Recessions are never easy to predict—except in hindsight. However, the most recent CMO Survey, published in February 2019, points to CMOs’ fears that a recession is approaching fast. In past blogs we highlighted CMOs’ focus on market penetration as a low-risk growth strategy and their precipitous 21% drop in optimism about the U.S. economy. These are not the indicators of aggressive executives focused on growth. They are the indicators of leaders covering their flanks.
What’s the latest red-alert for marketing leaders? Hiring is slowing for the third survey in a row. Specifically, in February 2018, the CMO Survey found that CMOs expected to increase marketing hiring by 7.3% in the year following. Now, 18 months later, hiring growth has stumbled to a more moderate 5.1%.
That’s still healthy, but category breakdowns provide more nuance. Here’s what CMOs have planned for hiring:
B2B vs. B2C Marketer Hiring Growth Projections
- B2B marketers expected to grow the most, with B2B Product executives notching 6.5% and B2B Services forecasting 6.1% hiring growth.
- B2C Services rings in at a moderate 4.4% projected growth.
- B2C Product has flatlined at 0.5%.
Industry Marketer Hiring Growth Projections
- Banking, finance, and insurance sectors expect to hire 9.8% more marketers.
- Manufacturing projects 7.7% new hires.
- Technology, biotech, and software anticipates hiring 7.6% more marketers.
Internet Sales Penetration vs. Marketing Hiring Growth Projections
- Companies with 0% of their sales over the internet expect to hire 7% more marketers.
- Those with less than 10% of sales from the internet anticipate hiring growth at 5.3%.
- Companies with more than 10% of sales from the internet report a negative growth rate at -0.18%.
What are we to make of these most recent findings?
With a long-running booming economy, corporate profits have surged over the past nine years as this chart from the St. Louis Fed shows. This has benefited both B2B and B2C companies. Yet a variety of media articles have recently reported that the American consumer is tapped out. Consumers around the world may be feeling increased uncertainty given global news about a coming recession, geo-political issues, immigration, tariffs, and climate change among others issues, and reconsider spending vis-a-vis their earning power and debt levels. When consumers retrench and stop spending, it hits B2C Product companies the hardest.
Across sectors, financial services is in the fight of its life, rapidly restructuring its industry with the help of marketers to catch up with fintech startups that have created new sources of value for customers. Other spending evidence in survey results indicates that manufacturers have awoken to the power of marketing and the tech and biotech sectors are investing heavily in helping marketers across sectors digitize key marketing activities.
Regarding internet sales, we surmise that those companies with no to low online sales are realizing they are late to the e-commerce game and seek help from marketers to create long-term strategies that connect with customers. Conversely, e-commerce leaders are benefitting from adopting advanced technology that enables staff to work more efficiently—reducing the need for hiring.
Let’s now turn our attention to more macro trends.
Why is the Pace of Marketing Hiring Slowing?
Across the hiring landscape, we are seeing a number of challenges that affect companies and job seekers alike. They are:
- Labor markets are ultra-tight: According the United States Bureau of Labor Statistics, the national unemployment rate fell to 6% as of May of 2019. As the economy continues to grow and unemployment remains low in many developed countries, it is harder than ever to recruit and retain top talent. As an anecdotal example, companies are struggling with new hires who ghost them—accepting offers, but never showing up on Day 1.
- Job-skill mismatches are increasing: The accelerating adoption of automation is creating intense demand for technical skills that don’t widely exist in today’s workforce. The August 2018 CMO Survey found that 6% of CMOs listed the “lack of people who can link marketing analytics to marketing practice” as a top factor preventing their company from using more marketing analytics. Marketers need analytics training for even entry-level jobs these days, and the lack of available talent with these skills has slowed marketing team growth.
- Revealed preference for training: In the latest Deloitte Human Capital Report, Chief Human Resources Officers (CHROs) say they are more inclined to train existing staff than hire new staff to obtain the talent they need. This is consistent with recent CMO Survey results that find marketing spend on training and development reached its highest level in five years, increasing from 2.7% of marketing budgets in 2014 to 4.7% in February 2019. This strategy is also evident in Amazon’s announcement that it will invest to retrain one-third of its workforce.
- Automation of the marketing function: According to a report by McKinley Marketing Partners, the percentage of companies stating that automation would impact marketing hiring plans rose from 7% to 12%. Marketing automation has reached ascendancy, with 60% of companies currently using it and another 15% planning to implement it by year’s end. With the exception of companies inventing these tools, this could mean fewer hires due to increased work efficiencies and a greater drive into all things tech at the expense of other marketing categories.
- Marketing budgets are weakening. While marketing budget growth remains positive, it has dropped from the high of 7.6% planned spending increase reported in the August 2018 CMO Survey to 5% growth reported in the February 2019 CMO Survey. The sector suffering the largest drop is B2C Product companies with budget growth expected to only increase 1.5%, no doubt contributing to that weak hiring growth number of 0.5%.
Who are CMOs hiring?
Despite these challenges, marketing leaders continue to put a premium on hiring the marketing staff they need. “Having the right talent” is rated as more critical for driving future organic growth than having the right technologies, data, operating model, or having all stakeholders aligned, as rated in the August 2018 CMO Survey. Who are CMOs looking for?
- Full-time employees dominate marketing teams: CMOs say full-time hires comprise 80% of projected hires, compared to 8.7% part-time independent subcontractors, 5.2% full-time independent subcontractors, and 3.1% of part-time employees (the rest were “other” and might include interns). This trend varies slightly across economic sectors as B2C companies plan to hire more full-time employees (B2C Product at 84.4% and B2C Services at 86.8%) compared to B2B companies (B2B Product at 78.8% and B2B Services at 74.5%). CMOs’ preference for full-time hires is in line with our training findings reported earlier.
- Luring marketers from other industries: CMOs reported that 34.9% of full-time new hires would come from companies in other industries, 26.9% from competitors in industry, 23.4% from within the company, and the remaining 13.4% from universities. The trend of hiring outside industries was highest with B2C Services companies, which plan to hire 45.6% externally. Here’s why: CMOs value industry-agnostic skills like analytics and automation more than industry knowledge, which they view as teachable.
Like the economy, hiring remains uncertain for marketing. Some industries will be winners and others will suffer from more upheaval caused by automation and tight labor markets due to new skill requirements. Marketers understand that human capital is a critical element of their success with 35.3% rating “having the right talent” as the most important part of their company’s ability to grow—above “having the right operating model” (23.1%), “having all stakeholders aligned” (20.8%), “having the right technology” (11%), or “having the right data” (9.8%). There are many ways to acquire, develop, and retain employees for marketing effectiveness. Above all, marketers should focus on what customers want and need and the human capital strategies that will help them meet these requirements better than the competition.