According to a recent Gartner survey involving 395 CMOs and marketing leaders, average marketing budgets have decreased to 7.7% of overall company revenue in 2024, a decline from 9.1% in 2023. These findings were revealed during the Gartner Marketing Symposium/Xpo held in London.
Survey Insights:
The Gartner 2024 CMO Spend Survey, conducted between February and March 2024, gathered responses from CMOs and marketing leaders across North America and Northern and Western Europe. Participants represented ten industries, various company sizes, and revenue levels, with most reporting a median annual revenue exceeding $5.3 billion.
Ewan McIntyre, VP analyst and chief of research for the Gartner Marketing Practice, commented on the trend, stating, “CMOs are navigating an ‘era of less’. Preceding the pandemic, marketing budgets averaged 11% of overall revenue, but in the four years since, they’ve plummeted to a mere 8.2%.”
Despite financial constraints, many CMOs hold a positive outlook on the potential of artificial intelligence (AI) to enhance marketing efforts. Although 64% of CMOs report insufficient budgets to execute their 2024 strategies, they believe generative AI (GenAI) could amplify the marketing function’s impact despite these limitations.
Marketing Budget Allocation:
CMOs Adjust Expenditures on Technology, Labor, and Agencies, but Maintain Paid Media Investments
While investments in paid media increased to 27.9% of the budget in 2024, spending on martech, labor, and agencies decreased. Technology investments, in particular, have reached their lowest level in a decade.
McIntyre noted, “We’re observing significant shifts in investment strategies reflecting tighter budgets and heightened growth aspirations. The reduction in martech spending doesn’t imply a diminished interest in technology; rather, it indicates that CMOs have less influence over martech decisions as other enterprise leaders, such as those in IT, assume more control. Conversely, CMOs are prioritizing media spend to drive revenue growth.”
Digital channels are claiming a larger share of paid media spend, rising to 57.1% of budgets in 2024 from 54.9% in 2023. Key digital channels include search (13.6%), social advertising (12.2%), and digital display advertising (10.7%). Among offline channels, event marketing (17.1%), sponsorship (16.4%), and TV (16%) continue to attract substantial investments.
McIntyre added, “In challenging times, CMOs are focusing on investments with clear, measurable impacts. However, there’s a disconnect between the channels CMOs are investing in and their perceived effectiveness. For instance, digital video/streaming is regarded as the most impactful digital channel, yet it ranks fourth in terms of spend.”
Conclusion
The downward trend in marketing budgets underscores the need for CMOs to adapt and innovate within constrained financial environments. Leveraging AI and carefully prioritizing media spend are pivotal strategies for achieving growth and demonstrating marketing’s value in 2024 and beyond.
