A survey by Gartner has confirmed what many suspect about company marketing budgets -- they are shrinking.
Marketing budgets dropped to 10.5% of overall company revenue in 2019 from 11.2% last year, according to a survey of chief marketing officers (CMOs).
Gartner’s CMO Spend Survey 2019-2020 report shows this is the first time since 2014 that marketing budgets have dropped below 11%. The survey is specific to North America and the UK.
However, CMOs remain confident about economic and budgetary outlooks, with almost two-thirds (61%) expecting their budgets to rebound in 2020, according to Ewan McIntyre, vice president analyst in Gartner’s Marketing practice.
“While we’re not yet witnessing a precipitous drop in budgets, this year’s downtick presents a counterintuitive scenario," says McIntyre.
"You could call this confidence in the face of adversity. Or you could call it hubris."
The CMO Spend Survey tracks the critical areas marketers are investing, including people, programs and technologies.
The report looks at how much companies spend on marketing, how those budgets are built, how they will change in 2020 and why.
Analysis by Gartner shows 63% of marketers have moved some aspects of their delivery from third-party agencies to in-house teams.
However, this has not eroded the significant value CMOs still place in external service providers, says McIntyre.
Spending on marketing agencies still accounts for nearly a quarter (22%) of 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,” says McIntyre.
Marketing technology investments dropped three percentage points to 26% of marketing budgets in 2019.
While martech still commands a major slice of the budget, it is a more volatile investment area.
Marketing spend on paid media increased to 26% in 2019 from 23% last year with digital channels taking up the lion share at 16% of marketing budgets.
Confidence in digital ads is strong, with 78% 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,” says 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 each have a 7% share of total marketing budgets.
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% of the budget allocated to marketing programs and operational areas.
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