The Gist:
- Budget decline. Marketing budgets have dropped to 7.7% of company revenues in 2024, a 15% decrease.
- Strategic shifts. CMOs are increasingly adopting data-driven approaches and cost-effective strategies to cope with budget cuts.
- AI utilization. A majority of CMOs view artificial intelligence as a crucial tool to enhance efficiency and drive growth despite financial constraints.
A recent Gartner survey revealed marketing budgets have fallen 15% on average in 2024.
The survey, which was conducted in February through March of this year, included nearly 400 chief marketing officers and marketing leaders across 10 different industries, company sizes and revenue.
The CMO survey’s findings were revealed at Gartner Marketing Symposium/Xpo on May 13, where Ewan McIntyre, VP analyst and chief of research for the Gartner Marketing Practice, highlighted three key strategic and budgetary hurdles: inflation, digital return on investment (ROI) and interest rates.
“CMOs are living in an ‘era of less,’” said McIntyre. “In the four years preceding the pandemic, the average marketing budgets were 11% of overall revenue. In the four years since, they’ve dropped to an anemic 8.2%.”
Time to Rethink Marketing Strategies
CMSWire’s State of the CMO 2024 report lines up with Gartner’s findings, with 31% of marketing leaders claiming that justifying budgets is a top challenge. A further 40% said a lack of budget is a big roadblock to improving the digital customer experience at their organizations.
Will Yang, head of growth and marketing at Instrumentl, told CMSWire his company has indeed seen shifts in its marketing budget allocation. Rather than seeing it as a setback, however, they look at it as an opportunity to rethink and reshape their marketing strategies.
“We are heavily leaning into data-driven approaches, focusing more on understanding our customers and their journey,” he said. “In this way, we can reduce our budgets while still producing better results by better allocating funds and optimizing our strategies.”
Yang added that he’s looking into more cost-effective marketing strategies — like content marketing and leveraging social media channels — to provide broader reach and reduce costs.
“We’re emphasizing creating meaningful relationships with our clients and partners, thus enhancing organic growth,” he explained. “The potential decrease in marketing budgets forces us to be more innovative and resourceful, propelling us to make prudent decisions that not only survive the downturn but also thrive in it.”
Related Article: Are Your Brand Marketing Strategies Outdated?
A Roadmap to Meaningful Business Outcomes
As marketing budgets shrink, CMOs and VPs of marketing are increasingly expected to maximize efficiency, said Heidi Bullock, CMO at Tealium. Yet rather trying to do more with less, she added, the focus should be on strategic initiatives that drive meaningful business outcomes.
One area she pointed to is evaluating data and performance. “Continuously assess the performance and return on marketing programs,” she said. “There will always be a few programs that are not providing the best return and consider putting those dollars somewhere else.”
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Another strategic focus should be on refining your strategy, she explained. “Regularly review and adjust positioning and messaging to ensure they resonate with current market needs and pain points, potentially focusing on specific use cases or verticals where your product excels,” said Bullock, a CMSWire Contributor.
Rather than keeping initiatives in-house or relegated to the marketing department, Bullock also recommended looking into partnerships to make a greater impact.
“Collaborate with partners on marketing initiatives to extend reach and share the workload, amplifying results with combined efforts,” she said. For example, she added, a webinar or event can have a joint message, where marketing can drive more impact and the work can be divided.
Is AI Marketing’s Saving Grace?
Gartner’s McIntyre claims that despite these financial challenges, the majority of CMOs believe artificial intelligence (AI) may be the answer.
“There is a light at the end of the tunnel: AI,” he said. “CMOs can harness AI to accelerate growth, compensating for lower resources. While topline budget looks worse, AI can drive new efficiency and productivity.”
According to Gartner’s survey, 64% of CMOs say they lack the budget to execute their 2024 strategy. “But GenAI offers the opportunity to grow the marketing function’s impact far beyond its budgetary constraints,” McIntyre said.
Bullock added that at her company, they’re using AI to help with areas like landing pages, emails, select design elements and even SDR flows. “It’s not about replacing people but helping them with their time and getting rid of some repetitive tasks,” she said.
In CMSWire’s latest CMO Circle episode, Karna Crawford, CMO at a Marqeta, claimed AI also has the potential to help marketers enhance productivity and scale personalization efforts.
“We’ve been heavily focused on AI within our product and technology teams to help increase operational efficiency, productivity, streamline the work effort of both our developers and customer developers, etc.,” she said in the interview.
Crawford added that she’s spent a lot of her time helping her team think about AI in marketing as a scaler, where the technology acts as an enabler that lets them bring humanity into what they do.
Related Article: AI in Marketing: 10 Crucial Skills for Success
Biggest Marketing Changes in the Next 5 Years
Looking ahead, while marketers might see AI as a savior, there’s a lot of work to be done. CMOs are excited to implement generative AI, said McIntyre, but many feel unclear about how to build out their AI strategy.
Beyond artificial intelligence, CMOs also feel that further digitization is inevitable, according to CMSWire’s report. Marketing teams will need to figure out which aspects of digital transformation are best for their organizations and which ad hoc policies they put into place at the early stages of the pandemic need to become permanent.
“Everything is supposed to be more digital, so we have to adapt to that type of marketing,” said one State of the CMO survey respondent. “CMOs shall be using the technology that is ever-evolving to deliver the desired customer experiences and devise innovative ways to integrate ROI measurement to drive greater business outcomes.”
