Dive Brief:
- Seventy-one percent of CMOs believe they lack the budget needed to properly executive their marketing strategy, according to Gartner’s 2023 CMO Spend and Strategy Survey shared with Marketing Dive.
- Marketing budgets comprise 9.1% of total company revenue this year, falling slightly from 9.5% in 2022. Paid media takes the lion’s share of budgets (25.6%) followed by marketing technology (25.4%) labor (24.6%) and agencies (23.2%).
- Marketing technology saw the largest increase in investment from 2022 (63%), while labor saw the most significant decrease in investment (35%). Such findings arrive as the ad industry continues to struggle with layoffs and rising costs.
Dive Insight:
As economic headwinds persist, chief marketers are feeling the impact, left to balance lofty brand ambitions with narrowing budgets. According to Gartner, 75% of CMOs feel heightened pressure to “do more with less” to drive profitable growth this year, however, 86% report that they must enact major changes to achieve sustainable growth.
“Suppressed budgets, increasing costs and lower productivity are squeezing CMOs’ spending power,” Ewan McIntyre, chief of research and vice president, analyst in the Gartner Marketing practice, said in the press release. “As volatility becomes the new normal, many CMOs are pricing disruption into their 2023 plans.”
More specifically, 22% of respondents expect threats of a recession to negatively impact marketing investment, per the report. Similarly, the top reported reason for shifted marketing strategy is the increase of costs (63%), followed by reductions in marketing budgets (49%) and reprioritized investment areas due to shifted business priorities (48%).
Among sectors CMOs are betting on, marketing technology gained the highest reported investment increase, a shift likely influenced by the explosive rise of generative artificial intelligence (AI). At the same time, however, 75% of marketers also report feeling pressured to cut martech as utilization rates, which have fallen from 58% in 2020 to 42% in 2022, continue to slow. Boosted spending for martech — while labor simultaneously faces the largest pullback in investment — could present challenges down the line.
“The willingness to let the majority of their martech stack sit idle signifies a fundamental resource disconnect for CMOs,” McIntyre said. “It’s difficult to imagine them leaving the same millions of dollars on the table for agencies or in-house resources. This trade-off of technology over people will not help marketing leaders accelerate out of the challenges a recession will bring.”
Though martech is making gains, paid media occupies the largest share of total marketing budgets. Within the sector, social advertising is the top digital channel receiving increased investment this year, followed by digital video advertising and influencer marketing. On the flip side, search advertising was identified as the top category receiving decreased investments, a finding that could pose additional challenges to Google’s already struggling business.
Gartner’s annual CMO spend report surveyed 410 CMOs and marketers, with the majority of those surveyed reporting annual revenue of over $1 billion.
