2017-2018 Gartner CMO Spend Survey

Changes in spending on media, martech and talent highlight the challenges of balancing short- and long-term needs.

This is part two of a two-part series exploring key findings and insights from the Gartner CMO Spend Survey 2017-2018. Read part one.

Read latest survey findings: 8 Top Findings in Gartner CMO Spend Survey 2018-19

Marketing’s accountability for business performance comes with both acute challenges and changes across a variety of budget areas. Changes to marketing technology (martech) spending year over year are a case in point. Spend on marketing technology was 27% of the overall budget in 2016-2017, but is down 15% from last year. CMOs pulled back from last year’s high spending amid concerns about marketing’s ability to effectively acquire and manage technology.

“Pressure from CFOs and CIOs means that now, more than ever, CMOs need to improve their martech capabilities and prove their technology chops,” says Ewan McIntyre, VP Analyst, Gartner for Marketers.

CMOs pull back on martech spending by 15%

Martech spending accounts for 22% of the marketing budget, according to the 2017-2018 Gartner CMO Spend Survey. While this is still a significant portion of the overall budget, it is down from the 27% reported in last year’s spend survey.

“67% of CMOs plan to increase their spending in digital advertising.”

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When total marketing budgets are squeezed, line items that constitute one-quarter of total investment are top candidates for trimming. CMOs’ ascent to a lofty technology role was swift and came with an intense learning curve. As a result, only half of CMOs regard themselves as effective at acquiring and managing tech, according to the Gartner CMO Strategy Survey 2017-18.

Recommendation: Build a martech roadmap that captures business and capability requirements and enables you to prove the value delivered by your martech ecosystem.

Two-thirds of CMOs lean in to digital advertising; traditional media facing declines

Sixty-seven percent of CMOs plan to increase their spending in digital advertising in 2018. The digital advertising increase is happening despite the likelihood that $6.5 billion will be diverted from the advertising ecosystem due to fraud in 2017. As marketers spend more on digital advertising, their investments may be more exposed to waste. Measurability contributes to digital media budget growth. CMO focus on analytics reflects the need to demonstrate performance and effectiveness to the business, and digital channels are purpose-built to feed digital performance data to CMOs.

Recommendation: Identify the right metrics to assess and improve marketing plans and campaigns.

CMOs struggle to balance resources by increasing agency spend while reducing spend on labor

Labor costs and services together constitute more than half (53%) of the total marketing budget, with 25% spent on services (up from 22% last year) and 27% spent on labor (down from 28% last year). There has been a trend toward insourcing, with CMOs bringing strategically important capabilities such as analytics and digital commerce in-house.

Yet the gap between desire and reality is stark.

CMOs report that the most important roles that are central to achieving their strategy, such as marketing analytics and digital commerce, are the hardest to acquire and retain. The inability to attract these roles means that agencies and third parties fill resource and capability gaps.

Recommendation: Review your agency and partner portfolio. Identify the optimal agency ecosystem model for your organization by aligning agencies to a common set of business objectives.

Marketing innovation stays protected from budget pressures

Despite budgetary pressures, innovation remains a spend priority for CMOs, and almost one- quarter of CMOs (23%) now have fixed annual innovation budgets. Ten percent of the CMO’s budget is earmarked for innovation. While this preservation of innovation budget is admirable, innovation needs to pay its way in the long term and ultimately contribute to business goals and profitability. Failure to do so will mean disinvestment. Near term, innovation budgets that support programs with little understanding of scope and objectives risk getting diverted to fill budget gaps elsewhere.

Recommendation: Define the role of innovation in the marketing organization and clarify the scope of programs.