Gartner: Overall marketing budgets shrink even as digital spending rises

Dive Brief:

A recent survey from Gartner found a three-year upward trend in the size of marketing budgets ended in 2017, with budgets claiming 11.3% of company revenue in 2017, down from 12.1% last year and the same as 2015 spending levels, per findings made available in a press release.
The news isn't all bad, with 67% of CMOs planning to increase investment in digital advertising, including 61% planning increased spending for websites, 59% for mobile and 64% for social media. That increase contrasts with more than half of CMOs expecting event marketing and partner/channel marketing investments to fall or remain flat, and 63% planning the same for offline advertising spending.
Another area feeling the marketing budget squeeze in 2017 is marketing technology with a 15% drop off in spending this year, although martech still accounts for 22% of the total marketing expense budget. In 2016, 27% of marketing budgets were allocated to martech spending.

Dive Insight:

The marketing budget cuts this year may have caught some CMOs by surprise, as just 14% of respondents to a similar survey from Gartner last year expected cuts in 2017. The cuts in marketing budgets are not across the board so far, with retail and manufacturing the hardest hit in 2017. It's been a particularly tough year for retail with numerous store closures and bankruptcies occurring as brick-and-mortar retailers adjust to the growth in online buying.

The findings suggest marketers lost their focus on how marketing delivers ROI and profitability in 2017 amid a macro-environment marked by significant upheaval in both global politics and natural disasters, according to the research firm.

"The risk is that CMOs are either being too nearsighted to be strategic or too visionary to deliver against marketing's objectives," Ewan McIntyre, research director at Gartner, said in a statement.

In a more fiscally restrained environment, CMOs need to prove they can assume accountability for business performance, build budgets based on future returns rather than assumptions and grow the business, McIntyre added. The pressure on CMOs to drive financial performance is evident in other recent news, such as Forrester's prediction that chief growth officers could quickly replace them in the boardroom.

The need for analytics and measurability is one reason digital channels are getting the lion's share of marketing budgets. Looking toward 2018, 15% of CMOs predict a significant increase in budgets, 52% see a slight increase and 33% expect budgets to be cut or frozen.