Marketing technology now takes up almost one third of CMO’s budgets and marketings leaders are still struggling to align marketing metrics with business priorities.
These are two key takeaways from Gartner’s 2018-2019 CMO Spend Survey.
According to the analysts, marketers spend on average 29 per cent of their budget on martech, compared to 22 per cent last year. While the rise is notable, the share isn’t as big as the 2015-2016 period, when martech spending peaked at 33 per cent of marketing budgets.
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The survey, which has been conducted annually since 2012, canvassed the views of 621 marketing executives in the United States, Canada and the UK at companies with $500 million to $10 billion or more annual revenue.
At a macro level, marketing budgets are holding steady. In 2018 marketing budgets were 11.2 per cent of company revenue, which is about the same as 2017 (11.3 per cent).
The majority of marketers (63 per cent) expect their 2019 budgets will increase, 27 per cent expect their budget will stay the same and 11 per cent expect their budgets will be cut.
As spending on martech has increased, the share of budgets spent on labour has dropped from 27 per cent to 24 per cent in 2018. But the shift doesn’t mean the robots are coming for marketer’s jobs (yet).
“Rather, this shift in marketing spend indicates that organisations are dealing with capabilities, resources and talent in increasingly complex ways,” write report authors Ewan McIntyre and Anna Maria Virzi.
The analysts urged caution when spending on martech, noting that “CMOs risk making costly mistakes if they don’t invest wisely (and strategically)”.
The report found CMOs are still struggling to align marketing metrics with business priorities. According to the survey, awareness is their top strategic measure instead of customer value, market share and return on investment (ROI).
Respondents said they spend an average of just over 21 per cent of their marketing budget on advertising, favouring digital advertising over offline.
Of this advertising spend, 8.9 per cent goes to digital advertising (which includes social, mobile and display advertising); 5.3 per cent goes to paid search; and 7 per cent goes to offline advertising (which includes TV and out-of-home media).
According to the survey, one in every $6 spent by CMOs is invested in innovation, despite doubts in the skills and capabilities available to support these programs.
Innovation investments ramped up significantly in 2018, with CMOs allocating 16 per cent of their total marketing budget to marketing innovation. Two thirds of marketers expect this share to increase next year.