In-Ear Insights: CMO Survey, AI, and 2024 Marketing Budgets

In this episode of In-Ear Insights, the Trust Insights podcast, Katie and Chris discuss the peculiar budget cuts that CMOs are making for 2024 marketing budgets and how it will impact marketing teams. We talk about the surprising reductions in spending for CRM, customer experience, and brand building. We analyze the disconnect between using AI to improve productivity while severely cutting staff. Katie and Chris examine the different types of creative thinking needed on marketing teams and the risks of letting go of divergent thinkers. We explain why AI alone can’t magically fix poor data tracking or replace most marketing roles. Katie and Chris provide helpful perspective on AI’s capabilities and limitations that decision makers should understand before slashing budgets. Tune in to gain insight into crafting budgets and strategies that balance AI and human skills.

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In-Ear Insights: CMO Survey, AI, and 2024 Marketing Budgets

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Christopher Penn 0:00

In this week’s In-Ear Insights, let’s talk about marketing, budgeting 2024.

And some very peculiar decisions that CMOs are making around their spending.

So Katie, the new cmo survey just came out not too long ago, according to what you were just saying.

And there’s a whole bunch of really interesting things.

In this biannual presentation, one of the ones that really stood out to me that I was just absolutely shocked at was the demos decided, in terms of where they’re going to be changing, they’re spending in 9%, reduction, CRM, okay, I can understand that a 90% reduction in customer experience spending, which seems counterintuitive since customer experiences while the less differentiators you have.

And then a whopping 43% reduction in spending on brand building, which to me, is quite possibly the stupidest thing you could do in 24.

So Katie, what were your takeaways? As you were looking through this deck, particularly on where it’s where people are spending their budgets for 2024? Well,

Katie Robbert 1:04

there’s a couple of things.

So it looks like budgets are budgets are basically still going down, but it’s dropped near pre COVID levels.

And this is what we’re talking three, four years ago now.

Budgets are getting slashed left and right.

I mean, we’re seeing it in the job market, we’re seeing people get laid off.

Pretty much every day.

Now, there’s some sort of an announcement that layoffs are happening.

And that’s one way that budgets are getting slashed.

It’s a short term plan, it’s very short term thinking.

But then when you start to go into the actual marketing activities, they’re getting cut, you have brand that’s getting cut, social media is getting cut, the employees, the analytics, the technologies, the research, customer experience, training, sales support, all of those budgets are getting cut.

So then the question is, what will then what are you doing? What is the money left to do? And I know you’ve been traveling a lot.

And so you’ve been talking with a lot of other agency, folks.

And one of the comments that was made to you was that the customer expectation now is, well, you’re using AI, so it doesn’t take you as long so what am I paying you for? And so we’re in this really precarious financial position, all of us, all of us agency owners, you know, people who support other marketing teams, where there’s this misunderstanding of what AI is doing, and therefore, I’m not going to pay you because AI is doing it.

And so it’s affecting budgets for companies like ours who’d be like, well, we have no new business coming in.

So we have to make those cuts somewhere and what can AI do? So we’re being forced to figure out what AI can do for our businesses, while trying to play catch up to our customers who already think that AI is like, the magic easy button?

Christopher Penn 3:04

Ah, yeah, I mean, there’s a lot to unpack there.

But I think AI is, is amazing.

It’s wonderful technology, I play with it all the time I talked about on a regular basis.

It’s like my third best friend.

But it is, it’s a tool.

It’s a tool, like a spreadsheet is a tool and and the results you get from it depend on your skills, right? It just like the results you get out of Excel are dependent on your skills with Excel.

If you have no skills with Excel, Excel is just taking up hard drive space on your computer AI is the same only even more so.

Because it is more sophisticated than a spreadsheet, and it’s more complex in a spreadsheet.

And yes, there is a lot you can do with just the basic tools.

In fact, we have a whole beginner’s toolkit on the Trust Insights website, we’ll put a link in the show notes to it.

But it’s not a magician.

It is not sentient, it’s not self where it can’t guess what you want, and certainly can’t just magically do things without you asking for in great detail.

This morning.

I was working on a thing I wanted to do for tomorrow’s newsletter about analyzing the transcripts of the hot ones YouTube show.

