An Updated Look At the State of Marketing Budgets

Image source: Gartner, Inc.

Last month, Gartner released its results CMO Spending Survey, 2021. The company hosted a webinar and published a report discussing the findings of this research.

The Gartner poll was conducted from March to May this year. The survey generated 400 responses from marketing decision makers and influencers based in North America, Europe and the United Kingdom. Respondents were with organizations operating in nine industry sectors, and 81% of them were with organizations that had annual revenues of $1 billion or more. Therefore, this survey primarily captured the perspectives and experiences of marketers in large organizations.

Gartner explicitly notes that the results of this survey are not representative of the market as a whole, but only reflect the sentiments of the surveyed respondents.

Marketing budgets fall

The “key” findings of Gartner’s research indicate a significant reduction in marketing budgets as a proportion of a company’s revenue. Gartner found that the average percentage of the company’s total revenue devoted to marketing in 2021 is 6.4%, down from an average of 11% in 2020.

The average percentage of revenue devoted to marketing in 2021 is about the same in both B2B and B2C businesses. The average percentage of B2B companies represented in the survey was 6.2%, while the median percentage of B2C companies was 6.6%.

Gartner’s research also revealed that marketing budgets (as a percentage of revenue) fell across all nine industries represented in the survey, although the effect varied widely. In manufacturing companies, the average percentage of total company revenue devoted to marketing fell from 12.7% in 2020 to 5.8% in 2021, down 6.9 percentage points. In contrast, the average percentage of consumer product firms decreased by only 2.5 percentage points.

Digital channels dominate

The Gartner survey found that pure digital marketing channels now control more than 70% of the total marketing budget of the average company represented in the survey. However, the survey also revealed that companies’ investment plans for both digital and offline channels differ greatly.

The following table shows the percentages of Respondents to a B2B survey who said they are increasing and decreasing their investment (2021 vs. 2020) in the marketing channels surveyed. These responses indicate that B2B survey respondents take diverse approaches to budget allocation decisions.

It is also worth noting that cost savings were not the primary driver of changes in channel priorities. Only 24% of survey respondents said they reprioritized channels in order to reduce costs.

In webinar materials, Gartner argued that “the era of digital versus offline budget is over.” The company noted that 24% of the budget traditionally spent on television is expected to shift from broadcast and cable television to video broadcasting this year.

Other important results

The Gartner survey produced several other interesting results. Here are some other key findings.

Spending on Martech – Marketing technology still accounts for the largest proportion of the marketing budget. In 2021, the average percentage of the total marketing budget allocated to your brand was 26.6%, up slightly from 2020 (26.2%). In addition, more than two-thirds of survey respondents (68%) said they expect to increase their financial budget in the next fiscal year.

Budget allocations for programs and areas of operation – Gartner also asked survey respondents how they allocate their budget across ten marketing programs and operational areas. The top four programs/operational areas (by average percentage of budget) were:

  • Digital Commerce (12.3%)
  • Marketing Operations (11.9%)
  • Brand strategy (11.3%)
  • Marketing Analytics (11.0%)

continue to live – In the 2021 survey, the average percentage of the total marketing budget allocated to outside agencies was 23.0%, down slightly from 23.7% in the 2020 edition of the survey. But this slight dip doesn’t tell the whole story. Participants in the 2021 survey reported that 26% of work previously outsourced to external agencies had been transferred internally over the previous 12 months.

My opinion

Gartner’s latest CMO spending survey provides several important insights for marketers, but I’m at a loss for survey results about the “fall” in marketing budgets. It’s hard to get real-time data on total marketing spend, but we have relatively current data on advertising spend. Most of that data indicates that advertising spending is showing a significant recovery compared to 2020. For example:

  • According to the US advertising market tracker Standard Media Index, the US advertising economy grew 35.2% in June, compared to June of 2020. This was the fourth consecutive month of double-digit growth compared to the same months last year. June’s numbers also represented a slight increase (0.03%). Compared to June of 2019.
  • Ad revenue for the first six months of 2021 at both Alphabet (Google’s parent company) and Facebook grew about 50% compared to the first six months of last year, according to corporate earnings reports.

Next version of CMO . Scan Directed by Dr. Kristen Moorman at Duke University’s Fuqua School of Business, due to be published later this month. This survey typically asks participants about their marketing budgets as a percentage of a company’s revenue and about changes to their marketing budget in the previous 12 months. It will be interesting to see if the results of this research align with those of the Gartner survey.

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