Marketing budgets as a percentage of company revenues and spend have risen to a record high during the coronavirus pandemic as brands turn to marketing to retain customers and build brand value.
Spend on marketing as a percentage of US companies’ overall budgets rose to 12.6% in May, according to the CMO Survey conducted by Duke University’s Fuqua School of Business. That is up from 11.3% in January 2020 and the highest it has been in the 10 years of the survey. The previous high was in January 2016, when it reached 12.1%.
Similarly, spend on marketing as a percentage of a company’s revenues increased to 11.4% in May, well above the 8.6% recorded in January and the previous high of 9.3% in January 2014.
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Three-fifths (62%) of brands say they will decrease their investment in brand advertising in the coming months, according to the latest survey of brands across the world from Ebiquity, conducted in May.
Just 16% of brands surveyed said they will be investing more in brand advertising, with one-fifth (22%) reporting no change. Brand-building was expected to get more attention from marketers this year but the novel coronavirus (COVID-19) outbreak and an incoming economic recession has forced brands to refocus on short-term survival.
Performance advertising has also seen a steep hit, with 41% of brands cutting investment and just 10% reporting an increase. Overall, advertising spend is now expected to drop by 8.1% – or $50bn – this year.
Instead, brands have shifted their investment to e-commerce. One-third (32%) report more spending on e-commerce, the highest share across all seven business areas. This shouldn’t be surprising given the surge in online shopping – half of all consumers plan to shop online more after COVID-19 ends.
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