• July 26, 2021
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Marketing Budgets Have Plummeted in 2021, Gartner Finds

Marketing budgets have fallen to their lowest level in recent history, dropping to just 6.4 percent of company revenue in 2021, down from 11 percent in 2020, Gartner reported after completing its annual CMO Spend Survey.

Marketing budgets hit their peak in 2016 at 12.1 percent of total revenue. The previous low was in 2014, when marketing made up 10.2 percent of revenue.

"Despite facing in-year budget cuts in 2020 due to the pandemic, most CMOs expected budgets to bounce back in 2021. This budgetary optimism was misplaced, as marketing budgets have fallen to their lowest level in the history of Gartner's CMO Spend Survey," said Ewan McIntyre, co-chief of research and vice president analyst in the Gartner for Marketers practice. "However, these cuts have been a slow burn over the course of the last year, where many marketing budgets have not recovered what was originally lost."

The 2021 Gartner CMO Spend Survey revealed that no one has escaped cuts in marketing budgets. In fact, no industry achieved a double-digit budget in 2021. Consumer packaged goods companies reported the strongest 2021 marketing budgets at 8.3 percent of company revenue, while technology reported the lowest at 5 percent.

Large enterprises got hit the hardest: Companies with revenue of more than $2 billion reported the lowest average marketing budget of just 5.7 percent. Companies with less than $500 million in revenue reported the highest allocation to marketing, at 8.6 percent.

Gartner research also found shifting spending commitments with pure-play digital channels accounting for 72.2 percent of total marketing budgets.

Agency spend also continues to decline, down only slightly from 23.7 percent in 2020 to 23 percent in 2021, but McIntyre sees this change as a sign that companies are moving activity in house, "as CMOs reimagine the capabilities that can be supported by their internal teams."

Twenty-nine percent of work previously done by agencies has moved in house in just the last 12-months alone.

The focus of in-housing is changing as well, with brand strategy, innovation and technology, and marketing strategy development making up the top three capabilities CMOs are moving to internal teams. Meanwhile, marketing technology continues to dominate, taking up 26.6 percent of the total budget.

2020 and 2021 have seen drastic changes to customer buying journeys –forcing even digital late-comers to accept the inevitable shift to online channels. Digital commerce makes up 12.3 percent of their budgets. Marketing operations and brand strategy make up 11.9 percent and 11.3 percent respectively.

However, while marketing analytics still commands 11 percent of the total budget, it has continuously dropped in prioritization—now in the fourth position in 2021. "CMOs continue to invest in marketing data and analytics, however, for many, the results have failed to live-up to expectations," McIntyre explained. "Given recent and upcoming regulations and changes in data collection, we expect this investment area to continue to be a strategically important capability, but also to continue to fluctuate until uncertainties subside."

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