CMOs Say Budgets Cut By 20% Or More: Forrester

The belts are getting tighter. More than seven in ten chief marketing officers surveyed by Forrester Research Inc. said their 2009 budgets have been reduced from 2008’s levels – and among those, more than half indicated their budgets had been slashed by at least 20%.

The marketing officers said that budgets for traditional media, such as television, print, radio or magazines, along with staff and training spending and branding and advertising expenditures had be cut by two-thirds from last year’s levels. CMOs also reported more than half of their direct mail budget was gone.

Marketing technology and online advertisings saw spending decreases of 29% and 27%, respectively. Web site development budgets were reduced by 22%, and loyalty program spending was clipped by 21%.

What was spared the knife? E-mail marketing budgets were reduced by “only” 11%, and social media spending was nicked by 7% from 2008’s level.

Measureable marketing may be demonstrating its worth: Among CMOs who anticipate lower budgets, or who have already had their budgets cut, 19% said they cut branding and advertising because “I can’t track its results,” while 26% said the same about their TV, print, radio or magazine expenditures. Disturbingly, however, 19% reduced their direct mail spending because “it delivers the lowest ROI.”

If there is hope, it is in electronics. Forty-seven percent of CMOs whose budgets have been cut are increasing their spending on social media, while another 44% are increasing spending on Web site development. Forty percent will spend more on online advertising, and nearly that amount will pump more financial resources into e-mail.

These functions, the CMOs indicated, were critical to their businesses, or were needed to maintain competitive advantages. And one-third indicated they hadn’t been spending any money on social media “so now is the time.”

Forrester’s survey also offered a glimpse into how marketing is viewed throughout a number of organizations. According to the CMOs, just over half see it as a revenue enhancer that needs to be supported. But 41% indicated marketing efforts are under increasing scrutiny from all levels of the company. And 18% are working in firms where “marketing is seen as a cost center that needs to be cut.”