CMOs Believe They Lack Sufficient Budget to Fully Execute Their Strategies

Seventy-one percent of chief marketing officers said they lack the budget to fully execute their strategies in 2023, according to Gartner's 2023 CMO Spend and Strategy Survey, the results of which were presented yesterday at the opening keynote of the Gartner Marketing Symposium in Denver. 

The survey revealed that marketing budgets compose 9.1 percent of total company revenue in 2023, remaining relatively flat but still dipping slightly from the 9.5% reported in 2022.

"Suppressed budgets, increasing costs, and lower productivity are squeezing CMOs' spending power," said Ewan McIntyre, chief of research and vice president analyst in the Gartner Marketing practice. "As volatility becomes the new normal, many CMOs are pricing disruption into their 2023 plans."

The survey also found that 75 percent of CMOs are facing increased pressure to do more with less to deliver profitable growth in 2023. Because of this, 86 percent of marketers said they must make significant changes to the marketing function to achieve sustainable results.

"In 2023, CMOs need to become a new type of enterprise leader. This goes beyond serving at the helm of the brand but also assuming a more business-focused role that pivots into a period of investing for profitability vs. growth. Those that carry on status-quo will face significant challenges in the near-term," McIntyre said.

The Gartner survey also found that CMOs have seen technology investments tumble into new lows of unproductivity, with utilization rates falling from 58 percent in 2020 to 42 percent in 2022. For this reason, 75 percent of marketers report being under pressure to cut martech spend this year to deliver better ROI, the research firm said. It added that the highest reported investment increase across all major marketing resources by CMOs this year goes toward marketing technology, while the largest decrease to labor.

"Like gamblers looking to write-off their losses with the next bet, CMOs are attracted to the allure of newer technologies, no doubt amplified by the chatter around generative AI," McIntyre said. "They are hungry to see its potential to transform marketing campaigns and content creation. While this hunger to invest is understandable, it illustrates the sunk-cost fallacy that more tech is always better.

“The willingness to let the majority of their martech stack sit idle signifies a fundamental resource disconnect for CMOs. It's difficult to imagine them leaving the same millions of dollars on the table for agencies or in-house resources. This trade-off of technology over people will not help marketing leaders accelerate out of the challenges a recession will bring,” he said further.

In Gartner's research, paid media leads in budget allocation across major marketing resources (25.6 percent of overall 2023 budget), followed by marketing technology (25.4 percent), labor (24.6 percent) and agencies (23.3 percent). Social advertising, which currently takes up the most paid media budget, was identified as the top digital channel to receive increased investment this year, followed by digital video advertising and influencer marketing. Search advertising was identified by the most respondents to receive decreased investment in 2023.

Change in Investments for Digital Channels in 2023 (Percentage of Respondents)

Growth, yield, and return must be foremost in CMOs' minds as they go beyond standard prioritization, McIntyre concluded, urging CMOs to double-down on scenario planning and balance efficient near-term execution with investments that enable them to build future-forward capabilities.

Domenic Colasante, CEO of 2X, a provider of cloud-based B2B marketing technology, sees a larger transformation in the marketing space, noting that the Gartner findings "have recently created a burning platform for marketing leaders to think bigger about transforming the marketing organization and the operating model."

"Organizational restructuring and layoffs alone do not fully solve the tech utilization problem. There is also a skills shortage of certified talent in the marketplace capable of fully utilizing marketing technology," he says.

The solution, he says further, is considering outsourced and offshore models.

"These models allow a marketer to significantly pull down the cost of labor with offshore economics, while gaining access to a global talent pool of certified marketing technologists that are being created, certified, and managed by marketing-as-a-service firms," Colasante continues. "The result can be an increase in marketing tech talent and headcount, as well as a higher capacity for marketing, while also driving a meaningful reduction in total marketing expenses. This crisis should be used as an opportunity to transform!”