And yes, AI was able to help me write the code but I had to be very specific and follow essentially a requirements document to get what I wanted out of it.

And so from people who were saying, fire everyone, let’s replace everything with AI or hey, I’m gonna cut your budget 80% Because I know that you’re using AI to do everything now is really, really short sighted.

And when I look at the spending, the two that bugged me the most are the 90% reduction in customer experience because in an age of AI, if all of your basic customer experience stuff is the same your advanced human customer experience is is your diff Rent cheater, right? If I go to the store, and I have a terrible customer experience with a human, you know, that reflects badly on you.

And it’s because you’ve caught that person salary 19%.

Right? Of course, they’re gonna be unhappy.

Katie Robbert 5:16

Well, and it’s interesting too.

So in looking at the CMO survey, it goes into how people are using artificial intelligence in their marketing.

And so AI use and marketing relatively new for most organizations like that’s no shocker.

You know, there’s very few of us who have been using artificial intelligence for longer than the past 18 months.

But then when you look at how they’re using it, unsurprisingly, content personalization and creation are top marketing uses for AI.

Okay, that’s also unsurprising, that doesn’t account for all of the other parts of the budget that you have cut.

And so if you’ve cut your content marketing budget, and replaced it with AI, okay, I can almost kind of make that connection, there’s still some problems there.

But that, in some ways kind of makes sense.

But it doesn’t account for you cutting your advertising budget for you cutting your email budget for you cutting this and that in the AVID.

Because if you’re only using AI for content creation, you have not addressed all of the other places, it definitely doesn’t address sales.

It definitely doesn’t address your analysis and your customer journey and your customer experience.

Blogs and website content, find primary focus with an AI generated content creation.

Okay, great.

So what about everything else? What about all of the other things that need a human writer, not just your blog and website content? There’s so many other things that writers do.

So when I look at budgets for 2024, and what companies are doing, it really does feel very panicky and short sighted, where Okay, AI is going to solve this.

We don’t have to, we don’t have to think about it, we have a chat bot that does that no, or I have ChatGPT.

That’s going to write all my content now.

So I’ll be fine.

And I know that one of the questions that came up for you is, are we just going to get a lot of sameness in terms of the the output of these things? And I think the answer is yes.

So to your point, there’s no more differentiator, if everybody’s churning out the same vanilla AI generated content.

Christopher Penn 7:32

Exactly in the Harvard Business School study that was done with BCG.

One of the things that was pointed out was that AI closes the gap at the bottom half of your company.

It takes people who have bad skills and gives them mediocre skills, and it helps the efficiency of your top performers.

But what this says to me is that the companies with the best ideas, the people with the best ideas will win when the tools can all do pretty much the same thing, when we all have access to ChatGPT.

Your ability to come up with ideas is going to differentiate you and if you fire all the people.

And yeah, like two people left, those two people had better have really good ideas, because now you’ve reduced the diversity of your organization, the ideas that can app.

So you know, for example, this kind of absurd thing I’m doing with the transcripts of hot ones.

Why would you do that? Because I want to see if I can convert text data into some interesting data that you can analyze and showcase.

And in this case, I’m doing something with a bit of neuroscience stuff.

That’s a weird idea.

But it’s an idea that is creative that a machine did not come up with the machine, in no way came up with this idea.

And it’s not even sensible.

But it’s kind of fun.

And it does have a point when it comes to marketing.

That’s creative idea.

Those those come from people machines can create yes, there’s a separate study and Nature magazine showing that people on average are less creative than machines.

But the top human creators are still more creative over top machine creators.

Those say went on to point out in very polite, where is it? There’s some people have really bad ideas.

But if you cut back on those people, then your pool of eligible idea creators is smaller.

And you will get that sea of sameness, if you’re using AI.

But even worse, you’ll have fewer ideas going into machines for them to come up with outputs for them.

Katie Robbert 9:41

I often think about so I sort of I haven’t decided if I’m a creative person or not.

And I think it really depends on the context.

So when I think about you know very basic things like when I was in, you know, school, or at other companies is sort of like decorating and putting together poster boards and like, so basically, you’re given a blank piece of paper, and some markers, and they want you to create something, you know, really interesting.

