Marketing Budgets Beginning to Recover

Marketing budgets have climbed to 9.5 percent of total company revenue in 2022, an increase from 6.4 percent in 2021, according to Gartner, but still well below pre-pandemic spending levels.

“In the face of telling macroeconomic considerations, [chief marketing officers] hold on to a belief that their own economic outlook is strong,” says Ewan McIntyre, chief of research and vice president analyst in the Gartner for Marketing Leaders practice. “Despite inflation, the Russian invasion of Ukraine, supply chain issues exacerbated by China’s lockdown measures, and unprecedented talent competition, CMOs appear sanguine. For example, the majority of CMOs surveyed thought inflationary pressures hitting their business and their customers will have a positive impact on their strategy and investment in the year ahead.”

Seventy percent of respondents reported their budgets had increased this year, but with marketing budgets increasing to 9.5 percent of total company revenue, it is still down from the 11.2 average in 2018, 10.5 in 2019, and 11.0 in 2020.

According to Gartner, average marketing spending has increased across nearly all industries. Financial services companies recorded the highest budget in 2022, at 10.4 percent of company revenue, up from 7.4 percent in 2021. Healthcare’s budgets increased from 7.2 percent to 9.7 percent. Retail’s went from 6.3 percent to 9.1 percent, travel and hospitality’s from 5.4 percent to 8.4 percent, media’s from 5.8 percent to 10.1 percent, manufacturing’s from 5.8 percent to 9.8 percent, IT and business services’ from 5.9 percent to 9.6 percent, and technology’s from 5 percent to 10.1 percent. The only industry to see a drop in 2022 is consumer goods, which moved from 8.3 percent in 2021 to 8 percent in 2022.

CMOs have shifted from digital-first to hybrid multichannel strategies. Online channels take the largest share (56 percent). However, offline channels account for almost half the total available budget (44 percent), presenting a more equitable split than in recent years. Looking at the average spend across industries, social advertising tops the list, closely followed by paid search and digital display.

“There has been a lot of discussion around COVID-19 shifting consumers to a digital-first mind-set. However, as Western Europe and North America relax pandemic protocols, customer journeys have recalibrated,” McIntyre says. “Post-lockdown, CMOs need to listen carefully to their customers and pay attention to the channels they are using, as this more closely resembles a hybrid reality.”

Gartner’s data also found that CMOs today are confident in their ability to manage brands. In fact, in their budget allocations across program and operational areas, brand strategy and activation are near the top of the list, accounting for nearly 10 percent of budgets. However, other strategic capabilities gaps still persist: 26 percent of CMOs identified marketing data and analytics as a top capability gap, followed by customer understanding and experience management (23 percent) and marketing technology (22 percent).

These specific instances illustrate a larger resource challenge for CMOs, with the majority (58 percent) saying their teams lack the capabilities required to deliver their strategies.

“Marketing is experiencing a historic surge in talent demand in 2022,” McIntyre says. “Prioritizing the proper mix of resources should be a mission-critical priority for CMOs in order to attract and retain the capabilities they need to deliver against their CEO’s goals, such as focusing on brand and customers.”