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

The latest Gartner report indicated that marketing budget prepared by CMOs have dropped to 6.4 percent of company revenue in 2021 from 11 percent in 2020.
Marketing budget forecast
The annual Gartner CMO Spend Survey surveyed 400 CMO and marketing leaders in North America, the UK, France and Germany from March 2021 through May 2021, tracking the critical areas marketers are investing in and where cuts are being made from people, programs and technologies.

No industry achieved a double-digit budget in 2021. Travel & hospitality, manufacturing and tech product companies have experienced the greatest cuts in 2021.

Consumer products and goods (CPG) companies reported the strongest 2021 marketing budgets at 8.3 percent of company revenue. Large enterprises got hit the hardest – companies with revenue of more than $2 billion reported the lowest average marketing budget of just 5.7 percent.

On the other hand, companies with revenue of under $500 million reported the highest allocation to marketing with an average budget of 8.6 percent of revenue.
Marketing budget in 2021 vs 2021Gartner research shows CMOs have shifted spending commitments across their channels and programs, with pure-play digital channels – owned, paid and earned – dominating those priorities and accounting for 72.2 percent of the total marketing budget.

When looking at the largest resource allocation – agencies, media, labor and paid media – agency spend continues to decline.

CMOs report that 29 percent of work previously carried out by agencies has moved in-house in just the last 12-months alone. The focus of in-housing is changing as well – with brand strategy, innovation and technology, and marketing strategy development making up the top three capabilities areas CMOs are moving to internal teams. Meanwhile, marketing technology (martech) continues to dominate, taking up 26.6 percent of the total budget.

Digital Commerce Tops Program Spend

2020 and 2021 have seen drastic changes to customer buying journeys – both B2C and B2B alike, forcing even digital late-comers to accept the inevitable shift to online channels. When looking at budget allocation by programs and operational areas, CMOs report digital commerce makes up 12.3 percent of the total budget. Likewise, marketing operations and brand strategy make up 11.9 percent and 11.3 percent of the total budget.

While marketing analytics commands 11 percent of the total budget, it has dropped in prioritization – now in the fourth position in 2021.

“CMOs continue to invest in marketing data and analytics, however, for many, the results have failed to live-up to expectations,” said Ewan McIntyre, co-chief of research and vice president analyst in the Gartner for Marketers practice. “Given recent and upcoming regulations, and changes in data collection, we expect this investment area to continue to be a strategically important capability, but also to continue to fluctuate until uncertainties subside.”

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