Is marketing getting short shrift in company budgeting?

by | Oct 8, 2019 | Marketing, Public Relations

Marketing budgets have shifted downwards, dropping from 11.2 percent of overall company revenue in 2018 to 10.5 percent in 2019, according to a survey of chief marketing officers by Gartner. Findings from the firm’s new CMO Spend Survey 2019-2020 report reveal this is the first time since 2014 that marketing budgets have dropped below 11 percent.

“In the face of perplexing external and internal environmental signals, CMOs remain confident about economic and budgetary outlooks, with almost two-thirds (61 percent) of CMOs expecting their budgets to rebound in 2020,” said Ewan McIntyre, vice president analyst in Gartner’s Marketing practice, in a news release.

“However, that same percentage of marketing executives believed their budgets would increase in 2019, indicating their optimism is misplaced. While we’re not yet witnessing a precipitous drop in budgets, this year’s downtick presents a counterintuitive scenario. You could call this confidence in the face of adversity. Or you could call it hubris,” McIntyre said.

The report looks at how much companies spend on marketing, how those budgets are built, how they will change in 2020 and why. Key findings from the report include:

Martech investments dropped, but agency spend remains steady

Gartner’s 2019 Marketing Organizational Survey reported that 63 percent of marketers have moved some aspects of their delivery from third-party agencies to in-house teams. However, while there may have been a shift in volume of output, it has not eroded the significant value CMOs still place in external service providers. In fact, spending on marketing agencies still accounts for nearly a quarter (22 percent) of total marketing budgets.

“While in-housing may be à la mode, agencies still offer an unparalleled breadth of scope, economies of scale and an ability to offer much-needed, external strategic input,” added Mr. McIntyre.

Meanwhile, marketing technology (martech) investments dropped 3 percentage points year over year, falling to 26 percent of marketing budgets in 2019. While martech still commands a major slice of the marketing budget, it has proved to be a more volatile investment area.

Furthermore, established technologies such as personalization engines and account-based marketing (ABM) have fallen into the Trough of Disillusionment in Gartner’s Hype Cycle for Digital Marketing and Advertising 2019. Of note, Gartner’s 2019 Marketing Organization Survey reveals that 24 percent of marketers believe martech strategy, adoption and use is one of their top three weaknesses in their company’s ability to drive customer acquisition or loyalty. More than 25 percent of marketers blame those martech strategy weaknesses on insufficient budget, resources or capabilities.

Paid media spend increases, doubling down on digital channels

Marketing spend on paid media has increased from 23 percent in 2018 to 26 percent in 2019, with digital channels taking up the lion share at 16 percent of overall marketing budgets. Confidence in digital ads remains strong, with 78 percent of CMOs expecting to increase investments in 2020. “As organic reach on social platforms plummets to zero, and confidence in influencer marketing is challenged, paid media presents more pros than cons for CMOs,” said McIntyre.

However, digital ads are not the only areas experiencing continued support. Across paid, owned and earned channels, CMOs are still investing in a range of channels. Offline advertising and TV spend remain strong, both commanding a share of 7 percent each of total marketing budgets.

Analytics remain the most strategically important capabilities

CMOs have staked their claim in competitive insights and analytics, reporting these areas as the two most important capabilities supporting the delivery of their marketing strategies over the next 18 months. Marketing analytics is the single largest area of investment, making up 16 percent of the budget allocated to marketing programs and operational areas.

Despite all these investments, marketing maturity levels are still lacking, according to Gartner’s Marketing Maturity Assessment 2018. This presents a significant risk to ongoing investment prospects. Strong investment in data and analytics raises expectations of the experimentation and learning that is being undertaken to transform marketing experiences. “Failure to deliver against inflated expectations in data and analytics may come at the expense of future funding commitments,” added McIntyre.

Gartner clients can download the full report here.

The survey, conducted with more than 340 marketing executives in North America and the U.K., tracks the critical areas marketers are investing in from people, programs and technologies.

Richard Carufel
Richard Carufel is editor of Bulldog Reporter and the Daily ’Dog, one of the web’s leading sources of PR and marketing communications news and opinions. He has been reporting on the PR and communications industry for over 17 years, and has interviewed hundreds of journalists and PR industry leaders. Reach him at richard.carufel@bulldogreporter.com; @BulldogReporter


Brand reputation management strategy: A complete guide with examples

Brand reputation management strategy: A complete guide with examples

Ninety five percent of customers trust well-regarded companies, showing how powerful a brand reputation management strategy is.  In this article, we will teach you a tested way to create a strategy to mold a positive brand image. We will also share effective tactics...