Gartner CMO Spend Survey 2020-2021: Technology and Digital Channels Withstand Budget Cuts

For many CMOs, budget cuts have become the norm following the COVID-19 outbreak. But in a welcome contrast to the trend, two areas of spend may actually enjoy growth — marketing technology and digital channels. Respondents to the Gartner 2020 CMO Spend Survey believe their budgets for these functions will grow in the coming year.

The research surveyed 432 marketing leaders in North America, the U.K., France and Germany. At the beginning of 2020, CMOs expected budgets that averaged 11% of revenue. But as demand collapsed in many sectors after the pandemic began, organizations clamped down on spending. Marketers put major initiatives on hold. In a Gartner poll, 34% of senior finance leaders said they had furloughed staff across all business functions, and 65% said they had imposed hiring freezes.

“CMOs remain under pressure to cut labor and other costs,” says Ewan McIntyre, VP Analyst, Gartner. “Longer-term budget cuts will require another look at staffing that could result in permanent changes to hiring and organizational makeup.”

In the face of that somber forecast, marketers are looking to technology as a bright spot. Technology currently accounts for the largest proportion of marketing budgets (26.2%), compared to media (24.8%), in-house labor (24.5%) and agencies (23.7%). CMOs remain bullish about technology heading into the next 12 months: 68% expect their already significant outlays to increase.

Technology investments are in line with marketers’ renewed focus on customer loyalty. “The COVID-19 crisis has shifted CMOs’ focus from customer acquisition to customer retention and growth,” says McIntyre. Asked which planned technology deployments they would postpone in the event of an economic downturn, marketing leaders say they’re least likely to cut customer data platforms, mobile marketing platforms and digital commerce tech.

An ongoing challenge, however, is optimizing the use of technology. Gartner research shows that marketers use only 58% of their existing technology capabilities. Extracting their full value may come with costs such as upskilling marketing talent or investing in workflow management applications — investments that would be hard to justify in a challenging business environment.

During the early months of the pandemic, consumers flocked online for information, entertainment and connection, and that trend will continue. Digital channels account for almost 80% of budgets in 2020. 

CMOs spend nearly one-quarter (22%) of the marketing budget on digital advertising (13.5%) — including display, video or ads on social media or 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.

The Gartner survey findings reveal that 62% of CMOs expect total media spend to bounce back in 2021. Marketing leaders are confident about the outlook for paid media in the coming 12 months. On average, 74% expect to spend more on digital advertising and 66% on paid search. B2C marketers are more optimistic about budget hikes than their B2B counterparts; for example, 78% of the former group say they will spend more on digital advertising in 2021, compared to 69% of the latter.

Marketers’ confidence may erode and investment intentions weaken if economic challenges persist in the year ahead. Staying true to course requires nimble strategies. In the B2B environment, CMOs should build and promote digital-first programming (such as webinars and digitally guided selling tools) that help answer customer questions and support conversions. On the B2C front, marketers need to focus on transparent communications with consumers through the channels that best gain authentic engagement for their products. A key tactic for CMOs planning for post-pandemic growth is to leverage current strengths and prioritize customer sentiment.