How timely the economic announcements were last Wednesday through Friday:
>>> Payrolls: Awful
>>> Jobless Claims: Bloody awful
>>> Job Gains: Zombie bloody awful
Timely, because we’ve come to the part in our review of Duke/Fuqua’s February 2013 version of “The CMO Survey” (multipart series began here) where marketers-who-are-not-CMOs were asked for their prescient views on the state of the U.S. economy.
They must all be watching another channel.
For the question “How optimistic are you about the U.S. economy?” the percentage climbed from 58.4% (August 2012) to 62.7%. What hopeful signs did these marketers see? After all, the initial report on Q4-2012 GDP had just come in at MINUS 0.1%.
A related question asked “Are you more or less optimistic…?” The percent who chose “more” nearly doubled from the prior survey period. At the time of the February survey, the fiscal cliff had been can-kicked down the road, and sequester was the word of the day. Where is the optimism in that?
The answer to this riddle starts to come into focus when each of the non-CMOs rated his or her company against the economy in general. They were, of course, more optimistic about “own company” than “overall economy.” Welcome to Lake Wobegon, where all the CMOs are strong AND good looking, and all the companies are above average.
The optimism spreads all the way to the marketing budget. Since February 2010, as the U.S. economy has basically run in place, The CMO Survey has never shown an answer lower than 5.9% to the question “What is your expected change in marketing budget in the next 12 months?”
That is at odds with the oft-repeated mantra - in The CMO Survey and a billion other places - that traditional advertising spending is “plummeting,” with the spending shifted to digital. Zero sum does not equal budgetary growth of 6%.
Finally, some new math. When asked what their marketing spend is of the company’s total expense budget, the figure fell only slightly from the prior survey, 11.4% to 10.6%. But get this – when asked on a percentage-of-revenue basis, it - *drumroll* - PLUMMETED from 11% to 7.9%.
Even adjusting for the 6.1% marketing budget increase cited earlier, this would require nothing short of a 36% - THIRTY SIX percent – increase in revenues.