The Modern Growth Investment Mix

How Modern Selling has Transformed the Allocation of Growth Investment Budgets

This year global brands spend over $1 Trillion a year on a growing mix of marketing assets, media and technology to grow sales, profits and enterprise value. A closer look shows the composition and allocation of this growth investment portfolio has changed significantly as growing a business becomes a capital intensive, digital and data-driven team sport. One that demands product, marketing, sales and service teams work together to build, protect and expand customer relationships. The mix of paid, earned, and owned marketing investments needed to support growth has expanded and evolved dramatically as digital, technology, content and owned marketing channels have emerged.

For example, today organizations spend more money on the technology, analytics, content, owned and earned digital and social marketing channels and programs than on paid media to support them. And the lines between marketing, sales and service programs have blurred as Account-Based Marketing, Value Management and cross selling programs have become a backbone of growth and revenue expansion in B2B.

The portfolio of growth channels and technology assets necessary to drive revenue growth have grown in the past 20 years to represent a significant portion of the sales and marketing mix and balance sheet. Commercial technology and analytics – and the owned digital channels they support – now make up over half of operating budgets.

This is transforming the allocation of resources, budgets and investment in growth resources, program and assets.

The allocation of operating and capital funds towards growth has shifted dramatically from paid media and field sellers to technology enabled owned digital selling channels.
The average organization uses over 20 digitally enabled media, marketing and sales channels to engage prospects and customers over the revenue cycle according to Forbes and MASB benchmarks.
The systems, operations, data, and content required to run these modern selling machines has grown dramatically.
The emergence of advanced analytics, AI, and Machine Learning (ML) – and the massive new sales engagement data sets to support them – represents the most significant opportunity to accelerate sales growth since the scale adoption of call centers (40 years ago), CRM (30 years ago), and digital channels (20 years ago) in sales.

Why has the growth investment mix changed so dramatically?

One factor is the scale adoption of smart phones, social media, text messaging, smart speakers, and AI fueled assistants by consumers has changed the go-to-market system. Adding channels, touchpoints. The portfolio of growth channels and technology assets necessary to drive revenue growth have grown in the past 20 years to represent a significant portion of the sales and marketing mix and balance sheet. Most of this investment is not paid media. Commercial technology and analytics – and the owned digital channels they support – now make up over half of operating budgets. Over 90% of the organizations we surveyed were using 20 different channels to go to market.

Old channels – like television, print, out of home, radio and events – never die. These channels have been used for over 80 years and remain fixed in over 98% of marketing budgets according Forbes and MASB benchmarks.

At the same time, a raft of fast growing adolescent channels – a range of new digital channels that have emerged in the last twenty five years, have grown to take the lions share (over 60%) of marketing budgets. In all, the majority of organizations have a robust set dozens of digital marketing, sales and services channels supported by dozens of customer-facing commercial technology solutions in their portfolio. These include:

Marketing channels – the average B2B organization has 16 owned, earned and paid marketing channels including all forms of paid media and owned channels like email, web site, mobile devices, catalogs, events and mail;
Sales and service channels – B2B and B2B2C organizations can have up to a dozen additional sales and service channels, including inside sales, customer success, retail, partner, contactless and direct to customer selling channels;
E-commerce channels – 17% of overall sales now go through online channels according to a survey of CMOs. 12.7% of all retail is now via ecommerce according to the US Census bureau. Over a third of packaged goods are not sold through online channels. 11.6% of business products through direct to customer channels. Most US consumers expect checkout counters to ultimately disappear according to research by Horizon Media.

89% of organizations are actively adapting their marketing channel mix according to a survey of 8,600 marketers by Salesforce. Digital channels have come to dominate the channel mix as more than 80% of even the most complex customer journeys now happen online. In marketing digital channels represent the majority of customer touch points.

The digital share of the media mix now represents 60% of all advertising spend.
Most of the growth in TV, Audio, Print and Out of Home media are coming from new digital formats like video on demand, podcasts and digital out of home networks. For example, half of television advertising is now in the form of streaming video as for the first time most (55%) US Adults watch TV on digital platforms and streaming video according to Horizon Media research.
Social media is a young (under 20 years old – which has come to dominate paid media mix and will pass television in 2022 to command the biggest share of advertising spending.
Less than a decade after the launch of the iPhone, mobile devices became the dominant platform for searching and eyeballs in 2016, passing desktop and television screens.
Most significantly, almost two thirds of what most of us still call the “marketing mix” are really owned digital channel infrastructure and resources (content, data scientists, bloggers, and promotions) necessary to fuel them.

