Unless you’ve been living in a cave for the last decade, you won’t be surprised to hear that marketing spend is on the rise. Global marketing expenditures are now approaching the $100 billion mark, with digital marketing budgets in the U.S. and Britain growing 44% between 2017 and 2018. Spending for marketing automation tools is predicted to reach $25.1 billion by 2023, and technology now accounts for more marketing budget than advertising.
The issue here isn’t that marketing spend is increasing; it’s that marketing ROI isn’t doing the same. If recent research is any indication, marketers are struggling to turn all that spending into brand growth—and that’s an understatement.
In the most recent CMO Survey, a twice-annual marketing report from CMO, Deloitte and Duke University’s Fuqua School of Business, more than 2,796 marketing leaders at for-profit businesses shared their insights into the marketing landscape. The survey shined a light on an all-too common marketing predicament: Marketing budgets are expected to increase 8.9% on averagef over the next 12 months, yet marketing ROI remains flat overall.
In an era driven by digital technology and an omni-channel approach, marketers have more tools than ever to drive results—the kind of results that can be measured, proven and used to justify spending in areas that deliver ROI. But to realize that vision, it requires a combination of creative, strategy, marketing technology and data analytics skills that are nearly impossible to cultivate in a single marketing department.
The result? More organizations than ever are embracing agency partners who deliver the capabilities of an entire marketing team—at a lower cost and with greater ROI.
A Complex Digital Marketing Landscape
In an article aptly titled, “A Refresher on Marketing ROI,” a Harvard Business Review writer summed up the state of marketing spend: Companies will shell out a record $2.1 trillion for global media in 2019. But is all that money well spent?
The answer to that question is complicated. In The CMO Survey we cited earlier, the gap between spending and results was wide across the board, but it was most pronounced in digital marketing tactics. Here are three prime examples of the disconnect between spending and measurable results:
- Social media: Despite investing more into social media, only 23% of the marketers surveyed were confident that they could show both the qualitative and quantitative impact of their efforts.
- Mobile marketing: Mobile marketing spend is expected to increase by 93% over three years, yet marketers found that mobile did little to improve the performance of their companies.
- Marketing analytics: According to the survey, marketing analytics spending is forecasted to increase by a whopping 198% over the next three years. Yet on a scale of 1 (“not at all”) to 7 (“very highly”), marketers put the impact of analytics on their company’s performance at a lukewarm 4.1.
Many of our clients are caught in this paradox when they approach our agency. They know they should be investing in marketing technology and digital strategies, but they’re unsure why or how to measure their return. It’s not that they aren’t savvy; it’s that the number of skills needed to successfully market online has grown exponentially with the rise of data, technology and marketing channels.
This is a major challenge in the energy industry, which stands to gain significantly from the digital transformation but has been late overall to adopt digital technology, which makes the learning curve feel all that much steeper. (In The CMO Survey, the energy industry has the largest expected marketing budget growth over the next 12 months, at 21.4%, and the biggest increase in marketing outsourcing.)
Read the case study for more on how we drive results, and lower costs, by acting as an in-house digital marketing agency.
Using Talent to Fuel Better Results
When used to their full advantage, digital marketing and marketing technology have been shown to deliver results beyond traditional marketing strategies. An inbound digital marketing strategy, for instance, produces 54% more leads, at a 51% lower cost per lead, with 3X the likelihood of achieving ROI when compared with traditional outbound marketing. Meanwhile, marketing technology automates tasks and opens the door for ongoing optimizations—both of which can save money overall.
So, what’s the key to bridging the gap between spending and return on investment? It all comes back to expertise.
Marketers in The CMO Survey cited finding the right talent as the single-most important factor in the organic growth of their organization. Yet the skills cited as their top hiring priorities illustrate the inherent challenges of building a powerhouse marketing department: creativity, marketing-technology platform and data science expertise all play a key role in the success of modern marketing, but these skills are rarely found in one marketing team—let alone a single employee.
Not surprisingly, marketing outsourcing is expected to increase by 5% in the next year as more brands choose seasoned partners in lieu of the overhead of building their own marketing department. Among the energy industry, it’s forecasted to increase by 10%.
The Marketing Benefits of a “One-Stop” Shop
“Outsourcing” often gets a bad rap, plagued by misconceptions about off-site teams that are worlds away, disconnected from the company’s culture, customers and daily challenges. That’s why HexaGroup is redefining the way that agencies and brands partner to enhance marketing results. By working hand-in-hand with our clients in a combination of onsite and offsite structures, we deliver the business- and market-specific expertise of full-time employees, plus the collective marketing brainpower of dozens of specialists.
Four reasons to consider partnering with an agency rather than building an in-house team:
- Amplified expertise: In today’s multichannel world, marketers need to master more skills than ever before—skills that cut across technology, user experience, content development, branding strategy and much more. An integrated agency can help a brand achieve a wider breadth and depth of expertise than they would be able to build in-house.
- Consistency to drive optimization: A poorly coordinated effort can result in efficient spend and missed opportunities for taking your campaign to the next level. With one team handling all the key aspects of your marketing, your brand can maximize the potential of in-campaign optimizations. At HexaGroup, we rigorously review marketing analytics against pre-determined KPIs. When we spot an opportunity for improvement, we take action in the moment—not after the campaign has ended—to ensure we are driving the best results.
- An eye on what’s next: A seasoned integrated agency invests time in understanding current marketing best practices as well as the market’s next moves. This helps keep brands positioned ahead of the competition, not lagging one step behind, all without taking your employees away from their crucial tasks.
- Cost savings: On average, our clients reduce their marketing spend by 20%. These savings can come from a variety of sources: reducing the costs for full-time employees, eliminating the budget for tactics that don’t work and optimizing the budgets that are spent to maximize a company’s return. In many cases, that 20% reduced budget allows our clients to put more into strategies proven to drive ROI—paid ads, for example—without increasing their marketing budget overall.
With emerging technologies like the blockchain and artificial intelligence quickly moving into the mainstream, the marketing landscape will only become more complex—and more technology-driven—in the years to come. If your brand’s digital marketing strategy isn’t driving ROI, drop us a line so we can discuss how we can work alongside, or as, your in-house department. Regardless of how we work together, we’re driven by the same goal: Marketing Results. Period.
Partner with a Data-Driven Digital Marketing Agency
Want a glimpse into the power of a performance-driven marketing partner? Read the marketing outsourcing case study to see how HexaGroup's team helped an energy brand generate 500% more qualified leads with 35% less marketing spend — without the overhead of building an in-house team.