firms, B2B International and gyro recently published the results of research that focused on what is required to consistently deliver world-class customer experiences, and where most companies have work to do to meet those requirements.

The research report is based on an analysis of 5,000 previous studies relating to customer experience and on over 3,000 interviews with B2B buyers and key decision-making influencers in North America, Europe, and Asia-Pacific. The interviews examined over 5,000 brand experiences involving the purchase and use of financial services, manufactured goods, professional services, and technology solutions.

The report begins with a rather sobering assessment of the overall quality of B2B customer experiences. The authors observed that over 35% of the interviewees with large companies (1,000 or more employees) said that buying from B2B suppliers is often a difficult process. So it's not surprising that the resulting customer experience is often mediocre. An analysis of Net Promoter Scores found that two-thirds of B2B customers have a passive or negative customer experience.

Merkle's report summarized the state of B2B customer experience in stark terms:  "We have established that the process of identifying, researching, choosing, and using a B2B supplier is rarely impressive, often ordinary, and frequently suboptimal."

The Four "Brand Superpowers"

Merkle identified four factors that collectively produce world-class customer experiences - Reliability, Understanding, Enrichment, and Preeminence. The report refers to these factors as "brand superpowers," and it places each superpower into one of two groups based on the type of value delivered.

Reliability and Understanding are superpowers that deliver "business" value directly to the customer organization, while Enrichment and Preeminence provide "personal" value to individual buyers, influencers, and users. Here's a brief overview of the attributes of each superpower.

Reliability - Merkle uses the term Reliability to describe company and product/service attributes that address basic business requirements. So this superpower includes good product quality, dependable customer service, and appropriate product/service pricing. If we think in terms of a hierarchy of needs, Reliability would be at the base.

Understanding - In Merkle's framework, Understanding refers to the quality of the relationship between a company and the business organizations it serves. Merkle says that Understanding includes attributes such as tailoring, adaptability, service, and aligned business cultures and philosophies. The report puts it this way:  "Where Reliability speaks to performance, Understanding is concerned with experience - the whole business-to-business customer journey must work in a seamless and integrated way."

Enrichment - Enrichment refers to a company's ability to make work life easier or better for the individuals in the customer organization who use or otherwise interact with the company or its product or service. So Enrichment provides personal value because the benefits are experienced by individuals, rather than by the customer organization. Enrichment also includes enhancing the professional knowledge and skills of individuals through educational resources and events.

Preeminence - In Merkle's model, Preeminence is the superpower that enables a company to enhance the professional status of the people in the customer organization who made the decision to do business with the company. A company that succeeds with this superpower is usually a recognized innovator and thought leader in its field, and if it also excels at Reliability, Understanding, and Enrichment, the people who made or influenced the decision to do business with the company will see their status enhanced in the eyes of their colleagues.

The B2B decision makers interviewed for the Merkle study generally gave companies good marks for delivering on the Reliability superpower, but they rated performance on the Understanding superpower as no more than satisfactory. The interviewees rated performance on almost every aspect of the Enrichment and Preeminence superpowers as unsatisfactory.

The idea that companies must provide both "business" and "personal" value isn't new. For example, a 2013 study by CEB (now part of Gartner) and Google also demonstrated that providing "personal" value is critical. This study tested the impact of more than seventy brand benefits on a range of "commercial outcomes," including familiarity, consideration, preference, purchase, repeat purchase, premium payment, internal advocacy, and external advocacy.

The researchers divided the benefits into two categories - business value benefits (those that flowed to the customer organization), and personal value benefits (those that flowed to individual "buyers"). The study found that personal value benefits had twice as much impact (lift) on commercial outcomes as business value benefits.

The Merkle research highlights the importance of the personal dimensions of B2B customer experience, and it provides a helpful framework for marketing, sales, and CX professionals to use when evaluating the quality of the experiences they are providing.

Image courtesy of frontriver via Flickr CC.

How Brand Marketing Improves B2B Financial Performance

Persuasive evidence shows that most B2B companies will maximize growth by balancing the use of long-term brand marketing and short-term demand generation marketing. Yet few companies have adopted this approach. This post explains why the disconnect exists, and what to do about it.

Earlier this year, I wrote about the "Cold War" between B2B marketers (and agencies, consultants, and technology providers) who focus on the various forms of demand generation marketing, and those who advocate the importance of brand marketing.

It's clear that the proponents of demand generation marketing have been winning the war. For the past several years, the primary focus of most B2B marketers has been on using data and technology to improve the performance of their demand generation programs. Meanwhile, only a relatively small cadre of marketing thought leaders have continued to make the case for B2B brand marketing.

The preference for demand generation marketing is due to several factors.

Demand for Short-Term Results - Most B2B marketing leaders are under intense pressure to prove the value of marketing programs, and more specifically, to execute programs that will produce results quickly. Many marketing leaders emphasize demand generation programs because they usually produce measurable results faster than brand marketing programs.

Ease of Measurement - The performance of demand generation programs is relatively easy to measure. Such programs are usually designed to elicit a behavioral response from potential buyers, and those behaviors are easy to track. And because demand generation programs produce results quickly, the measurement timeframe is short. In contrast, the objective of most brand marketing programs is to evoke a change in the minds of potential buyers. For example, they are often designed to raise brand awareness and increase brand salience. These objectives are vital for growth, but they are difficult to measure because they don't involve observable behaviors.

Research Focus - Most of the research regarding the benefits of brand marketing is focused on B2C brands, while there is an abundance of research about the benefits of improving the effectiveness of B2B demand generation programs. This imbalance of evidence makes it easier for B2B CMOs to persuade their CEO to invest in demand generation.

