Three Key Takeaways from Gartner's New CMO Spend Survey

Gartner has just published the results of its 2019-2020 CMO Spend Survey. The research report is based on survey responses from 342 marketing executives in North America and the U.K. at companies with $500 million to $5 billion or more in annual revenue.

The Gartner study produced several valuable data points, but I want to focus on three takeaways that I found particularly interesting.

Marketing Budget Growth

Gartner's survey indicates that marketing budgets will come in at 10.5% of company revenue in 2019, down from 11.2% in 2018. This agrees closely with the August 2019 edition of The CMO Survey, which found that current marketing budgets represent 9.8% of firm revenues.

However, most of the Gartner survey respondents were optimistic that their marketing budgets will increase in 2020, as the following table shows:

Gartner observed that this CMO optimism exists despite widespread concerns about a global economic slowdown among many economists and financial industry pundits. In fact, when survey participants were asked how the overall economic environment would likely affect their company's performance over the next 18-24 months, 86% of respondents indicated they believe the future impacts will be positive.

The above table also shows that marketing executives with B2B manufacturing companies are significantly less optimistic about future budget growth than other marketing leaders. In my view, this is likely due to the economic slowdown in manufacturing that is already occurring, and to the uncertainty surrounding Brexit in the U.K.

Martech Spending Falls

Gartner's study found that spending on marketing technology represents 26% of the total marketing budget in 2019, down from 29% in 2018. However, Gartner does not believe that this year-over-year decline indicates that marketing leaders are reducing their long-term commitment to technology.

In the research report, Gartner observed that spending on marketing technology has varied considerably over the years and that part of this variability is due to normal investment cycles. The report also referred to other Gartner research, which had found that some marketers are struggling to implement and fully utilize new technology tools.

I generally agree with Gartner's thinking on this issue. The explosive proliferation of marketing technologies is well documented. And with most technology tools, it takes time to assimilate a new technology and begin to fully utilize it. So, it's not surprising that technology spending is volatile, and we shouldn't read too much into a one-year decline.

The Rise of Marketing Operations

The third interesting takeaway from the Gartner CMO Spend Survey relates to the growing importance of marketing operations. The Gartner survey asked participants what capabilities they consider most vital for the execution of their marketing strategy over the next 18 months. The following table shows the percentage of respondents who included each capability in their top three choices:

As the table shows, 30% of survey respondents included marketing operations as a top three capability. Survey respondents also estimated they they are currently spending 12.6% of their marketing budget on marketing operations. Other research by Gartner (the 2019 Marketing Organization Survey) found that two-thirds of marketing organizations now have a discrete marketing operations function.

Gartner argues that the growing complexity of marketing and a shift toward a more decentralized marketing organizational structure are driving the need for a marketing operations function that is focused on creating excellence in planning and execution across the entire marketing organization. Gartner also observed that the scope of the marketing operations function is growing, and now includes diverse responsibilities such as technology management, talent management, budgeting, and supplier management.

Top image source:  Gartner, Inc.

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