In an era where marketing dynamics seem increasingly bewildering, the latest Gartner CMO study provides illuminating insights into the current landscape. The study, which surveyed 395 CMOs and marketing leaders across North America and Europe, highlights significant shifts in marketing budgets and priorities, reflecting the evolving challenges and opportunities faced by today’s marketers.
Declining Budgets and Shifting Priorities
Marketing budgets as a percentage of overall company revenue have fallen to 7.7% in 2024, down from 9.1% in 2023 and a stark contrast to the pre-pandemic average of 11%. This decline has raised concerns among brand owners and marketing practitioners who feel the squeeze on resources. Ewan McIntyre, VP Analyst and Chief of Research for Gartner Marketing Practice, described the current climate as an “era of less,” where marketers must navigate tighter budgets and heightened expectations.
Interestingly, the proportion of marketing budget allocated to technology has also seen a notable decline, reaching a ten-year low. Martech, which commanded over 29% of the marketing budget in 2018, now accounts for less than 24%. This reduction appears counterintuitive given the increasing emphasis on digital transformation and the migration of ad spend to digital and social channels.
The Challenge of Digital ROI
One of the underlying challenges driving these budget shifts is the lagging return on digital investments. According to Gartner’s Jay Wilson, the disappointing returns on digital investments have become a significant drag on marketing budgets. Brand owners are not realising the expected benefits from their tech stacks and digital partnerships, leading to a reallocation of funds.
Furthermore, consumer trust and satisfaction with digital services have been on the decline, with engagement rates languishing in fractions of a percent. This has prompted some industry observers to question the efficacy of continued digital investment without a corresponding improvement in customer experience.
The Rise of Experience-Centric Approaches
Despite these challenges, there is a silver lining. The focus is gradually shifting from mere digital transformation to enhancing the overall customer experience. Major agencies and new entrants in the market are pivoting towards an experience-centric approach. For instance, WPP’s creation of VML, the world’s largest agency centred around an experience proposition, and Ari Weiss’s Quality Experience agency underscore this trend.
The recent BrXnd.ai conference also showcased how generative AI is being leveraged to enhance customer interactions and experiences. With AI reducing the cost of content creation and interaction, the emphasis is now on creating value for customers rather than merely digitising processes.
Paid Media and AI: The New Frontiers
Despite cuts in martech, labour, and agency fees, CMOs are protecting their paid media investments, which grew to 27.9% of budgets in 2024. Digital channels dominate this spend, with search, social advertising, and digital display advertising taking significant shares. Offline channels like event marketing, sponsorship, and TV also remain important.
In this context, AI emerges as a crucial tool for CMOs striving to “do more with less.” According to McIntyre, AI’s ability to enhance productivity and deliver time and cost efficiencies is helping marketers navigate budget constraints. Over one-third of CMOs identified these efficiencies as top benefits when considering the ROI of AI investments.
Conclusion
Gartner’s latest CMO study paints a picture of a marketing landscape in flux. Budget cuts and shifting priorities reflect broader challenges in achieving digital ROI and the need to refocus on customer experience. However, with strategic investments in paid media and AI, CMOs have the tools to drive growth and innovation in these constrained times. As the industry continues to adapt, the question remains: how can marketers best leverage these insights to create more meaningful and impactful customer experiences?