Traditional Perceptions - The traditional view is that B2B buying decisions are primarily rational, and that personal selling is the primary driver of revenue generation. These perceptions cause many B2B company leaders to undervalue the contribution of brand building to revenue growth.

How Brand Marketing Creates Value

In order to convince CEOs and other senior company leaders to make appropriate investments in building the brand, B2B marketing leaders must be able to explain how brand marketing will drive important business outcomes. The chart below illustrates how effective brand marketing contributes to revenue growth, increased profitability and cash flow, and ultimately to increased company value.

The model depicted in the chart was inspired by the brand valuation model developed by the Marketing Accountability Standards Board (MASB), an organization composed of marketing industry professionals and marketing academics. The mission of the MASB is to develop evidence-based standards for measuring marketing performance and linking that performance to business financial outcomes. The chart specifically relates to the role of brand marketing in a B2B company.

This chart illustrates three major points about B2B brand marketing.

Customer Preference - Cultivating customer preference is the linchpin goal of all B2B brand marketing, and in fact, it's the primary goal of all forms of marketing. Customer preference is what ultimately drives sales, and in B2B, customer preference is formed from a combination of rational and non-rational factors.

Brand Marketing Operates Directly and Indirectly - Effective brand marketing operates directly to increase buyer awareness and familiarity and to cultivate customer preference. But it also works indirectly by improving the performance of demand generation programs, as research has shown.

Impact on Revenue/Profit - By  cultivating increased customer preference, effective brand marketing impacts four key measures of revenue and profit growth. More specifically, an effective brand marketing program will contribute to increases in:

• The number of sales
• The velocity of sales (shortened sales cycles)
• The average gross margin earned on sales (by reducing price sensitivity)
• Market share

Parting Thought

Brand marketing is an integral part of a complete marketing strategy in a B2B company, but its importance and value are often not appreciated. The model discussed above can help B2B CMOs have meaningful conversations with their CEO and other senior company leaders about the need to make sufficient investments in building the brand. 

Top image courtesy of EdgeThreeSixty via Flickr (CC).

2021 Looks To Be a Rebound Year for Marketing and Advertising

The COVID-19 pandemic upended marketing and advertising at many companies last year. Confronted by a historically high level of business and economic uncertainty, many marketers were forced to dramatically change their marketing plans, and in some cases at least, to substantially reduce marketing and advertising spending.

Today, the outlook for marketing and advertising is considerably brighter. As I wrote last month, many economists now believe the U.S. economy will grow (measured by real GDP) between 4% and 7% in 2021, a rate of growth we haven't seen in decades. As a result, many marketing industry forecasters are predicting that marketing and advertising spending will also grow substantially in 2021. 

The Ad Agency Forecasts

Three global advertising agencies - IPG's Magna, Publicis' Zenith, and WPP's GroupM - recently published their estimates of advertising spending for 2020 and 2021. The following table shows the agency forecasts for total advertising spending in the United States. As might be expected, these agencies estimate that overall advertising spending declined in 2020, but they expect the advertising market to grow significantly in 2021.

The strength of digital advertising is clearly reflected in the agency estimates. The table below shows the estimates of year-over-year growth of spending on digital advertising in the U.S. for 2020 and 2021. All three agencies estimate that despite the COVID-19 pandemic - or perhaps because of the pandemic - digital advertising spending actually increased in 2020, and they expect the growth to continue this year.

All three agencies also estimate that spending on digital advertising will represent more than half of total advertising spending in the U.S. in both 2020 and 2021.

I should note that these estimates were published in December of last year. Therefore, they don't reflect the current level of optimism about the growth of the U.S. economy. I suspect these agencies will soon be increasing their estimates of U.S. advertising spending for 2021.

The Winterberry Group Forecast

Winterberry Group, a specialized management consultancy focused on the advertising, marketing, data, technology, and commerce sectors, issued a new forecast for advertising and marketing spending in January of this year. Winterberry divided its forecast into two major categories - offline media and online media. 

The following table contains Winterberry's estimates for U.S. offline media spending for 2020 and 2021. As the table shows, Winterberry is estimating that spending fell in 2020 in every offline media category except addressable TV. The firm predicts that six of the nine offline media categories will return to growth in 2021, with the laggards being linear TV, newspapers, and magazines.

The Winterberry forecast also reflects the resilience and continuing growth of marketing and advertising via digital channels. The table below shows Winterberry's estimates for U.S. online media spending for 2020 and 2021. Winterberry is estimating that spending in five of the eight online media categories actually grew in 2020, and the firm predicts that spending in all eight categories will grow substantially this year.

What Marketers Are Saying

The latest edition of The CMO Survey provides strong evidence that U.S. marketers are also expecting a rebound in marketing and advertising this year. The February 2021 edition of the survey generated 356 responses from senior marketing leaders in the United States. Almost two-thirds (64.6%) of the respondents were affiliated with B2B companies, and 94.5% were at VP level or above. The survey was fielded January 6-26, 2021.

The survey asked participants how their level of marketing spending had changed in the twelve months preceding the survey (essentially 2020), and how they expected spending to change in the twelve months following the survey (essentially 2021).

The survey respondents reported that their marketing spending declined by 3.9% (mean of all responses) over the twelve months preceding the survey, but they expect spending to increase 10.1% over the twelve months following the survey. More specifically, the respondents expect digital advertising spending to grow 14.3% over the following twelve months, while traditional advertising spending will be essentially flat (-0.2%).

The Takeaway

If history is a guide, it's likely that these forecasts and marketer expectations won't prove to be completely accurate on the specifics, but they are likely to capture the larger trends. Rapidly improving economic and business conditions will drive increase spending on marketing and advertising this year, and the popularity of digital methods and channels will continue to grow.

Top image courtesy of ccPixs.com (CC)