CMOs tightening purse strings to cause US$2.5 billion losses for ad industry

Decreasing ad spend will lead to increased investment in customer experience in 2018. According to Forrester's report titled Predictions 2018: The CMO Bar Rises With More Pressure For Growth, it will be tougher to justify digital advertising in the future due to the issues with transparency and effectiveness of digital advertising.

CMOs also have to go beyond just creating campaigns to making sure their marketing efforts and investment in marketing technology can aid in creating sales value for the company.

Forrester's report noted that CEOs might expect their CMOs to follow in the footsteps of P&G and slash ad spend, which will result in CMOs further "[tightening] the purse-strings" and cause the industry to lose US$2.5 billion.

Earlier this year, Procter & Gamble (P&G) revealed its intention to cut marketing spend by US$2 billion in the next five years, as part of a broader US$10 billion cost reduction plan launched a year ago. Meanwhile, P&G is also targeting up to half a billion in savings from reducing ad production costs and agency fees. In July, its chief financial officer Jon Moeller said that the drop in its digital ad spend was due to its decision to “temporarily restrict spending in digital forums” where its ads were not being placed according to its “standards and specifications”.

The report also stated that marketing technology budgets will increase by "double digits", as companies start to invest more in areas such as automation. With aspects to consider such as the re-evaluation of digital ad spending, customer experience and allocation of technology budgets, CMOs will feel a stronger need to understand consumers using data that used to be inconceivable. This includes data showcasing a detailed understanding of emotions which was not possible in the past, allowing marketers to rationalise emotions.

The report also noted that marketing technology is not only influencing CMOs, but also other individuals in the company such as chief growth officer (CGO) and chief digital officer, all of whom understand the opportunities that come with having customer experience technology.

As high CMO attrition remains, CGOs are expected to take over the CMO role in eight more Fortune 100 companies.

This is also a result of CEOs seeking to create new roles with a wider remit following the CMO's departure.

An example would be Coca-Cola scraping the global CMO function by merging it with “customer and commercial leadership as well as strategy” to create a new CGO role. This resulted in the departure of CMO Marcos de Quinto, who led the "Taste the Feeling" campaign in 2016. According to Forrester's report, this change will benefit CMOs who are ready for the next challenge, and an "immediate threat" to those who are unprepared.