“Marketers are dealing with an exploding possibility curve in terms of channels, investments, choices and change—it’s difficult to set priorities when there are so many smart things to pursue,” says David Edelman, a Managing Director of the Revenue Enablement Institute Faculty and the former CMO of Aetna. In the past 20 years, this portfolio of technology investments now occupies a significant portion of the sales and marketing mix and balance sheet.”

Owned digital infrastructure and resources (i.e., data, data scientists, content marketers, bloggers) now make up almost two thirds of the marketing operating budget, for example according to an analysis in the Revenue Operating System Report.

As a consequence, in the last ten years, the size, complexity and capital investment in the sales and marketing technology infrastructure that supports growth has grown dramatically to thousands of dollars per rep, and are on a trajectory to exceed $10,000 of technology and related services per selling resource according to the Revenue Operating System report by the Revenue Enablement Institute.

This means growth leaders have gone from managing sellers to managing selling systems. Humans are still critical to this system, but budgets are shifting from human capital to technology tools that make those humans more effective. As part of that, the commercial technology portfolio for selling has grown in scale, cost, and complexity.

Unfortunately, in most organizations these critical growths asset and channels are managed in an uncoordinated and tactical manner across operational and functional silos.

How can CMOs cope with all this change?

CMOs must find better ways to manage this modern portfolio of investments and channels to compete and keep up with changing buyer expectations. They must partner more closely with their peers in sales and customer success to drive programs that extend through the entire revenue cycle – from their traditional domain of awareness and demand generation to engagement, activation, retention and expansion programs. They must also find ways to generate greater returns on the commercial assets – capital investments in the data, systems and content that underlie this modern growth engine.

One way is for CMOs to find ways to generate more revenue and profits from these commercial growth assets if they only treated them like financial assets. Which is what they are. As selling becomes more data-driven, digital and capital intensive – the assets that support growth – e.g., customer data, digital channels, sales content, product knowledge, etc. – have become the most financially valuable assets in your business. These assets have grown to represent the lion’s share of growth investment and firm value.

It is practical and possible to unlock more growth and value by improving the return on their revenue generating commercial assets. By revenue generating commercial assets we mean your customer data, digital technology, digital channel infrastructure, customer relationship equity. These assets comprise a significant portion of your firm’s balance sheet.

Most organizations don’t need more technology as much as they need higher returns on their commercial technology and customer data assets. “Success in a 21^st Century Commercial Model requires centralized management and operational ownership of the commercial assets that support sales, marketing, service, and success, advises Corey Torrence. “Without a business case for the capital expenditure required and operating model that looks at the revenue team and commercial process, it is extremely difficult to execute scalable technologies like 1:1 personalization at scale, coaching at scale, and cross functional customer journey management. You cannot manage, monetize, and scale these capabilities in a functional or piecemeal manner.”

Managing this modern growth investment mix will require a different set of skills, capabilities and agency partners. This will involve”

Better measuring and maximizing the return on these expensive commercial assets;
Adopting Revenue Operations to better align teams, budgets, programs, operations and process along the complete revenue cycle;
Finding agency partners that can orchestrate go to market programs that span paid, owned and earned channels to support customer activation and expansion in addition to awareness and demand generation.

These are big changes. For them to happen CMOs need to abandon the status quo for managing the marketing mis established when it was dominated by media and promotions. A new system for growth is urgently needed. One that aligns revenue teams and the systems, operations, and processes that support them across the entire revenue cycle. And generates more growth from the expensive data, technology and channel assets that are the foundation of modern selling. We call that system for growth a Revenue Operating System. We’ve published a book and an exhaustive report that explains what that system is, why it came to be, the capital and investment that goes into creating it, and the top 100 technologies that will enable it. It them, we propose a framework – the Revenue Operating System – as a better model for aligning the people, process and technology to create more scalable and consistent growth. The Revenue Operating System is designed to unlock the potential of technology to make selling more consistent, scalable, and most importantly profitable. This system can help business leaders to reimagine their technology stacks and go-to-market models around platforms that aggregate, orchestrate and deploy customer engagement data rather than a disconnected portfolio of “point solutions” purchased to solve functional problems.

You can learn more about the modern growth investment mix, and practical ways you can better manage and monetize it by reading the Revenue Operating System Report.