AI marketing: 5 ways to drive authentic customer connections
We're in the middle of an AI marketing revolution with huge benefits, including: personalization at scale, predictive analytics, and automated customer journeys.
Among all the potential use cases for generative AI in business, marketing is at the top of the list. But a survey of marketing leaders shows that while leaders see benefits with the technology, actual adoption is slow.
So far, genAI is having a positive impact despite organizations only using it for 7% of marketing activities, according to the The CMO Survey from Duke University’s Fuqua School of Business, Deloitte, and the American Marketing Association.
The study, which surveyed 292 marketing leaders at for-profit companies earlier this year, provides intriguing insight into marketing spending, trends, and challenges. This is the 32nd edition of The CMO survey, which started in 2008.
CMO survey: Marketing budgets remain tight
Marketing budget, as a percentage of a company’s overall budget, is 10.2%, representing an ongoing decline since reaching a high of 13.8% in 2022, but higher than the low of 9.8% in 2021, according to the survey.
While organizations expect digital marketing spending to decline from 8.9% last year to 8%, overall marketing spending will grow by 4.7%.
Inflation continues to put pressure on marketing budgets, with 45% of leaders saying higher prices have led to reduced marketing spend.
However, that’s fewer than the 52% of leaders who said spending was down due to to inflation last year.
Generative AI in marketing: Early results
Even though only 10% of survey participants are actively using large language models, marketing leaders are bullish on AI’s impact, reporting these benefits:
- Sales productivity up 5.1% on average
- Customer satisfaction up 6.1%
- Marketing overhead down an average of 7%
Half of the CMO survey participants are evaluating or piloting generative AI tools while nearly 40% haven’t used them at all.
Marketing leaders reported numerous challenges with integrating genAI into their organizations, including minimizing bias, hardware investments, and making sure the tools suit the brand.
Banking on martech
The CMO Survey found that an overwhelming majority (75.3%) of organizations use marketing technologies (martech). Sixty-two percent of marketing activities involve use of martech, up from 58.4% a year ago.
Organizations spend nearly 20% of their marketing budget on marketing technologies (martech), but expect to increase their investment to nearly 31% of their budget in five years.
Despite the appetite for martech tools, a lot of them gather dust, with only 56.4% of tools purchased actually used, the survey found.
Marketing leaders surveyed cited integrating marketing technologies with other data systems as a top challenge, along with hiring staff to manage martech.
CMOs and sustainable marketing
Brands are well aware of the growing consumer demand for sustainability, both in the products they buy and in the way companies operate. Conveying a brand’s commitment to sustainability has become a marketing priority for many businesses.
The CMO survey’s findings illustrate this trend:
- Spending on sustainability issues grew to 1.9% of marketing budgets, up from 1.2% in 2023
- Sustainable marketing budgets are expected to increase to 2.8% in one year, and 4.5% in five years.
- Changing products or services is the top way brands are addressing climate change, with 52% of respondents reporting this action
Another interesting survey finding: 25.6% of survey respondents said their companies are adopting climate-related metrics, up from 18.7% two years ago. The growing focus on metrics comes as consumers and regulators become less tolerant of greenwashing.
