Roughly 2 in 3 (68%) CMOs expect their martech budget to increase in 2021, despite the impacts of COVID-19 being seen elsewhere in budget decisions, according to Gartner’s latest annual CMO Spend Survey [download page]. Here are 5 key points about what CMOs’ financial priorities look like right now and heading into 2021.
1. Marketing Technology Leads in Budget Plans
Despite the difficult budget decisions being made by many CMOs as a result of current economic uncertainty, their tech spend is likely to remain strong. Marketing technology not only accounts for the largest share (26.2%) of marketing resource budgets, but the majority (68%) of the marketing executives surveyed expect their martech budget to increase slightly (43%) or significantly (25%) in the next fiscal year.
Allocation to other resource areas is roughly equal, with the remaining budget going to paid media (24.8%), labor (24.5%) and agencies/services (23.7%). [Editor’s Note: 2020’s options included ‘Other’ which represented a 0.9% share].
2. More CMOs Bring Work In-House
Respondents indicated that nearly one-third (32%) of agency work has shifted to internal marketing services over the past 12 months. This change is potentially indicative of CMOs looking to cut costs. Social marketing was the type of work most commonly brought in-house (53%), followed by creative production/content marketing (44%), audio/video production (42%) and creative concepting (42%).
3. Resource Budget Allocation Varies by Industry
That said, some industries are seeing a lower budget allocation to labor – respondents from the Travel and Hospitality and Consumer Products industries report a relatively allocation of budgets to labor compared with other industries, with IT and Business Services seeing the highest labor allocation. Correspondingly, IT and Business services have the lowest budget allocation for agencies/services compared with other industries.
It’s no surprise that general budget pressures in the wake of the COVID-19 pandemic and economic uncertainty are leading to labor cuts. In fact, one-third (34%) of respondents had furloughed staff, while a further 65% reported having implemented hiring freezes.
4. Digital Advertising Tops Channel Mix
In terms of how CMOs divide their budget across channels, digital advertising showed up as receiving the highest budget share (13.5%) of a list of 10 channels. This follows a post-COVID-19 trend identified in other research that sees digital taking on renewed significance since the outbreak.
Allocation across the remaining channels is largely equal, with social marketing receiving the next highest share (11.3%) followed by website (10.4%), SEO (9.9%), mobile marketing (9.8%) and offline advertising (9.4%).
5. Channel Allocation Set to Increase in Next Fiscal Year
Fortunately, B2C CMOs indicate a positive outlook on future budget allocation, across all channels. When asked about the same 10 channels, the majority of respondents expect an increased budget in the next fiscal year for every channel. This is particularly true of digital advertising and social marketing, with 78% of respondents anticipating increased budgets for each of these channels. Even the channel that the lowest share expect to receive an increased budget, event marketing, has 57% anticipating an increase.
Read more in the full report here.
About the Data: Based on a survey of 432 marketing leaders in North America, the UK, France and Germany at companies with $500 million to $20 billion+ in annual revenue.