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Gartner Examines Marketing Budgets Closely (H1 2023)
The turbulence of the macro-business environment has never been more evident, with both threats (inflationary context, geopolitical tensions, first signs of an economic crisis) and great opportunities (dazzling developments in AI). As in every period of uncertainty, companies are mobilising to maintain their competitiveness, with the challenge of doing more with less and striving for operational excellence. In marketing departments, the issue is even more thorny, given that ROI is not easy to calculate.
It was against this backdrop that Gartner mobilised its resources and conducted a survey: how will marketing budgets behave in 2022 and H1 2023? Here’s a look back at some particularly enlightening research.
Marketing budgets will account for 9.1% of total sales in 2023
Gartner chose to conduct its study in March and April 2023, in order to accommodate the ‘latecomer’ companies that had not allocated their marketing budgets before the start of the new fiscal year and/or had not yet assessed the results of the previous fiscal year.
The CMOs surveyed operate in Europe and North America in companies of varying sizes and in a variety of business sectors. Despite this very heterogeneous sample, one common finding emerged: we are a long way from the budget cuts of the subprime crisis and the pandemic. In 2023, marketing budgets amounted to 9.1% of total sales, just 0.4% less than in 2022, when the post-COVID recovery saw strong growth.
But CMOs are not necessarily satisfied, because the expectations of their superiors have increased. Gartner explains that 71% of CMOs feel that their current budget envelopes are insufficient to implement the particularly ambitious strategic vision of decision-makers. Similarly, 75% of CMOs point to pressure to do more with less, while sometimes having to deal with an external growth strategy (mergers and acquisitions, joint ventures, licences and franchises, geographical expansion, etc.). Another interesting finding is that 86% of CMOs believe they will be able to meet demands with slightly lower budgets, but not before initiating major transformations, sometimes on a company-wide scale, such as :
● Single Customer View project: the creation of a unified and consistent view of each customer across the entire organisation ;
● Investment in a rigorous marketing attribution system: adoption of tools and methodologies to accurately attribute value to the different touchpoints in the customer journey in order to optimise resource allocation and boost ROI;
● AI integration at scale;;
● Alignment with Sales to strengthen the contribution of marketing to booking ;
● Team training and skills development.
Ewan McIntyre, research leader and analyst vice-president at Gartner, explains: “Tightening budgets, rising costs and falling productivity are reducing the purchasing power of marketing managers. With volatility becoming the new norm, many CMOs are predicting disruption to their plans for 2023 and beyond”.
Another striking fact is that CMOs are gradually changing their position. They are no longer just heads of brand and LeadGen in the theoretical sense. Their role is moving away from Vanity Metrics (number of likes, number of subscribers, gross traffic) and becoming more aligned with business KPIs. In short, they need to speak the language of the financial director. Marketing investments are aimed at profitability rather than growth.
MarTech: has the race for tools reached its conclusion?
Gartner reveals that the proportion of investment in technology has fallen significantly, from 58% in 2020 to 42% in 2022. As a result, 75% of marketing decision-makers have decided to “rationalise” their MarTech spending in 2023 after years of massive investment, both in terms of value and number of tools. This slowdown was to be expected, since according to another Gartner study, marketers are only using 42% of the capacity of their technology stack.
McIntyre comments: “The fact that many marketers are willing to let a significant part of their MarTech arsenal lie dormant reflects a fundamental imbalance in the allocation of resources by CMOs. It is inconceivable that they would be so nonchalant about the use of invested budgets”.
The excitement surrounding generative AI does not seem to be stimulating MarTech spending, for one simple reason: IT solution vendors have almost all promised to integrate AI functionality into the next updates of their tools.