Marketing budgets as a share of revenue fall to post-covid low
New Gartner survey of CMOs and other marketing leaders finds average budgets have declined in the years following the pandemic as marketers are tasked with doing more with less.
Marketer budgets have fallen to 7.7% of overall company revenue in 2024, down from an average of 11% over the four years preceding the pandemic and a new low since 2021, according to a survey of marketing leaders from research firm Gartner. The figure is also below the average of
8.2% in the four years since 2020.
The spending survey included nearly 400 chief marketing officers and marketing leaders in North America and Northern and Western Europe, most at companies with annual revenue of over $1 billion. The firm found marketer budgets in 2021 were 6.4% of total revenue but considers that to be a year still heavily affected by the pandemic. The survey in 2020 was conducted early in the year before lockdown-era budget cuts began, the firm said.
“The new normal is that we just simply have less funding in marketing now,” said Ewan McIntyre, a vice president analyst and chief of research at Gartner for Marketers.
Those decreased budgets are coming as chief executives are asking for marketers to achieve growth and profitability at heightened levels. According to Gartner’s research, 73% of surveyed marketers said they were being asked to do more with less and 64% said they don’t have sufficient budgets to execute their outlined strategy.
“It’s kind of a double challenge for marketing this year that we’ve got a reduced budget, but we’ve also got a strong expectation that we need to do more with less,” McIntyre said.
Even small changes in the marketing budget expressed as a proportion of revenue can mean a major difference in dollar terms. “The difference between
11% and 8.2% is pretty bad,” McIntyre said. “If you’re an enterprise with annual revenue of $500 million, this is going to be a decrease of $14 million per annum in your marketing budgets. It’s tough in any one year, but over several years of this, it becomes really quite difficult for marketers to work out how they can actually manage in this environment.”
The shrinking of CMO budgets comes as ad spending in the U.S. appears poised for strength in 2024.
Media budgets continue to hover around 2% of company revenue in 2024, in line with the average over the past three years, according to Gartner. But companies are reducing their spending in other areas of marketing such as labor, agency work and marketing technology.
The declines are likely to result in marketers looking even more to artificial intelligence to improve productivity and efficiency, Gartner said.
It makes sense that some marketing budgets at strong companies would capture a lower proportion of revenue in a time of growth because marketing at these businesses is effective enough to keep driving returns even at a lower level, said Michael Duda , managing partner at consumer venture-capital and marketing consulting firm Bullish. But he said he believes advertisers will ratchet up their spending this year as they try to win back consumers who have been spending more selectively amid inflated prices .
But for marketers facing lower budgets this year, AI won’t fill in the blanks quite yet.
“Whether marketing budgets are going up or down, AI is not going to play a material role overall yet, but it will be a highadoption area for marketers sooner than later,” he said.
According to Gartner, 73% of surveyed marketers said they were being asked to do more with less