Marketing budgets fell below 11% of company revenue this year for the first time in five years, according to Gartner’s latest annual “CMO Spend Survey” [registration required].
In spite of the drop — from 11.2% to 10.5% this year, 61% of CMOs expect their budgets to rebound next year. But the bad news is that the same percentage of CMOs in 2018 thought that their budgets would increase this year.
“While we’re not yet witnessing a precipitous drop in budgets,” Vice President and report co-author, Ewan McIntyre said in a statement, “this year’s downtick presents a counterintuitive scenario.”
“You could call this confidence in the face of adversity,” he added. “Or you could call it hubris.”
As part of that drop in total marketing budgets, investments in marketing technology dropped three percent year-on-year to 26% of budgets in 2019. Paid media spending actually increased from three percent to 26% this year.
Digital paid media was the largest portion of media spending, consisting of 16% of marketing budgets, with analytics also accounted for 16%. Seventy-eight percent of CMOs said they expected to increase spending on digital ads next year, in part driven by the falling effectiveness of organic reach on social platforms.
A separate Gartner study, its 2019 “Marketing Organizational Survey,” found that nearly two-thirds of marketers have in-housed some aspects of their marketing delivery from third-party agencies, although agency spending this year remained steady at 22%.
The rise and then fall of marketing budgets have been fairly steady over the last six years, with a peak in 2016.
McIntyre told ClickZ that, while there is no single reason for this arc, there are several factors in the mix.
Faced with tangible returns from increased spending in such areas as IT or research and development, he said, many CEOs are demanding greater accountability for returns from marketing budgets. But, at the same time, marketers have become increasingly responsible for enterprise-wide investments whose ROI is often hard to calculate, including user experience or, to some extent, digital transformation.
One surprise in the surveys, McIntyre said, is that while many brands are bringing in-house many of the services they previously farmed out, such as ad placements, the level for agency spending is remaining steady. The reason, he added, appears to be that brands are looking to third-parties for new kinds of tasks, such as strategic services or large analytics projects.
The survey queried 340 marketing executives in North America and the UK.
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