Here’s a non-shocker: U.S. marketing spend is falling and will continue to do so. And hundreds of thousands of marketers will be out of jobs. US jobless claims passed the 40 million mark last week, after all.

Just how bad is it out there for marketers with the COVID-19 health pandemic still far from over? Forrester predicted in a May report (fee required) the U.S., in the most optimistic scenario, will see a 28% drop in marketing spend by the end of 2021, with media, services, technology and internal headcount all taking a hit. About 469,000 more marketers would be out of a job by the end of this year, according to another scenario analyzed by Forrester.

Marketers as early as March showed little faith in marketing budgets. In Gartner’s survey of marketers in March, 65% of respondents reported anticipated budget reductions relative to their original plan as a result of the pandemic.

CMOs Need Shift to ‘Sense-and-Respond’

What does this all mean for CMOs? They need to make huge pivots, including shifting to a “sense-and-respond-mode,” according to Forrester report authors Shar VanBoskirk, Tina Moffett, Rick Parrish and Brandon Verblow. “It’s always a good idea to be much more dynamic, and much more responsive in the way that you've planned your media and the kinds of messages that you're sending out,” VanBoskirk said in an interview with CMSWire. “I just think right now, this becomes critical.”

Historically, a CMO would plan for media six to 12 months in advance. But that, VanBoskirk said, would be a “total fallacy” right now since what CMOs are concerned about now likely won’t be the case six months later. "So this idea of a shift to a sense-and-respond mode is about actually sensing what their market needs now,” she said. “And trying to accommodate that through your media, through your communications and through your creative, but also through the products and services that you offer. And then listening, measuring and seeing how well you did and adjusting as best as you can.”

CMSWire caught up with three CMOs to learn how they’re grappling with massive changes brought about by COVID-19 and how they’re adapting their marketing spend programs. We’ve found that generally, these CMOs aren’t seeing a dramatic budget decreases or major changes to technology spend quite yet.

Related Article: What's on the Mind of the Modern CMO?

Questions About the Future

Mike Hicks, CMO of Igloo Software, shared that he wouldn’t say there’s a change in budget. However, there’s definitely a change in the mindset over the effective use of that budget, he added. “There’s a lot of questions from business leaders on the future demand outlook and if maintaining spending can keep demand at pre-COVID-19 levels,” Hicks said. “Unless you are pandemic-proof like Amazon, Zoom or Netflix, nearly every business that once had fully green-lit projects are now putting them on hold. There’s a fine line in how much spending to do on lead-gen for prospects who aren’t in a position to buy anything.”

Dan Frohnen, CMO of Sendoso, said changes in the budget have “gone in phases.” First, the team, like the rest of the world, canceled all its events, which actually returned money to the budget. However, the team held back on re-investing this money and instead worked to optimize current programs and focus on go-to-market messaging and relevance. “As we start to know more about the world and COVID’s impact, we are starting to invest in more digital events as well as continue to scrutinize and run our current programs in a way that maximizes ROI,” Frohnen said. “There are no nice-to-haves in this environment.”

Push Toward a ‘Data-First Digital Machine’

Paz Macdonald, chief marketing officer for Software AG, said her teams have made a shift toward “marketing as a data-first digital machine,” with an increased investment in data mining and data fluidity. “I have seen a push toward using data to drive decision-making,” she added. “In line with most marketers around the world, as a result of mass cancellations of physical events, my marketing team has been putting additional funds toward virtual events and digital activities, and are ramping up PR activities in order to close the awareness gap, an essential move in the face of this pandemic.”

Software AG’s marketing teams also now focus on transformational efforts, flexibility and modernity in budget programs. This has enabled the marketing teams to shift from systems and tools to skills and processes. “Our investments have recently been centered on transforming our brand into a demand generation machine and reworking older and well-established company routines, enabling Software AG to not only function flawlessly during the pandemic, but to come out a better company overall,” Macdonald said. “Now is the perfect time for marketers to spend additional time thinking about how they want to rework their branding image and therefore, the budgets that go along with this evolution.”

Macdonald added that forward-looking budgets coming out of the pandemic, and now, will be “laser-focused on rebuilding brand narrative and broadening our reach globally.”

Learning Opportunities

Related Article: You Can Reduce Marketing Expenses While Improving Business Performance. No, Really

More Direct Outbound Campaigns

Hicks and the Igloo marketing teams are looking to more direct outbound campaigns that are essentially free as a way to save money on hard cost tactics like advertising. It is also narrowing its use case to things that are important to supporting remote work, improving culture and increasing employee productivity. “Most martech spend today is on SaaS on an annual basis, so as those contracts come up for renewal we are all being put under even tighter scrutiny than they normally would,” Hicks said. “If a clear ROI hasn’t been established or utilization is low, you can expect many of those agreements not to be renewed as every available dollar in marketing savings can be used to offset costs in other parts of the business.”

Shifting to ROI-centric programs has ensured that everything it does has a direct and undeniable tie back to revenue, Sendoso’s Frohnen said. “These are the times," he added, "that programs need to be heavily focused on growth. It doesn’t mean it’s time we should stop our brand-building programs, but we just need to be extra sure that we have the right goals and measurements in place to track it back to a hard revenue number.”

No Significant Martech Budget Cuts, One Martech Hire

Frohnen said his marketing teams are not looking at its technology spend beyond making sure that the stack is fully optimized and working as intended. “Now is the time for teams to double down on their technology investments,” he said, “and really make the technology work for them. The best teams will be operationally sound and able to quickly adjust to be as relevant as possible to their audiences."

Making data-driven decisions and truly understanding the customer journey is critical for the marketing teams at Software AG. To that end, the martech stack will play a pivotal role, according to Macdonald. “We have not been holding back on technology spend, as it is so important, now more than ever, to be investing in our technological capabilities,” she said. "And I recently hired a new member of my marketing leadership team to focus specifically on this topic.”

Related Article: Will Marketing Technology Tailwinds Help Power Through the COVID-19 Crisis?

Jumping Into Sprint Style

One big change for his marketing teams was the immediate jump into a “sprint style of working,” according to Frohnen. The Sendoso teams began to focus on planning projects in short spurts to make sure it’s still being true to its target audiences and understanding the market and its company’s place in it. “This helped us manage the changes to our marketing mix (missing events) and spinning up our own virtual event quickly,” Frohnen said.

Big Bets Still in Play?

Ultimately, reviewing spend effectiveness is constantly necessary and something that marketers do all the time, according to Hicks. Even pre-pandemic. “The difference is,” he said, “we’ve never been in a situation like this so there are no established best practices to model after. We don’t know how long this is going to last. We don’t know if things will clamp down further in the future. In this kind of environment, big bets could be costly mistakes, or could be game-changing for the business if you are at the right place at the right time like Zoom was.”