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Gartner Survey reveals marketing budgets increased for third consecutive year

Marketing budgets are continuing to rise, according to a survey of marketing executives by Gartner, Inc. The survey showed that marketing budgets increased to 12 per cent of company revenue in 2016, from 11 per cent in 2015. Fifty-seven per cent of marketing leaders surveyed expect their budgets will increase further in 2017.

However, 14 per cent of marketers say they are bracing for budget cuts, up from 3 per cent just two years ago.

The findings form part of Gartner’s “2016-2017 Chief Marketing Officer (CMO) Spend Survey” that included responses from 377 marketers at companies with more than $250 million in annual revenue in North America and the UK. The survey took place in July and August 2016 and marks the fifth year that Gartner has surveyed marketers on spending priorities and marketing operations.

“Marketing is now responsible for critical customer-facing, revenue-generating systems and applications,” said Jake Sorofman, research vice president at Gartner. “As the marketing leaders’ mandate broadens, we are seeing the CMOs’ marketing tech spending approach the levels of the CIOs’ technology spend.”

Although marketing budgets have, on average, increased, marketing leaders have many demands on their resources. The top three categories in 2016 marketing spend identified in the survey — web, digital commerce and digital advertising — illustrate how critical digital marketing has become. Digital commerce, in particular, is a recurring theme in this and last year’s CMO Spend Survey, signalling the continued importance of these initiatives to marketing leaders.

The marketing leaders surveyed said they spend at least 8 per cent of the budget on digital commerce.

“Digital commerce matters to marketers on multiple levels, from driving incremental revenue, to measuring attributable performance, to gaining customer insight through direct engagement,” said Mr Sorofman. “In addition, we’re seeing marketing leaders look beyond traditional storefronts and shopping carts, investing in rich commerce experiences, experimenting with the Internet of Things and treating digital commerce as a multichannel strategy.”

Digital commerce investments remain a high priority with marketing leaders as an important way to meet company growth objectives, particularly in consumer packaged goods (CPGs). Without digital commerce efforts, CPG marketers have limited ability to develop direct relationships with customers, drive loyalty and advocacy, or collect immediate insights. Spending on digital commerce gives CPG marketers the building blocks to complement their indirect channel strategies with direct-to-consumer (DTC) engagement.

Despite concerns over ad effectiveness, opaque industry practices and the increasing use of ad-blocking tools by consumers, digital advertising remains resilient as 65 per cent of marketing leaders surveyed said that they plan to increase their spending in this area. Contributing to the increase are a continuing and consistent shift of offline media spending to digital channels, a decline in organic social in favour of paid social and the rising importance of video, which is considerably more expensive than other digital techniques.

“Over the last several years, we’ve witnessed an expansion of the CMO mandate, from what was largely a promotional role to what is now often seen as the growth engine for the business,” said Mr Sorofman. “This year’s survey really drives this point home as CMOs are taking on more formal responsibility. In more than 30 per cent of organisations, at least some aspects of sales, IT and customer experience now report into the CMO.”

Gartner clients can read more detailed analysis in the report “CMO Spend Survey 2016-2017: Budgets Climb (Again!) to 12 Per cent of Revenue as Marketers Juggle More Demands.”

This research is part of our Gartner for Marketers business. Gartner guides marketers with ongoing research, practical insight and actionable advice focused on customer experience; multichannel and data-driven marketing; digital commerce; emerging marketing technology & trends; and marketing strategy and operations. For additional details, email or visit us on the web.

Hear more about digital marketing trends at the Gartner Digital Marketing Conference 2017, 10-12 May, 2017 in San Diego, CA. Follow news and updates from the event on Twitter using #GartnerDMC.