Dive Brief:
- Marketing budgets are on the mend, reaching 9.5% of total company revenue this year versus the 6.4% recorded in 2021, according to the latest CMO spending and strategy survey from Gartner. The researcher presented the findings at its Gartner Marketing Symposium/Xpo this week.
- While marketing budgets are again ticking up, they remain off from pre-pandemic levels, when the average held at 10.9% of company revenue between 2018 and 2020. Current macroeconomic factors don’t appear to be causing much concern, however, as the majority of surveyed marketing chiefs said they believe inflationary pressures will result in a positive impact on strategy and investment.
- Online marketing channels still command the most investment from CMOs, making up 56% of spending, with social media advertising topping the list. Looser COVID-19 restrictions have also buoyed offline media, which now accounts for 44% of budgets. That’s a more equitable split compared to recent years and one that speaks to an altered landscape from earlier in the pandemic, when digital handily dominated.
Dive Insight:
The economy may be on shaky ground, but CMOs don’t seem too phased. Gartner’s latest batch of research indicates that marketing budgets have continued to recover at a steady clip after cratering earlier in the pandemic, when many businesses enacted spending freezes.
Still, volatility is persistent around the globe and the sustained pinch on consumers’ wallets may create additional headwinds heading into the year’s second half. CMO overconfidence is something of a recurrent theme in Gartner's annual survey.
“In the face of telling macroeconomic considerations, CMOs hold on to a belief that their own economic outlook is strong,” Ewan McIntyre, chief of research and vice president analyst in the Gartner for Marketing Leaders practice, said in a press statement. “Despite inflation, the Russian invasion of Ukraine, supply chain issues exacerbated by China’s lockdown measures and unprecedented talent competition, CMOs appear sanguine.”
Last year, the digital ad market experienced a rebound with the media taps turned back on. Growth for the sector came to outpace that of the general economy and reach new heights. In 2022, marketing activity remains healthy but is manifesting in more hybrid ways, including for offline media, according to Gartner.
The survey is the latest piece of industry analysis to suggest that the square focus on digital could be shifting as people get out more. E-commerce growth has slowed considerably for many companies after previously posting meteoric gains. Streaming services like Netflix, which once held the homebound at rapt attention, are now struggling with subscriber growth — though advertising is becoming a part of their expansion plans, a development that’s excited adland.
Breaking out the Gartner results by category, financial services have seen the strongest recovery, with marketing budgets now at 10.4% of company revenue versus 7.4% in 2021. Media and tech products both sit at 10.1%, while consumer products and travel and hospitality ranked comparatively low at 8% and 8.4%, respectively. CPG is among the segments contending with steep inflationary challenges.
Gartner polled 405 CMOs or equivalent leaders between February and March 2022 for its findings. The executives were located in North America and Europe and represented a variety of industries and company sizes, with the majority of respondents claiming their business generates more than $1 billion in annual revenue.
Marketers are putting on a sunny face given an overall challenging environment, but lack confidence in key areas. Over a quarter (26%) identified data and analytics as a capability gap, which could be a problem as cookies are set to be deprecated next year. Twenty-three percent reported troubles with customer understanding and experience management and 22% said the same for marketing technology, another area of increasing importance. The need to master these fields has led to a “historic” surge in talent demand, per Gartner’s McIntyre.
