8 Top Findings in Gartner CMO Spend Survey 2020-2021

Despite budget limitations, CMOs expect to fuel growth by marketing to existing customers and boosting brand strength.

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.

1. Midyear budget cuts loom as a direct result of COVID-19

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.

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2. Marketing leaders expect a return to business as usual in the next 18-24 months

Despite spending restrictions, CMOs remain upbeat. A sizable 73% of respondents expect the business and economic climate to have a positive impact over the next two years. More than half (57%) of respondents across all industries believe that performance will return to normal in the next 18 to 24 months — perhaps an overly optimistic expectation.

Confidence varies across industries, however. For example, only 22% of respondents in travel and hospitality and just 34% of those in consumer products anticipate a significant positive impact. In light of the uncertainties in some markets, CMOs must build cross-functional scenario plans to create a collective view on the opportunities and risks, as well as balance the quest for positive outcomes with pragmatism.

3. CMOs are at odds with C-suite colleagues over economic recovery

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.

4. Most CMOs have a lower tolerance for risk than other leaders in 2020

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.

5. Existing customers drive recovery strategies

In keeping with their risk-averse stance, most CMOs (79%) expect to rely on their current customers to forge a path to recovery. Close to half (45%) plan to sell new products to an existing market, focusing on new product development through partnerships, product augmentation or R&D investments. Just over one-third (34%) are relying on selling existing products to existing markets to support growth.

But even this conservative strategy may require CMOs to consider bold tactics to implement it. Not all customers — even loyal ones — are equal. “Adopt value segmentation to ensure that your focus for growth in 2021 is on the most profitable customers,” says McIntyre. “Build a balanced portfolio strategy, ensuring that safer bets such as servicing existing customers and driving repeat purchases are counterbalanced by more transformative options.”

“On average, 74% expect to increase spending on digital advertising and 66% on paid search”

6. Brand strategy is the most vital strategic capability

For most CMOs, brand strategy tops the list of transformative options. Although close to the bottom of essential marketing capabilities in 2019, this year it has skyrocketed to No. 1, outranking analytics. The most valuable brand metric has also shifted. In 2019, brand awareness took the top spot, with brand health coming in second. This year the positions have reversed as CMOs sharpen their focus on what audiences know and think about their brand.

Now, more than ever, handle your brand strategy with care. Avoid message fatigue around COVID-19 and the risk of insensitive messages on important cultural movements such as Black Lives Matter. “Focus brand investments on building trust and credibility by delivering informative experiences and messages focused on relevance and compassion,” says McIntyre.

7. Marketing technology withstands budget cuts

Despite tough economic times, marketers remain enthusiastic about technology. In 2020, technology spend will account for the largest proportion of marketing budgets compared with media, agencies and in-house labor. CMOs remain bullish about technology heading into the next 12 months, with 68% expecting their investments to increase. And given their renewed focus on customer retention, it’s not surprising that marketing leaders are least likely to cut customer data platforms, mobile marketing platforms and digital commerce, even if there is a downturn.

8. Digital channel budgets are expected to increase in 2021

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.

Gartner clients can read more in 2020 CMO Spend Survey, Part 1: CMOs Gamble on Swift Recovery, but Strategic Priorities Reveal Hedging and 2020 CMO Spend Survey, Part 2: CMOs Protect Digital Channels and Martech (For Now). Gartner clients can also visit the Gartner COVID-19 Resource Center to learn more about how to lead through the coronavirus disruption.