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2024: a year of winners and losers in professional services marketing?

By Alastair Beddow

2024: a year of winners and losers in professional services marketing?

By Alastair Beddow
2024: a year of winners and losers in professional services marketing?

The results of the 12th annual PM Forum and Meridian West International Marketing Benchmark suggest some CMOs are forging ahead in areas such as CX strategy and AI adoption, while others risk behind left behind.

Despite a persistently lukewarm macroeconomic environment 2023 marked a largely successful year for the professional services sector. Most firms reported increases in revenue against a backdrop of sustained client demand and were able to offset the impact of a sluggish deal environment with growth in areas such as digital transformation, consulting and advisory and ESG services.

What will the next 12 months have in store for professional services? Our annual survey of CMOs, Marketing Heads and BD Directors suggests that two distinct groups are emerging. The first group anticipate significant forward momentum through 2024, buoyed by double digit increases in marketing budgets and investment in new technology. The second group feels less confident in their ability to respond to new market developments and is faced the task of delivering more with only limited increases in their budget.


Cautious optimism returns this year

Our survey shows CMOs are more optimistic about the prospects for 2024 than they were 12 months ago. They see light at the end of macroeconomic tunnel this year. A quarter (24%) anticipate that economic conditions will improve for the year ahead, compared to just 6% who thought so at the start of 2023. Significantly, just 19% expect conditions to worsen this year, compared to 73% who thought the same in 2023.

Although sentiment has rebounded, CMOs strike a cautious note of optimism. Half (51%) say that a poor economic outlook is among the top three constraints of their firm’s growth this year. Two thirds (64%) expect growth in the professional services sector to remain flat. This means that firms cannot rely on a rising economic tide to fuel another year of record profits in 2024. Instead, they remain focused on operational efficiency, hiring and retaining highly skilled people, and increasing their use of technology to maintain economic performance this year.


CX remains a clear focus for 2024

Once again CMOs tell us that client experience (CX) is their leading priority for the year ahead. 50% of CMOs rank CX within the top three priorities for their team, down 5% year-on-year, but still significantly ahead of all other priorities. Meridian West’s research shows that firms with superior CX outperform their peers for both commercial value and brand equity, so it is perhaps unsurprising that half of CMOs remain highly focused on delivering value to their firm through improved CX capabilities.

It is also encouraging to see that obtaining feedback from clients comes second on the CMO priority list this year, up 8% on 2023. In a sector characterised by change – new technologies, international growth, changing client demand – firms need to ensure their strategic decisions are informed by really listening to, and understanding, what their clients and the wider market expects from them.


Marketing budgets outstrip inflation

Since the rapid spike in global inflation two years ago, marketing budgets have struggled to keep pace with the rising cost of doing business. For the first time since 2020, this year’s average increases in marketing budgets are expected to be higher than inflation. The CMOs in our survey report an average increase in marketing budget for 2024 of 8.3%. This compares to a headline inflation rate of 4.2% in the UK at the start of 2024.

However, simply looking at average figures doesn’t reveal the full picture of what is happening on the ground. If we look behind the headline figures winners and losers emerge in our research. One in ten CMOs anticipate a cut to their budget during 2024, some as deep as 20%. Four in ten expect no growth to their budget, which in the content of inflation of 4%+ represents a significant real terms cut. Just one in four CMOs say they expect an increase in their budget of more than 10%.


Technology dominates the management agenda

One of the most eye-catching findings from this year’s International Marketing Benchmark is the pace at which technology has risen up the management agenda. 46% of CMOs say that increasing use of technology is among the top three management priorities for their firm in 2024, up 18% on 2023. 61% of CMOs say they expect to increase the spending on technology and systems within the marketing function itself.

It is easy to forget that just 12 months ago ChatGPT had only just been launched. Within the space of a year, professional services firms have had to rapidly adjust to the possibilities that generative AI tools (GenAI) offer to their business. CMOs generally see this as a positive trend: 68% in our survey agree that GenAI will transform the way that marketing and BD professionals work for the better. Just 5% disagree.

Although, a majority of CMOs are optimistic about the potential for GenAI to transform things for good, fewer feel sufficiently prepared to take advantage of these opportunities. For example, 43% agree that their firm lacks the right capabilities to take advantage of GenAI. When asked how confident they are that their firm is making the right levels of investment in GenAI, fewer than half (41%) identified themselves as confident.


Rapid adoption of AI set to continue

Regardless of how confident they feel about GenAI today, CMOs recognise they need to embrace it for the future. While 41% of CMOs say their firm has a GenAI usage policy in place today, this is expected to rise to 78% of firms by the end of 2024. However, to really take advantage of these changes, firms need not just a clear policy framework, but also to build skills and capabilities around AI. 22% of firms have run in-house training on GenAI today, and this is expected to rise to 51% by the end of 2024. Similarly, while just 5% of CMOs say they have GenAI specialists in their team today, a further 24% anticipate recruiting these roles during 2024.

Our research tells us that CMOs and their teams have already begun experimenting with a wide variety of GenAI usage cases. Half (50%) of CMOs say they have used GenAI tools to assist with summarising large volumes of text or for writing marketing copy such as website text or credentials documents. Other usage cases such as writing client communications, producing bid content and generating imagery are being rapidly adopted.

As GenAI tools get more intelligent, and professional services firms learn how to deploy them more effectively, CMOs will need to continue learning, experimenting and investing to ensure they stay on the winning path for 2024.