I’m someone who I sort of stare at it for a while.

And I’m like, Well, I don’t know, can’t you just tell me what you want.

And so I’m someone who’s really good at following a process or creating a process, that’s repeatable.

But when we’re talking about these creative, really innovative ideas, it’s something that feels like net new or something that hasn’t been done before, which, you know, everything is sort of a version of something else.

But the point being is like, if you sat, if you sat down a room of 10, people, gave them a blank piece of poster board and some markers, you’re not gonna get 10 outstanding posters with like, beautiful artwork, you’re gonna get maybe two, and the other eight are going to be, Oh, I saw what that person’s doing.

Let me also do that, or, I don’t really know what you want me to do.

So I didn’t do anything.

And I think when we think about that, sort of, you know, our ability as humans to be creative, that’s where we should be concerned, because that’s really what you’re talking about is, yeah, a lot of us can follow a recipe, a lot of us can follow a blueprint or a process.

But where are those ideas coming from that are going to allow AI to do what it really does.

And so that’s when you’re thinking about your budget? Who are you retaining on your team? And what do they bring to the table, knowing that AI is not going to come up with the ideas?

Christopher Penn 11:38

So I’ll go back to that the creative thing, because I think we kind of lumped creativity into into one big bucket when there’s so many buckets, but the two broad categories are convergent and divergent thinking.

Divergent thinking is, hey, here’s your blank poster board.

Here’s your markers, come up with new ideas.

Right, right.

So diverge from from a starting point, just how do you exploit stuff on Virgin thinking is, here’s a bunch of disparate facts, ideas, whether synthesize this into something coherent.

So when you talk about, you’re not sure about your, whether you’re creative or not, we’re, we, as humans can do both, but we tend to be stronger.

And one of them as a systems thinker.

As someone who’s very process oriented, you are a very much a convergent thinker, you see a whole bunch of things, you see a whole bunch of employees on a team.

And you can say, Okay, I know how I can leverage each person’s strengths to make this a coherent team.

That’s that’s, that’s convergent thinking.

Machines can do both now, machines, but machines are only as good as the instructions they are given.

So if a convergent thinker is giving prompts to a machine for divergent thinking, it’s probably not gonna be as high quality as a divergent thinker, giving prompts to a machine for divergent thinking and vice versa.

So that’s a really important distinction, I think, when we talk about AI and creativity, is understanding what kind of creative person you are, because everyone is creative to some degree.

But it’s leveraging your strengths.

And again, if you’re fired everybody, you have fewer strengths to work with.

Katie Robbert 13:08

So Which category do you fall into?

Christopher Penn 13:12

I’m I’m more on the divergent side, and more on the dividual side, only because convergent thinking requires a lot of organization and logic and process and linearity.

In order.

That’s typically not the state of my head.

Katie Robbert 13:34

Yeah, I don’t know if I could apply any of those words to you confidently.

But I think the point that you’re making is you need both kinds of creativity.

Because you’re absolutely right, I can look at a bunch of objects, and I can figure out what to do with them.

But if you give me a blank slate, that’s where I struggle.

But if I have something to work with, that’s where I can make magic happen.

And so you’re right, those are the two different kinds, whereas you look at a blank slate, and you’re like, Hmm, let me see what sticks.

Yep.

Whereas for me,

Christopher Penn 14:08

what can I do? Because I can make a hat or brooch, whatever it actually,

Katie Robbert 14:11

exactly.

And so I think that, you know, in terms of creativity, we tend to think that that’s the only kind of creativity and you’re absolutely right, like, I can’t look at a blank piece of paper and think of 50 things to do with it.

But if I have a blank piece of paper, and a pencil and a stapler, and this and that, and some paints and some, you know, boxes, and this, I’m like, Oh, now I can put the pieces together.

Now I can build a couple of different things over and over and over again.

And so

Christopher Penn 14:43

go ahead.

Here’s something really important because it applies to you and I very well, divergent thinkers tend to make convergent thinkers tend to improve.

So when we have something like I’ll make a new, a new piece of software, and you’ll be like, What is this like, what does this do? And it forces me to To refine it.

But if we were both convergent thinkers, nothing would be new, we would have a very polished version of software maybe from 10 years ago, that would be perfect and precise, but they’d be nothing new, there’d be nothing that would be captured people’s imagination.

