MarTech Is Now CMOs’ Biggest Resource Spend, Plus 4 Other Budget Highlights

November 28, 2018

CMOs in North America and the UK now spend more on marketing technology than on any other resource area, declares Gartner in its latest annual CMO Spend Survey. This year, the more than 600 senior marketers surveyed estimated spending an average of 29% of their marketing expenses on marketing technology, up from 22% last year.

That jump means that martech – which had been the smallest of the 4 people and program areas last year – is now the largest. By comparison, marketers allocate 24% share of their budget to labor (down from 27%), 23% to paid media (down from 25%), and 23% to agencies (also down from 25%).

The results are similar to a recent Warc survey, in which brands estimated allocating almost one-quarter of their budgets to martech, up from 16% last year. It’s also possible that some marketers underestimate what they will spend on these tools, as many marketers struggle to understand the external costs for marketing technology. Encouragingly, though, most brands across the world feel that they have all the tools they need now, even if they’re not necessarily fully utilizing them.

Here are 4 other highlights from the CMO Spend Survey.

1. Budgets Stabilize; CMOs See Growth Ahead

One of the main findings in last year’s CMO Spend Survey related to a dip in marketing expense budgets, which had fallen from 12.1% of company revenues in 2016 to 11.3% in 2017.

The good news is that marketing budgets seem to have largely stabilized this year. Respondents estimated that marketing expense budgets occupy 11.2% of company revenues, basically flat from last year.

That’s a more enthusiastic response than found by The CMO Survey [pdf] among CMOs in the US, who recently estimated that their spending equates to 7.3% of company revenues.

If you’re keeping score, with marketing budgets occupying 11.2% of revenues and martech 29% of that, this means that 3.25% of company-wide revenues are now being allocated to marketing technology.

Looking ahead, respondents to Gartner’s survey are optimistic about spending, with almost two-thirds (63%) expecting a budget hike in 2019.

2. Digital Takes Over Ad Spending

Where is that budget going to go? Well the ad budget at least will mostly go to digital, if these results hold true.

CMOs estimated that, on average, more than one-fifth (21%) of their marketing budgets are spent on advertising. That advertising budget is leaning ever-more towards digital, which hogs two-thirds of the spending, per CMOs’ estimates.

The actions of these CMOs – spread across North America and the UK – may not be fully reflected in the US market. And yet the prevailing trends are certainly there: CMOs in the US predict more spending on digital than traditional media, and one recent forecast calls for digital to overtake offline in ad spending this year in the US for the first time.

The prominence of digital is seen beyond paid media, too. Traditional digital “workhorses,” as Gartner describes them, occupy one-quarter of the average marketing expense budget. What are these 4 workhorses? Paid search, organic search, websites, and email.

3. Innovation Gets Prioritized

CMOs around the world tend to look at innovation as being less important than other roles of the marketing function, but there are signs that it’s getting a larger seat at the table.

The Gartner study indicates that close to two-thirds (63%) of CMOs will be increasing their innovation budgets in 2019 as they “embrace new channels, models and methods to remain competitive.” Indeed, 1 in 6 marketing dollars is spent on innovation, per the results, which is about as much as is being spent on CX initiatives (18%) and more than is spent on personalization (14.2%).

That said, there’s plenty of room for growth. Only about 1 in 10 CMOs believe that innovation will be vital to their marketing strategy delivery in the coming 18 months, and the Gartner analysts also point out that “marketers’ innovation intent isn’t matched by their innovation capabilities.”

4. Brand Awareness Beats ROI

Finally, the report comes to an interesting conclusion: despite all the pressure on CMOs to quantitatively prove their impact on the business, ROI is not the most valued metric. Instead, among various metrics identified, brand awareness was considered the most important metric measured by the largest share (12%) of CMOs, almost twice the number that cited ROI (7%).

The finding is interesting given that business growth is a bigger priority for CMOs than brand management. It may simply be that CMOs are prioritizing the KPI that they have an easier time measuring…

About the Data: The results are based on a survey conducted in July and August 2018 among 621 marketing executives in North America and the UK.

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