• June 25, 2024

Marketing Budgets Fall 15 Percent

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Marketing budgets today have fallen by 15 percent, representing just 7.7 percent of overall company revenue, down from 9.1 percent in 2023, Gartner says in its annual CMO Spend Survey.

“[Chief marketing officers] are living in an ‘era of less,’” says Ewan McIntyre, vice president, analyst, and chief of research for the Gartner Marketing Practice. “In the four years preceding the pandemic, average marketing budgets were 11 percent of overall revenue. In the four years since, they’ve dropped to an anemic 8.2 percent.”

“Despite financial challenges, the majority of CMOs believe AI may save the day,” McIntyre says. “Sixty-four percent of CMOs say they lack the budget to execute their 2024 strategy, but [generative artificial intelligence] offers the opportunity to grow the marketing function’s impact far beyond its budgetary constraints.”

While paid media investments grew to 27.9 percent of budgets in 2024, spending fell across martech, labor, and agencies. Technology investments continue their downward trend, reaching the lowest level for a decade (see below).

“We’ve seen a major shift in investment strategies, reflecting tightened budgets and higher growth aspirations,” McIntyre adds. “The drop in martech investment doesn’t signal a dulled appetite for technology; rather it reflects CMOs’ diminishing influence over martech as other enterprise leaders, such as IT, take more control. Meanwhile, CMOs are clearly prioritizing media spend as they seek to drive revenue growth.”

Digital dominates a growing share of paid media spend, taking 57.1 percent of budgets in 2024, up from 54.9 percent in 2023. Top channels include search (13.6 percent), social advertising (12.2 percent) and digital display advertising (10.7 percent). Among offline channels, event marketing (17.1 percent), sponsorship (16.4 percent), and TV (16 percent) were the top channels for investment.

“In these tough times, CMOs are prioritizing investments that have demonstrable impact,” McIntyre states. “However, there’s a mismatch between the channels CMOs are investing in and their perceived impact. For example, CMOs ranked digital video/streaming as the most impactful digital channel, despite it only coming in fourth when it comes to spend.”

At the same time, as CMOs chase revenue growth despite budget cuts, artificial intelligence has emerged as an important tool. “Reduced budgets are only a problem if marketing leaders are working with the same tools as before. That’s not the case now that CMOs have AI,” McIntyre says. “GenAI is delivering enhanced productivity despite constrained resources.”

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