Gartner research shows drop in marketing budgets, martech investment

US and UK research highlights marketing budgets dipping as a percentage of company revenue to 11 per cent for the first time in five years

New UK and US research from Gartner is showing a dip in marketing budgets, the first time numbers have dropped under 11 per cent since 2014.

The analyst firm’s latest Gartner CMO Spend Survey 2019-2020 found marketing budgets to be shifting downwards, reducing from 11.2 per cent of overall company revenue in 2018 to 10.5 per this year. The largest figures were in B2C indirect sales companies (10.9 per cent) and those with an even mix of B2B and B2C (10.9 per cent).

The highest percentage recorded by Gartner over the five years of its research was in 2016, when marketing budgets accounted for 12.1 per cent of company revenue. This year’s report is based on a survey of 340 North American and UK marketing leaders.

Across the survey, Gartner said CMOs remain confident about economic and budget outlooks, with nearly two-thirds (61 per cent) expecting budgets to rebound in 2020. However, Gartner VP, Marketing practice, Ewan McIntyre, noted the same percentage of marketing executives had expected budgets would increase this year, indicating more optimism than reality behind responses.

“While we’re not yet witnessing a precipitous drop in budgets, this year’s downtick presents a counterintuitive scenario,” he commented. “You could call this confidence in the face of adversity. Or you could call it hubris.”

It’s worth noting that across the board, CMOs also believed the global economic outlook will have a positive impact on their businesses in the next 18-24 months.

Gartner’s report also shines a light on several broader marketing trends. For example, two-thirds of marketers said they’ve moved some aspects of delivery from third-party agencies to in-house teams. Despite this, 22 per cent of total marketing budgets are still being spent on marketing agencies.

The research also indicated martech investments dropped 3 percentage points year-on-year, falling to 26 per cent of marketing budgets this year. The analyst firm noted that while martech commands a major slice of the marketing budget, it has proved to be a more volatile investment area.

In CMO’s own 2019 State of the CMO findings across Australian marketing leaders, 30 per cent of the more than 100 respondents expected martech spend to increase in the next year, while 66 per cent predict the level of spend would remain the same. Only 4 per cent predicted a decrease.

Spend on paid media, meanwhile, increased from 23 per cent in 2018 to 26 per cent in 2019, the Gartner report found. Digital channels accounted for 16 per cent of overall marketing budgets, and 78 per cent of respondents expected investments in digital ads to increase in 2020.

Elsewhere, offline advertising and TV spend represented 7 per cent of total marketing budgets each.

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