If we were both divergent thinkers, we’d have any ideas, none of what you’re done.

We’d be essentially out of business, because we would never get any work done.

So right it is that pairing of the those two types of thinkers, you know, we often talk about what makes Trust Insights different from another consulting firm or a different different kind of company, is the people who work at it, who have these different skill sets.

And if you, if you are unbalanced on your team, or within your organization, you will lean one way or the other of these things.

And again, if you fire everybody, then you’re really in a rough spot.

Katie Robbert 15:51

And so when we think about the marketing budgets going into 2020, for that, I can almost guarantee that that’s not a factor.

That’s not something that’s being thought about as what kind of thinker do I have? It might be thought of in terms of, you know, do I have a worker bee? Or do I have someone who’s trying to be in charge? It’s not the same thing.

Because someone who’s a doer, like, I’m a doer, you’re a doer.

But that has nothing to do with how we think about things.

It’s the fact that we know that things need to get done.

So we just do them.

And I think that unfortunately, that’s about as far as the decision making goes, it’s how productive is this person? Do they do the thing? If they don’t do the thing? Or if if Chris does a thing faster than Katie, let’s keep Chris because he can do his work and her work? There’s no sort of thinking about? But how did Chris get to the point where he’s able to do the work so fast, Katie created all the processes for Chris to follow.

That’s why she’s slower at the thing, because she’s the one creating, he’s the one doing in that context.

Christopher Penn 17:04

And if you think about the five Ps, right, and you’re evaluating, and you know, maybe one of the maybe your version of performance is how much somebody costs, you’re neglecting the people, right? Which is, by the way, the hardest part to manage, it is the hardest part to hire for, and is the hardest part to replace.

You can change processes pretty easily.

You can change platforms really easily.

You can change purpose, you know, with a lot of alignment and thinking, but the people part is the hardest.

So if you’re looking at your marketing budgets for 24, and saying, Okay, well, we need to cut our budget by 30%.

So let’s just find the lowest performers and lop off the 30%.

Most performers.

It’s possible that that’s a good decision.

But it’s also possible that you have not done a skills audit, and you’ve got the wrong people on the wrong jobs.

And if you do a thoughtful and thorough skills audit of your people, you may find out a they’re in the wrong jobs.

And b Yes, you have 80% convergent thinkers and 20% divergent thinkers and you fire the divergent thinkers, now you’re stuck and rehiring for that set of skills is going to be very difficult.

So you have to take those people into account.

Katie Robbert 18:17

I’m looking at just more data from the CMO survey.

And it’s saying use of AI and marketing drives up productivity and customer satisfaction while reducing overhead costs.

So six point to improve sales, productivity 7% increased customer satisfaction.

Here’s the problem with this statistic.

It doesn’t go into context in terms of what that actually means.

So the danger is that companies who use the CMO survey as a decision making tool which in some ways you can, it can guide your decisions, but it should not be the be all end all is that they’re going to look at this and go oh, AI improved sales, productivity 6.2%.

So let me go ahead and get rid of some people and just replace it with AI.

Well, guess what people actually need to use the tool and the tool is only one small part of the sales experience.

Same with the customer satisfaction.

This goes back to what we were talking about at the top of the episode have, you know, oh, I have a chatbot for that, or, you know, oh, I now have I just, you know, bought my license to Salesforce.

So now I don’t need people.

That’s not how that happens.

You can’t just hit the magic AI button, and suddenly Salesforce is going to spit out.

Okay, here’s all your prospects and here they are segmented and here’s exactly what their customer journey is, and here’s exactly how they’re going to buy.

So you don’t need people to run the system anymore.

The system doesn’t does it automatically because it knows exactly what it is you need.

Unfortunately, that’s just not how it works.

Christopher Penn 19:46

No, it is not and a part of this is decision makers in particular, not understanding what AI can and cannot do.

And there needs to be a lot of education about what, what AI is capable of.

And more importantly, what AI, I know really sucks at.

Because, yes, it is absolutely evolving.

Yes, it is very, very smart.

But at the same time, it is also it’s just a tool.

