A new Gartner study reveals that global business budgets have gone down to their lowest level this year.
In spite of facing in-year budget cuts throughout 2020 amid the pandemic, CMOs across the globe expected budgets to bounce back this year. However, this budgetary optimism was misplaced since marketing budgets have dropped to their lowest in recent history. According to Gartner’s CMO Spend Survey, marketing budgets reached their lowest recorded level of 6.4% of company revenue in 2021. This is even down from 11% in 2020. The researchers tracked the critical areas of marketing programs and technologies.
Basically, no one – despite the company size or industry – has escaped swingeing cuts in marketing budgets. In reality, no sector has attained a double-digit budget in 2021. Travel and hospitality, manufacturing, and technology product companies have encountered the most significant cuts in 2021.According to Ewan McIntyre, co-chief of research and VP analyst in the Gartner for Marketers practice, “However, these cuts have been a slow burn over the course of the last year, where many marketing budgets have not recovered what was originally lost.”
For now, consumer products and goods (CPG) firms indicated the most robust 2021 marketing budgets at about 8.3% of total company revenue. Large enterprises got the hardest-hit – companies with total revenue of $2 billion and more hit the lowest average marketing budget of only 5.7%.
In contrast, organizations with revenue below $500 million revealed the highest share to marketing – with an average budget of 8.6% of revenue. Even many marketing leaders have shifted spending commitments spanning their channels and programs.
This is undoubtedly the pure-play digital channels – owned, paid, and earned. In fact, it is dominating those primacies and accounting for approximately 72.2% of the overall marketing budget. Regarding the largest resource allocation, agencies, media, labor, and paid media, agency spend continues falling.
Meanwhile, marketing technology continues to dominate, taking up almost 26.6% of the total budget. Both 2020 and 2021 have seen radical changes to customer buying journeys – B2C and B2B alike, driving even the digital late-comers to accept the foreseeable shift to digital channels.
Many CMOs stated that around 29% of work previously carried out by agencies has now moved in-house in the last 12-months. The focus of in-housing is also evolving – with brand strategy, innovation, and technology. Certainly, marketing strategy development is making up the top capabilities areas CMOs are focused on.
However, while marketing analytics still holds roughly 11% of the total budget, it has constantly dropped in prioritization. It is now in the fourth position in 2021. Clearly, CMOs continue to invest in marketing data and analytics with this sudden rush towards digitization.
Again, for many, the outcomes have been unsuccessful to live up to expectations. Given the latest and upcoming regulations, alongside changes in data collection, the industry experts expect this investment area to remain a strategically important capability. Simultaneously, it also continues to fluctuate up until uncertainties subside.
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