Improving diversity, equity and inclusion (DE&I) is a major priority for companies today as they seek to outcompete in the marketplace. As a result, CMOs are spending more on DEI than ever before.
But are they spending on the right priorities? The latest CMO Survey, released in February, provides a report card with benchmark data that marketing leaders can use to evaluate their companies’ performance.
More Money for Marketing on DEI
Our survey of 320 leaders found that companies are allocating 10.8% more to marketing spending on DE&I in 2022, compared to the 8.9% growth they reported in February 2021. Examining DE&I spending patterns, we find that DE&I spending is strongly correlated with company size as measured by revenues and number of employees.
For example, companies with $10 billion or more in sales plan to spend 23.2% more in 2022, compared to 9.4% more for companies with $100-$499 million in sales and 6.3% more for companies with less than $10 million in sales. Business-to-consumer (B2C) companies will spend close to twice as much as other sectors with B2C-Services companies spending 9.1%, followed by B2C-Product companies (8.5%).
So, what are marketers using DE&I funds to accomplish? A year ago, marketing leaders reported the biggest investments in the DE&I on their external-facing communications and brands as they responded to the social and political upheaval surrounding George Floyd’s murder and the rise of Black Lives Matters.
This external focus makes sense, given the demands stakeholders were making on companies for DE&I improvements. So, what’s happening now? Both brand and communications investments have stayed high in 2022.
However, other key activities have seen much larger increases over 2021. These activities include improving the DE&I of key marketing strategy activities, such as segmentation and targeting, product and service design and marketing partnerships. We see this as a promising trend, indicating that marketers are committing to more strategic marketing DE&I initiatives at their companies.
Related Article: Deepening Diversity, Equity and Inclusion in Marketing
DE&I Marketing Commitment Varies Significantly Across Companies
One factor that might be driving this deeper work is that 68% of marketing leaders expect DE&I to be a priority for their companies over the next five years. What is less encouraging is that when asked the same question for marketing — do you expect DE&I to be marketing priority for your company over the next five years? — only 59% of marketing leaders reported yes. In fact, 25% of marketing leaders report that their companies have taken no DE&I actions in marketing.
What specific opportunities exist for marketing-relevant DE&I in companies? Two stand out to us. First, most senior marketing leaders report their companies do not have an inclusive approach to marketing decision making, meaning that they have not yet established steps to review and/or evaluate marketing decisions from a DE&I perspective. On a seven-point scale where 1=not at all and 7=very highly, only 5.2% of marketers rated their companies as “very highly” while 23% rated their companies as “not at all” with the mean level 3.5 — indicating a fair amount of work to do on this metric.
Second, most companies have not changed their marketing strategy to reach a more diverse set of customers. On a seven-point scale where 1=not at all and 7=very much, the average score was again very modest at 3.4 with a full 49% rating their companies 1-3.
Given that demographic shifts continue at a strong rate, companies run the risk in using outdated marketing approaches to reach highly diverse populations. YouGov reports that 44% of global consumers say that they don’t feel fully represented by the people they see in advertising. Given that diversity spans race, nationality, gender, sexual identity, age, abilities and more, there is work to be done to reach these buyers.
Companies risk losing ground if they don’t update their marketing approaches. More nimble peers will step in to fill the void, using creative, real-time marketing approaches to appeal to buyers’ changing identities, beliefs and behaviors — even B2B customers who, after all, are led by people.
Related Article: Is Your Marketing 'Thoughtfully Inclusive' of African Americans?
Overcoming Roadblocks to DE&I Marketing
To understand current challenges to using DE&I in marketing, we interviewed marketing leaders and reviewed the literature — both academic and business press. We asked marketers to rate their top three barriers to bringing DE&I into the core of your marketing strategy and decision-making from our list? By so doing, we identified six principal barriers.
The table shows our results:
Two challenges surfaced. First, 69% of marketing leaders rated the “difficulty assessing the value of DE&I-related opportunities” as a key barrier. From our discussions with marketing leaders, the challenge seems to be understanding how the DE&I investment will pay off for their company. This concern weighs heavily on many marketers, as they face competing demands for investments, and 59% report increased pressure to prove the value of marketing to business stakeholder and leadership.
We examined this topic more deeply in our February 2022 survey by asking marketing leaders, “What types of impact have you been able to document for DE&I?” Our results, displayed in the table below, demonstrate that none of the impacts exceeded 50%, with most contributing much weaker results.
The most common impact was benefiting human capital by improving employee acquisition and/or reputation (41% of companies reporting they have demonstrated this impact), followed by enhancing the brand reputation at 38%. DE&I marketing's ability to impact other stakeholders (28%) and customer acquisition and/or retention (15%) was less pronounced. Weaker still was DE&I marketing’s ability to increase shareholder value and innovation (both at 10%), pointing to the work that companies need to do to build out these important connections.
Second, 69% of marketing leaders rated “difficulty envisioning DE&I-related opportunities” as an equally vexing barrier. To understand the challenges they experienced, we asked marketing leaders to identify the different barriers they face when trying to envision DE&I-related opportunities in marketing. The biggest barrier was that “other opportunities crowd out DE&I opportunities” (35% reported this barrier), followed by not having enough time to envision DE&I opportunities (31%) and not seeing DE&I as part of the company’s brand purpose (17%).
Conclusion: Process Needed for Measuring DE&I Impact
Marketers are clearly dedicating resources to DE&I and are considering marketing activities beyond just brand and external communications. Our research suggests that marketing leaders need to devote more attention to creating strong processes for driving decisions and measuring the impact of DE&I on the business. The latter will go a long way toward moving the conversation about DE&I from being the “right” thing to being the effective thing for companies to undertake.
Research studies, such as The CMO Survey and other benchmarking reports, can help marketers develop a solid business case for investment that management is willing to sign off on. With better metrics, they can complete the circle, reporting back on the gains they have achieved with increased DE&I marketing investments.
DE&I is an important social, business and consumer priority, so we expect to see companies make significant gains with their marketing strategies over the coming years.
Holly Larson contributed to this post.
0 Comments
Email This
Stumble This