And so if you have people who are making decisions, who don’t understand the consequences of those decisions, or are just kind of going off very broad assumptions, you run into the situation where yeah, you’re going to make some decisions that are kind of productive.

I have spoken to a friend yesterday who said that at a at a company, they laid off 80% on the marketing team.

And now the 20% of people who are left, were told just use ChatGPT for everything, but no one knows how to write prompts.

And so they’re just wildly guessing.

And the entire marketing team is in total chaos.

Because of this, they let go of like, literally 80%, top to bottom, just out the door.

And I’m like, That’s stupid.

And I will shamelessly plug if you have folks who don’t understand AI but are making decisions with that.

Go to trust insights.ai/ai services, we do education on training for literally from the from the most junior person and accompany all the way up to the C suite.

If people are thinking about making decisions, trying to build a 2024 marketing budget, and a 2020 for marketing strategy that incorporates AI, and you have some questions, we’ll help answer.

Katie Robbert 21:35

Well, and in addition to AI, so you got 80% of your marketing team.

Three months from now, you’re gonna feel the hit of things not getting done.

You know, nobody’s generating reports, nobody’s creating new campaigns, nobody’s getting the email newsletter out the email newsletter, you know, doesn’t even get delivered to the right places anymore, because nobody’s keeping up on the cleaning of the data.

Those are all things that we can help support with.

And those are jobs, those are skills, those are tasks and tactics, that AI is just not going to, like you can’t just plug it in and be like, Okay, now it’s going to do it for me, someone still needs to manage that machine.

And I think that again, so I keep saying yet, but these budget cuts are just so short sighted.

And unfortunately, a lot of it is being driven by the push back of consumers who have false expectations of Well, now that you have AI, I’m not going to pay so much because AI is doing 90% of it anyway.

And it’s just we’re in this, you know, vicious circle of AI and humans right now.

And I don’t know, I mean, what’s going to be the breaking point?

Christopher Penn 22:52

I guess the it will come down to At what point does the customer experience get so bad that a new company can enter a space and disrupt it? And say, okay, maybe they do us a good blend of AI and humans.

But whatever it is they deliver a better experience? Because, yes, people, particularly now, there’s a whole other show we could do on on, you know, the politics of income inequality and things, that’s probably one that’s best done at the bar.

But there is a limit, a lower limit to which people will accept really poor service.

Before they will say yes, you know, I will pay a little bit more to just not have an absolute garbage experience.

And to the extent that companies, the company is basically gonna find that out the hard way.

This is the scientific method at work.

It’s called F around and find out.

But what’s going to happen is, companies who do who think they can cut their way to growth will eventually find that no, you actually cannot do that.

And we’ll we’ll make room for competitors to eat their lunch.

Katie Robbert 24:01

What’s interesting, and this is the last stat that I’ll bring up from the CMO survey is that companies continue to struggle tracking the entire customer journey, not just touchpoints.

And so what I do find interesting about this survey, it doesn’t tie all the pieces together, it just sort of drops in data points for you to do something with.

But when I look at the story that this most latest cmo survey is telling me, it’s telling me that people are cutting their budgets in the wrong places, bringing on AI to do one thing, which doesn’t address all of those budget cuts, and they’re still struggling with their data.

So there is no real solution.

Their AI hasn’t solved the problem.

If they still can’t track their customer across all the different touchpoints introducing yet another tool is just introducing another tool that you then have to figure out where the data is coming from.

It doesn’t then say oh Okay ChatGPT connect all my data.

Tell me what my customer journey is.

I mean, my God, if somebody invents that that’s going to be amazing and disruption, but it’s also going to cost a heck of a lot of money.

Christopher Penn 25:14

We should talk about that in a staff meeting is there.

Katie Robbert 25:19

But you see, my point, though, is that, you know, if your customer data is still spread across 20 different platforms, introducing generative AI isn’t going to fix that because generative AI is generative it creates, it’s not going to say, Oh, let me collect all of the data from all of these different places, bypassing the fact that you have no data governance, no data quality, you have to clean it, you don’t even have access to six of those 20 stacks.

So let me go ahead and just fix this problem for you.

And then magically tell your salespeople how to sell the thing.

Not happening.

Christopher Penn 26:01

Not happening right now.

All right.

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