8 Top Findings in Gartner CMO Spend Survey 2020-2021

Marketers snapped into survival mode after the COVID-19 pandemic broke out. They launched crisis-related communications to customers, canceled or delayed campaign launches, reduced contractor head count and halted long-term projects. Five months on, however, their actions are more deliberate and strategic, with an eye to business recovery.

 “An important part of the plan for recovery is understanding the environment and building plans aligned to the new economic, social and business realities that emerge over the next 18 to 24 months,” says Ewan McIntyre, VP Analyst, Gartner.

In their responses to the annual Gartner CMO Spend Survey 2020-2021 — which polled 432 respondents in North America, France, Germany and the U.K. between March and May 2020 — marketing leaders reveal optimism tempered with prudence. Eight key findings of the survey offer insights into their budgets, strategies and growth priorities at a time of great upheaval.

Before COVID-19 hit, marketing budgets remained stable year over year at 11% of company revenue, but now that picture looks vastly different. Nearly half of CMOs (44%) expect budget cuts of 5% to 15% or more. Marketing organizations initially trimmed budgets to free up cash flow, but as they move toward recovery, CFOs will need to turn their attention to how different functions support profitability.

The majority of CMOs believe in a quick and sharp (V-shaped) recovery, but not all their peers in the C-suite share this optimism. Gartner research shows that nearly 60% of CFOs are building scenario plans that include a second wave of the pandemic. CFOs also report a strong connection between COVID-19 and challenges with the macroenvironment, revenue loss and demand.

This clash in viewpoints should alarm marketing leaders and reinforce the need for a collaborative and agile approach to budgeting and planning. Ignoring business realities can threaten even the most critical spending priorities.

CMO optimism about the economy doesn’t extend to taking risks. Close to 70% of this year’s survey respondents either prefer to preserve the status quo or will only take risks within certain limits; in fact, CMOs are more likely (37%) than the wider enterprise (20%) to favor the status quo.

In contrast to their economic pessimism, other C-level leaders may be more likely to embrace change. Recent Gartner research shows that heads of sales see COVID-19 as a catalyst to drive change and smash perceived obstacles. Setting risk parameters is therefore important for CMOs — guardrails that are too narrow can stifle the impetus to innovate and embrace emerging opportunities.

The use of digital channels intensified during the early months of the pandemic as consumers flocked online, and CMOs continue to guard digital budgets with particular care. They spend 22% of the marketing budget on digital advertising — including display, video or ads on platforms like Amazon — and paid search. Another 59% goes to owned and earned digital channels such as social marketing, the website, SEO and mobile marketing. CMOs feel confident about the outlook for paid media in the coming 12 months: On average, 74% expect to increase spending on digital advertising and 66% on paid search.

Even as budget and cost-cutting limitations pressure marketers, the current environment presents opportunities for growth. CMOs must be realistic about their confidence in business recovery, as solid investment intentions may weaken if economic challenges persist in the wake of the pandemic. The most practical course for marketers is to deliver value by nurturing their brands, allocating budgets strategically and investing in efforts to strengthen customer loyalty.