Gartner CMO Spend Survey 2019-2020 Reveals a Reversal in Marketing Budget Growth, Yet CMOs Remain Optimistic Their Fiscal Health Will Bounce Back
Marketing budgets have shifted downwards, dropping from 11.2% of overall company revenue in 2018 to 10.5% in 2019, according to a survey of chief marketing officers (CMOs) by Gartner, Inc. Findings from Gartner’s CMO Spend Survey 2019-2020 report reveal this is the first time since 2014 that marketing budgets have dropped below 11%.
“In the face of perplexing external and internal environmental signals, CMOs remain confident about economic and budgetary outlooks, with almost two-thirds (61%) of CMOs expecting their budgets to rebound in 2020,” said Ewan McIntyre, vice president analyst in Gartner’s Marketing practice.
“However, that same percentage of marketing executives believed their budgets would increase in 2019, indicating their optimism is misplaced. While we’re not yet witnessing a precipitous drop in budgets, this year’s downtick presents a counterintuitive scenario. You could call this confidence in the face of adversity. Or you could call it hubris,” Mr. McIntyre said.
The CMO Spend Survey 2019-2020, conducted with more than 340 marketing executives in North America and the U.K., tracks the critical areas marketers are investing in from people, programs and technologies. The report looks at how much companies spend on marketing, how those budgets are built, how they will change in 2020 and why. Key findings from the CMO Spend Survey 2019-2020 include:
Martech Investments Dropped, But Agency Spend Remains Steady
Gartner’s 2019 Marketing Organizational Survey reported that 63% of marketers have moved some aspects of their delivery from third-party agencies to in-house teams. However, while there may have been a shift in volume of output, it has not eroded the significant value CMOs still place in external service providers. In fact, spending on marketing agencies still accounts for nearly a quarter (22%) of total marketing budgets.
“While in-housing may be à la mode, agencies still offer an unparalleled breadth of scope, economies of scale and an ability to offer much-needed, external strategic input,” added Mr. McIntyre.
Meanwhile, marketing technology (martech) investments dropped 3 percentage points year over year, falling to 26% of marketing budgets in 2019. While martech still commands a major slice of the marketing budget, it has proved to be a more volatile investment area.
Furthermore, established technologies such as personalization engines and account-based marketing (ABM) have fallen into the Trough of Disillusionment in Gartner’s Hype Cycle for Digital Marketing and Advertising 2019. Of note, Gartner’s 2019 Marketing Organization Survey reveals that 24% of marketers believe martech strategy, adoption and use is one of their top three weaknesses in their company’s ability to drive customer acquisition or loyalty. More than 25% of marketers blame those martech strategy weaknesses on insufficient budget, resources or capabilities.
Paid Media Spend Increases, Doubling Down on Digital Channels
Marketing spend on paid media has increased from 23% in 2018 to 26% in 2019, with digital channels taking up the lion share at 16% of overall marketing budgets. Confidence in digital ads remains strong, with 78% of CMOs expecting to increase investments in 2020. “As organic reach on social platforms plummets to zero, and confidence in influencer marketing is challenged, paid media presents more pros than cons for CMOs,” said Mr. McIntyre.
However, digital ads are not the only areas experiencing continued support. Across paid, owned and earned channels, CMOs are still investing in a range of channels. Offline advertising and TV spend remain strong, both commanding a share of 7% each of total marketing budgets.
Analytics Remain the Most Strategically Important Capabilities
CMOs have staked their claim in competitive insights and analytics, reporting these areas as the two most important capabilities supporting the delivery of their marketing strategies over the next 18 months. Marketing analytics is the single largest area of investment, making up 16% of the budget allocated to marketing programs and operational areas.
Despite all these investments, marketing maturity levels are still lacking, according to Gartner’s Marketing Maturity Assessment 2018. This presents a significant risk to ongoing investment prospects. Strong investment in data and analytics raises expectations of the experimentation and learning that is being undertaken to transform marketing experiences. “Failure to deliver against inflated expectations in data and analytics may come at the expense of future funding commitments,” added Mr. McIntyre.
Additional details from this year’s CMO Spend Survey and insights on marketing teams’ top investment priorities are available to Gartner for Marketers clients in the report “CMO Spend Survey 2019-2020: CMOs Double Down on Digital Channels and Analytics, but Fail to Plan for Tough Times Ahead.”