Dive Brief:
- Chief marketing officer spending power is slipping, with marketing budgets making up 7.7% of total company revenue this year versus 9.1% in 2023, according to new research from Gartner. Those figures are below pre-pandemic averages of 11%.
- Investments from CMOs in marketing technology, labor and agencies are on a downward trajectory, while paid media is up, accounting for 27.9% of 2024 budgets. Digital makes up the lion’s share of paid media spending at 57.1%.
- As CMOs contend with fewer resources and more pressing growth mandates, artificial intelligence (AI) has emerged as a promising tool. Time and cost efficiency gains were among the top benefits cited by one-third of marketers when assessing generative AI’s return on investment.
Dive Insight:
The ad market is on the rebound so far this year, with major events like the Summer Olympics expected to add further momentum in the months ahead. A renewed sense of optimism is not reflected in CMO budgets, however, which continue to be winnowed down and today sit well below the averages recorded in the four years preceding the pandemic.
Marketing budget allocations in relation to company revenue hit a nadir in 2021 at 6.4% before climbing back up to 9.5% in 2022, but it’s been a downward slide since then. Almost two-thirds (64%) of marketing leaders surveyed by Gartner stated they lack the resources to properly execute their 2024 strategies. The researcher surveyed nearly 400 CMO’s or equivalent roles between February and March, with the vast majority of respondents from organizations reporting median annual revenue of over $5.3 billion.
“CMOs are living in an ‘era of less’,” said Ewan McIntyre, vice president analyst and chief of research for Gartner’s Marketing Practice, in a statement attached to the research. “In the four years preceding the pandemic, average marketing budgets were 11% of overall revenue. In the four years since, they’ve dropped to an anemic 8.2%.”
Many CMO’s are pinning their hopes on generative AI to save the day and enhance productivity, according to McIntyre. But the technology is still in its early stages of development and subject to a growing number of legal and ethical challenges that could cool some of the stratospheric hype that’s gathered since the introduction of ChatGPT in November 2022.
As marketers try to stretch their dollars further, their focus has shifted to paid media, which has shot up in priority to command 27.9% of 2024 budgets. Digital stands as the biggest paid media allotment, representing 57.1% of budgets. Channels like search (13.6%), social (12.2%) and digital display (10.7%) are receiving some of the largest investment in that area. CMOs cite video and streaming as the most impactful digital channel, but it ranks fourth in regards to spending.
Meanwhile, CMOs have seen their stewardship of marketing technology diminish, with the category accounting for 23.8% of budgets this year, the lowest level recorded in a decade.
“The drop in martech investment doesn’t signal a dulled appetite for technology, rather it reflects CMOs’ diminishing influence over martech as other enterprise leaders, such as IT, take more control,” McIntyre said.
