Gartner’s annual CMO Spend and Strategy Survey looks at marketing budgets, spending and strategic priorities to capture how CMOs are grappling with a range of geopolitical, social, cultural and fiscal realities. Following record lows in 2021, have marketing budgets recovered? And how are CMOs allocating their budgets as enterprises focus on growth amid uncertainty?
Marketing budgets are climbing back.
Survey results show that budgets have recovered somewhat, with the average marketing spend increasing from 6.4% to 9.5% of company revenue across almost all industries. While this is a significant uptick, budgets still lag behind prepandemic levels — between 2018 and 2020, they averaged 10.9% of company revenue.
Financial services, travel and hospitality, and tech product companies stand out, recording budget increases at 10.4%, 8.4% and 10.1% of company revenue, respectively. In contrast, spending for consumer goods CMOs decreased slightly from 8.3% in 2021 to 8.0% in 2022. Inflationary pressures, cost-of-living increases and lower consumer confidence are hitting consumer goods brands hard.
CMOs are optimistic despite signs of future disruptions
“In the face of telling macroeconomic considerations, CMOs hold on to a belief that their own economic outlook is strong,” says Ewan McIntyre, VP Analyst and Chief of Research at Gartner. “Despite inflation, the Russian invasion of Ukraine, supply chain issues exacerbated by China’s lockdown measures and unprecedented talent competition, CMOs appear sanguine.”
The majority of CMOs surveyed think inflationary pressures will have a positive impact on strategy and investment in the year ahead. However, in the past, marketing has been caught off guard by budgetary shocks. It’s imperative that 2022’s optimism turns into optimization. You must take time to plan for uncertainty by building scenario plans and looking at the potential downstream implications of upheaval.
Customer journeys are changing (again)
CMOs are shifting from digital-first to hybrid multichannel strategies. Although online channels take the largest share of 2022 marketing budgets — 56% to be exact — offline channels account for almost half of total available budgets (44%). This is a more equitable split than in recent years. In terms of digital spend, social advertising tops the list, closely followed by paid search and digital display. Social advertising is a logical choice for marketers in 2022, as it continues to offer highly targeted messages at scale.
“There has been a lot of discussion around COVID-19 shifting consumers to a digital-first mindset,” says McIntyre. “However, as Western Europe and North America relax pandemic protocols, customer journeys have recalibrated. CMOs need to listen carefully to their customers and pay attention to the channels they are using, as the current environment more closely resembles a hybrid reality than a state of digital channel domination.”
Marketing embraces “back to basics”
As buying journeys evolve, budget allocations across marketing spending priorities favor core marketing capabilities. When asked how the marketing budget is being spent on programs and operational areas, CMOs’ top three investments were:
– Campaign creation and management (10.1%)
– Brand strategy (9.7%)
– Marketing operations (9.6%)
This indicates a return to marketing’s core value proposition: to build awareness and engagement with compelling brand marketing and effective campaigns that connect with customers to deliver results. When asked about the issues that CEOs need their CMOs to focus on in 2022, CEOs echo the back-to-basics approach, citing acquisition, retention and engagement as top priorities in Gartner’s 2022 CEO and Senior Business Executive Survey.
Marketing lacks critical in-house capabilities
While CEO-CMO synergy is a win, CMOs are challenged with capability gaps.
1. 26% of CMOs consider marketing data and analytics as a top-three capability gap.
2. 23% of CMOs include customer understanding and experience management.
3. 22% of CMOs cite marketing technology.
These speak to a larger resource challenge, as 58% of CMOs report that their teams lack the capabilities needed to execute on their strategy. It’s mission critical to build and retain the capabilities to deliver against expected goals, yet little has changed year over year when it comes to budget allocations to labor, agencies, technology and media. CMOs know that they must make large-scale changes to marketing, reevaluating the role the function plays to achieve their long-term vision. It’s up to you to lean into your role as a change agent, reimagining and reappraising the components required to drive the marketing machine.
Released by Gartner
