New Gartner Research: CMOs Reallocate Marketing Budgets To Accommodate The Shift To Enterprise-Wide Digital Plays

Published: August 10, 2021

Marketing leaders are investing more resources into creating digital plays that drive engagement and revenue in today’s digital-first world. In Gartner‘s recent The State of Marketing Budgets 2021 report, pure-play digital channels accounted for 72% of organizations’ marketing budgets, with CMOs emphasizing the role of digital plays in their marketing strategies.

Although B2B marketing leaders have placed all their bets on digital strategies, CMOs are reporting that their marketing budgets have seen a decrease to the lowest levels in recent history. The report shows that marketing budgets have decreased to 6.4% of an organization’s total revenue in 2021, compared to last year’s 11%.

“It’s the result of a shifting focus to digital as an enterprise strategy,” said Ewan McIntyre, VP Analyst at Gartner, in an interview with Demand Gen Report. “Most respondents to this survey have not experienced one precipitous drop in their budget, but a bunch of ‘death by a 1,000 cuts’ that have happened over time. There have been several different cuts, but marketing got cut first and hardest. CMOs recognize this and are taking accountability of more things outside marketing.”

CMOs are getting smarter about their spending, making the best of their smaller budgets to reimagine their marketing strategies to match their organizations’ new focus on digital engagement. Some are diversifying their marketing spend to inhabit multiple digital channels, while others are spending less on outsourced content to allow for more sensible, in-house management.

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Adopting A Hybrid Spending Mix To Diversify Digital Engagement

One of the key takeaways from the report is the transformation of digital plays from a purely marketing initiative to an organization-wide strategy, with many CMOs citing this as the reason their marketing budgets were cut. However, CMOs decided to pivot in 2021, using their smaller budgets to support these enterprise digital initiatives through diverse marketing initiatives in multiple digital channels.

“I’ve joked about this a number of different times, the CMO is the chief optimist in the enterprise and that’s a good thing,” said McIntyre. “CMOs doubling down on active monitoring and measurement of a brand is incredibly important. And brands have realized that you can’t take your audiences for granted, and that marketing is one team that can help brands reach their digital engagement and revenue goals.”

According to the report, CMOs have invested heavily in optimal SEO content (22%) and digital advertising (21%) to enhance engagement in digital channels. Almost 47% of CMOs cited this type of digital content as an effective response to better meet the disruptions in the buyer’s journey brought about by new technology, with another 40% claiming this has helped them improve brand awareness in external digital channels.

Interestingly, 30% of the digital plays CMOs were creating inhabited their organizations’ own digital channels, including websites, email and mobile content. Although the report showed a cut to analytics in CMO spending, 39% have measured the interaction around digital content on their websites or in email inboxes to gather data-driven insights faster and more efficiently.

“It’s not surprising that the vast majority of budget has gone to digital, but the surprise is the change towards a constantly evolving channel mix,” McIntyre explained. “CMOs have shifted toward a more hybrid view of channel spend and are creating a hybrid channel mix with content that creates specific experiences in various digital channels.”

Reallocating Marketing Spend For In-House Efficiency

Another major takeaway from the report was the shifting focus from outsourced content to more in-house processes and workflows, with many CMOs allocating their marketing budgets to support their internal teams and cut down on unnecessary help.

The report cited that 76% of marketing budgets were allocated for in-house management and production, including employee count, martech implementation and media management. Additionally, there has been a 29% decrease in reliance on agencies in the last 12 months, with some CMOs moving their marketing content and processes internally.

McIntyre explained that CMOs in 2021 started to realize many of the digital initiatives organizations focused on were more easily facilitated when done in-house, as brands spend more on supporting their teams and improving their martech stacks than overcomplicating them with outside interference.

“If you look at your in-house labor and technology costs, it’s easy to compare it to the competitive labor environment in the industry,” said McIntyre. “If we think that outside technology or labor is more important than our people, that’s when we find talent challenges and capability issues that are prevalent in some marketing organizations right now. CMOs recognize this and are reconsidering their agency and technology spend for more optimized spending, even when faced with fairly significant budget challenges.”

Check out the full report for additional insights into how CMOs are reallocating their marketing budgets for stronger digital plays in relevant channels.

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