Marketing budget drops to 6.4% of revenue in 2021 from 11% in 2020: Gartner

The last Gartner Report reported that the marketing budget prepared by CMOs fell to 6.4% of company revenue in 2021, from 11% in 2020.

The annual Gartner CMO Spend Survey surveyed 400 CMOs and marketers in North America, the UK, France and Germany from March 2021 to May 2021, tracking the critical areas marketers are investing in and where cuts are made in people, programs and technologies.

No industry hit double-digit budgets in 2021. Travel and hospitality, manufacturing, and tech companies saw the biggest cuts in 2021.

Consumer products and goods (CPG) companies reported the largest marketing budgets for 2021, at 8.3% of company revenue. Large companies were the hardest hit – companies with revenues over $2 billion reported the lowest average marketing budget of just 5.7%.

On the other hand, companies with revenue below $500 million reported the highest allocation to marketing with an average budget of 8.6% of revenue.
Gartner research shows that CMOs have shifted their spending commitments between their channels and their programs, with pure digital channels – owned, paid and earned – dominating these priorities and accounting for 72.2% of the total marketing budget.

Considering the greater allocation of resources – agencies, media, labor, and paid media – agency spending continues to decline.

CMOs report that 29% of work previously done by agencies has moved in-house in the last 12 months alone. The focus of insourcing is also changing – with branding, innovation and technology, and marketing strategy development being the three main areas of capabilities that CMOs pass on to internal teams. Meanwhile, marketing technology (martech) continues to dominate, taking up 26.6% of the total budget.

Digital commerce tops program spending

2020 and 2021 have seen drastic changes in customer buying journeys – both B2C and B2B, forcing even digital laggards to embrace the inevitable shift to online channels. Looking at budget allocation by programs and operational areas, CMOs report that digital commerce represents 12.3% of the total budget. Similarly, marketing operations and branding account for 11.9% and 11.3% of the total budget, respectively.

While marketing analytics accounts for 11% of the total budget, it has lost priority – now in fourth position in 2021.

“CMOs continue to invest in marketing data and analytics, but for many the results have not lived up to expectations,” said Ewan McIntyre, co-head of research and vice president. Gartner for Marketers practice analyst. “Given recent and upcoming regulations and changes in data collection, we expect this area of ​​investment to continue to be a strategically important capability, but also to continue to fluctuate until let the uncertainties disappear.”