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CMO: If You Had 10 Percent More Budget, Where Would You Spend It?

August 17, 2012 | By Marilyn Reap

In a recent study, SiriusDecisions asked b-to-b CMOs and senior marketing leaders the following question: “If you were given 10 percent more budget, where would you spend it?” In some ways the responses simply raised more questions.

Marginal utility is an important economic concept that involves making decisions “at the margin” (i.e. based on small changes in available resources). For example: How should I spend the next hour? How should I spend the next dollar? It’s a tool used to predict consumption based on incremental level of utility or satisfaction.

In a recent study, SiriusDecisions asked b-to-b CMOs and senior marketing leaders the following question: “If you were given 10 percent more budget, where would you spend it?” In some ways the responses simply raised more questions.

By a factor of about two to one, the most frequent answer was to invest more in demand creation – with the goal of increasing the return on marketing investment, a top priority for most marketing leaders. The underlying question then becomes: What’s the best way to invest in new roles and disciplines, such as digital marketing, customer insights and sales enablement, to drive the efficiencies and leverage required to impact marketing performance?

Interestingly, branding was the next most frequent category cited for incremental investment. This is presumably because branding is harder to justify, it may have been one of the first areas impacted by a budget cut, and/or because it’s viewed as a luxury that would benefit from increased discretionary budget. But as branding becomes more integrated into content and social marketing, how will the branding investment strategy and measurements change?

Similarly, the next two frequently mentioned areas for marginal investment centered around emerging marketing priorities: content and marketing operations. Despite the volume of existing content, it isn’t enough. How will the incremental spend help keep it current and relevant to the buyer’s journey?

Increased spending in marketing operations was seen as a lever to achieve scale. Are the critical marketing skills and competencies being developed to drive consistent global process and dashboard adoption as well as deeper customer insights?

Positive marginal utility is when the consumption of an additional increment increases the total utility. Negative marginal utility is when it decreases the total utility. Directing the 10 percent to the right enabling capabilities is the key.

Marilyn Reap

Marilyn Reap is Research Director, Executive Edge: CMO, at SiriusDecisions. For more than 25 years, she has led marketing, sales and consulting professionals through significant business re-engineering and organizational change, providing thought leadership, team building and innovative strategies. Follow Marilyn on Twitter @MarilynReap.