July 21, 2021
Gartner’s new report on CMO spending is enough to make even the hardiest of marketers wince. Most CMOs expected budgets to rebound from last year’s pandemic wasteland, but Gartner says marketing budgets have continued to slide this year.
“This budgetary optimism was misplaced, as marketing budgets have fallen to their lowest level in the history of Gartner’s CMO Spend Survey,” says 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.”
Specifically, Gartner says marketing budgets dropped to 6.4% of company revenue this year, from 11% in 2020. Travel and hospitality, manufacturing and tech companies received the worst of it. Large companies were hit hard, too. No one escaped swinging cuts, Gartner says.
Not good news, especially as CMOs come under pressure to grow revenue. In the report Rising Above the Fray, The CMO Council found that nine out of 10 marketing leaders are expected to grow revenue this year. On average, marketers are now responsible for 44% of revenue. A whopping 95% of CMOs say a lack of resources resulted in missed revenue opportunities.
To be fair, Gartner’s findings contrast those of The CMO Council. In the report Getting It Done in 2021, The CMO Council found that almost two-thirds of marketing leaders are planning to increase marketing spend this year. Seven out of 10 plan to grow their MarTech investments, primarily in areas such as analytics, insights and intelligence.
Both The CMO Council and Gartner agree that data and analytics should be a priority, although Gartner isn’t so sure such investments will pay off.
“CMOs continue to invest in marketing data and analytics, however, for many, the results have failed to live up to expectations,” McIntyre says. “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.”
If CMOs are investing in data and analytics, as well as digital commerce, then where are they cutting spend?
Gartner says CMOs have shifted spending commitments across their channels and programs and that agency spend, in particular, continues to decline. Nearly 30% of work done by outside agencies has been brought in-house, as “CMOs reimagine the capabilities that can be supported by their internal teams,” McIntyre says.
Of course, there’s risk in doing so. In an interview with Forbes, McIntyre says that the loss of outside-agency perspectives may lead to “fast-tracking group think,” which can lead to unintended long-term consequences.
Another casualty of budget cuts: marketing innovation.
Sounds crazy, right? McIntyre told Forbes that the majority of respondents in the Gartner study pointed to innovation investments in planning, processes and technology rather than data, content and new channels. This means funding may be skewed toward the perception of innovation and not actual innovation.
Whether or not you believe marketing budgets are shrinking, there’s no question that CMOs face a scarcity of resources and skills necessary to meet their mandate.
It’s not just revenue growth, either. Marketing also tackles brand-building, digital experience, personalized content and more. In the report C-Suite Scorecard, for instance, The CMO Council found that more than 60% of business leaders consider the essential role of the CMO as “customer experience advocate and champion.”
Bottom line: CMOs lack the budget to support all of marketing’s great expectations.
Tom Kaneshige is the Chief Content Officer at the CMO Council. He creates all forms of digital thought leadership content that helps growth and revenue officers, line of business leaders, and chief marketers succeed in their rapidly evolving roles. You can reach him at firstname.lastname@example.org.
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