CMOs plan to boost digital spend

But Gartner also reports just 15% of marketing execs expect a significant budget increase next year.

Following three years of growth, marketing budgets declined slightly in 2017, returning to levels seen in 2015, according to a recent survey by Gartner.

Through its annual CMO Spend Survey, the research firm found that marketing budgets fell from 12.1% of company revenue in 2016 to 11.3% in 2017, with the retail and manufacturing sectors having been most affected. Extra-large businesses were largely shielded from the cuts.

Declining budgets reflect what Gartner describes as “significant macroenvironmental upheaval,” citing the situation in North Korea, Brexit and a slew of hurricanes as three examples that have contributed to global political and environmental uncertainty in 2017. These incidents have had a broader impact on businesses, which in turn have had an influence on marketing budgets.

Looking ahead to next year, the firm reported that North American CMOs have “modest expectations.” Of those surveyed, 15% said they expect a significant increase in budget, while 52% expect a slight increase and one-third expect their budgets to be cut or frozen.

Despite this year’s cuts in spending, 67% of CMOS said they plan to increase their investment in digital advertising, while 63% said they expect their offline budgets to flatline or shrink. Gartner attributes that trend in part to the measurability of online performance and the need for businesses to demonstrate the success of marketing efforts through advanced analytics.

Investments are expected to grow across digital channels, with 61% of CMOs saying they want to increase investment in websites and 59% of them saying they expect to bump up spending  in mobile.

Gartner also notes that CMOs’ budgets have been focused on retaining customers over acquiring new ones by a margin of around two-to-one.

Marketing technology continues to account for a significant part of CMOs’ spending, but that spending has fallen by 15% in 2017. CMOs reported spending 22% of their total marketing budgets on technology in 2017, a significant drop from the year before, when it represented 27% of their budgets.

The CMO Spend Survey was conducted from June through August with the participation of more than 350 North American and U.K. marketing executives at companies with more than $250 million in annual revenue.