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The past two years have been chaotic and unforgiving to brands that didn’t or were unable to adapt to drastic changes in the way they do business. In 2023, marketers continue to face challenges including economic uncertainty, a focus on consumer privacy and the eventual demise of third-party data, changing consumer spending behaviors, budget cuts and a shrinking workforce.
Let's take a look at the top challenges that CMOs are facing in 2023, and what they are doing to rise to the challenge.
Privacy Concerns Affect Marketing Analytics
According to Salesforce’s recent State of Marketing report, in spite of the postponement of deadlines to phase out third-party cookies, marketers are still transitioning to zero- and first-party data. In fact, 75% of marketers polled said that they rely at least in part on third-party data, however, 68% indicated that they have a fully defined strategy to shift toward first-party data.
Most concerning to marketers, the changes in data privacy policies and regulations over the past few years have had a huge impact on digital analytics. With economic uncertainty, marketing budgets are looked at with increased scrutiny, which is why a recession combined with a tightening of the methodology used to create analytics is a troubling combo for marketers who desire to give tangible proof to leadership of the value and effectiveness of their marketing campaigns. According to the State of Marketing report, marketers cite measuring marketing ROI/attribution as the No. 2 challenge they are facing.
Many brands are looking for more effective ways to measure the success of their marketing campaigns. Birk Cooper, CMO at Fetch, a rewards app, told CMSWire that to compete in an increasingly competitive market, brands must tap into platforms that invest in the ability to truly understand what the spend is doing for their business.
"Until recently, the best tool for measuring advertising effectiveness has been Return On Ad Spend (ROAS), or the newly coined Incremental Return on Ad Spend (iROAS), but these methodologies have always been fundamentally flawed," said Cooper.
CMOs today must remain open to new opportunities for both growth and measurement, as the Salesforce State of Marketing report reiterated, indicating that 91% of CMOs say they must continually innovate to remain competitive. "Thankfully, new technologies are here that provide real-world attribution and precise measurement. There's no excuse in today's world to put significant spending into channels where the best reporting metric available is ROAS," said Cooper.
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Recession and Economic Uncertainty Drive Spending Behaviors
A recent Gartner report indicated that there are several issues that CMOs will face in 2023, including challenges related to customer behaviors, cross-functional collaboration and disruptive market dynamics. With continued inflation and economic uncertainty, customer demand and buying behaviors will fluctuate unpredictably, and today's strategic marketing priorities are now enterprisewide priorities with complex cross-functional execution. Additionally, the report pointed out that these shared priorities may draw funding away from marketing departments, resulting in lower performance against critical marketing goals.
Rehmann Rayani, chief strategy and marketing officer at Model N, a revenue management solution provider, told CMSWire that although today's fluid economy can lead to brands pulling back on spending, it’s more important than ever to invest intelligently in your company’s growth. "From making strategic hires to investing in key technology that will propel business growth, companies that double down on their investments now will emerge stronger in the long run."
Finally, Gartner predicted that traditional sources of brand value, such as brand reach, positive brand sentiment or perceived differentiation are under pressure amid disruptive market entrants, heightened audience expectations and the ease with which customers can learn about unfamiliar brands.
Robert Koenen, chief revenue officer (CRO) and CMO at Boxed Water Is Better, a sustainably packaged portable water provider, told CMSWire that 2023 will prove to be one of the most challenging years that businesses will have faced in recent memory. "That’s a bold statement considering the last four years have been a tumultuous roller coaster ride,” said Koenen. “But this year, we face settling into the ‘new normal’ that is the result of the previous four years’ cacophony." Koenen emphasized that consumers are now aware of a world that consists of high inflation, economic uncertainty, political in-fighting, social and climate challenges, and now will be setting new behavioral patterns.
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Koenen’s team believes that differentiation and consumer relationships are more important than ever. “Today’s consumer is more inquisitive, diligent and skeptical than ever.” As the Gartner report pointed out, they have more tools at their disposal to research brand claims and discover truthful, authentic brands. Koenen said that although he acknowledges the unprecedented challenges facing businesses today — ranging from double-digit cost-of-goods increases to the rising cost of capital — he will continue to allocate more resources to his marketing education efforts.
Market Where Your Customers Are
Instead of trying to reach customers everywhere, marketers today are changing their focus toward meeting their customers in their preferred channels. Erica Schultz, CMO at RAIN Group, a global sales training and consulting organization, told CMSWire that with the challenges 2023 presents related to changing buyer behavior, economic uncertainty and shifting budgets, the solution is to get more focused.
“Our motto used to be: ‘be everywhere.’ We’ve changed that to ‘be only where our buyers are.’ We’re more focused on defining our ideal customer profile and understanding what these buyers read, where they go for information, the conferences they attend, etc.,” Schultz said, adding that her business is doubling down on having a presence in these areas.
Becoming customer-centric is also becoming more important in 2023. Schultz suggested that brands work more closely with product development, operations and sales to ensure that they have a customer-focused approach across the board.
“We’re asking questions and collaborating to determine how we can provide the most value to our customers today. And we’re developing a consistent message and ensuring we can deliver on that promise," she said. Schultz explained that although this approach requires greater internal collaboration and alignment, it’s how CMOs and companies must think to keep up with the significant change.
Related Article: Why the 'C' in CMO Stands for Change
Short-Term and Long-Term Approaches in Tackling Marketing Challenges
The changes that have occurred over the past three years did not occur overnight, and the challenges that 2023 will bring will also happen gradually. As such, Ryan Mckenzie, co-founder and CMO at Tru Earth, an eco-friendly household product company, told CMSWire that to tackle the challenges that CMOs are facing, it is important to look at both short-term and long-term strategies.
“On the one hand, in order to adjust to fluctuating customer demand and buying behaviors, we need to be agile when creating campaigns and marketing initiatives,” said Mckenzie. “Leverage real-time data to quickly analyze emerging trends and create personalized experiences for customers.” Mckenzie suggested that this falls back on a deep understanding of customer needs, wants and motivations, which can help brands stay ahead of the curve.
Emerging technologies can also help marketers rise to the potential challenges of the coming year. “It is important for CMOs to focus on investing in digital transformation initiatives such as artificial intelligence (AI) and machine learning technologies,” said Mckenzie. “These can provide better insights into customer preferences while also automating and streamlining marketing processes.” Mckenzie understands that these tools can be an effective way to identify potential opportunities in the market and develop strategies accordingly.
Customers today have high expectations of an exceptional omnichannel experience when they interact with brands, and their experiences should align with their perception of brand value.
“CMOs need to address any challenges related to brand value by actively engaging with customers, understanding their needs and aligning their product offerings with those needs,” explained Mckenzie, who believes that by creating a positive customer experience across all touchpoints — from physical stores or websites to social media channels — businesses will be better equipped to build loyalty and trust among their target audiences.
Final Thoughts on 2023 CMO Challenges
CMOs today are facing a number of challenges, including a looming recession and economic uncertainty, the eventual demise of third-party data and rising customer expectations, all occurring during a time when brands are trying to get more done with less.
By continuing to invest in marketing, AI and ML, exceptional omnichannel experiences, and technologies that provide real-world attribution and measurement, CMOs will be able to weather the storm, enhance and improve the customer experience, and increase ROI.
