CMOs are spending less on marketing technology than last year, but the software still makes up a considerable portion of marketing budgets. 

According to Gartner’s CMO Spend Survey 2019-2020, marketing technology (martech) investments dropped 3 percentage points year over year, falling to 26 per cent of marketing budgets in 2019. 

The annual report is based on a survey of more than 340 marketing executives in North America and the UK, which tracks the critical areas marketers are investing in from people, programs and technologies. 

Martech has proved to be a volatile area of investment, as CMOs chart a path through the hype which surrounds new technology and the technical challenge of driving value from their new investments which require changes to skills and processes. 

In 2018 martech spend represented 29 per cent of the budget, up from 22 per cent in 2017. Martech spending peaked in 2015-2016 period, when it climbed to 33 per cent of marketing budgets. 

This year, at 26 per cent, it is equal to spending on media. 

Gartner’s CMO Spend Survey 2019-2020

The report, authored by Gartner analysts Ewan McIntyre and Anna Maria Virzi, noted that martech budget are under pressure because CMOs struggle to effectively manage their marketing technology stack. 

Gartner’s 2019 Marketing Organisation Survey reveals that 24 per cent of marketers believe martech strategy, adoption and use is one of their top three weaknesses in their company’s ability to drive customer acquisition or loyalty. More than 25 per cent of marketers blame those martech strategy weaknesses on insufficient budget, resources or capabilities.

The analysts recommend hiring martech generalists who can help marketing teams meet fast-changing customer demands while supporting strategically important data integrations. 

The limits of in-housing

The report also examined the trend of in-housing, driven by the availability of tools to do the work that was once outsourced to agencies. 

“Martech and adtech have democratised capabilities that had previously been in the exclusive domain of agencies. For example, in-house media planning and buying is now within the reach of brands with even the most modest budgets,” the authors write. 

Gartner’s 2019 Marketing Organizational Survey found that almost two-thirds (63 per cent) of respondents have moved some aspects of their delivery from third-party agencies to in-house teams. 

However CMOs are still willing to invest in external service providers, spending on marketing agencies still accounts for nearly a quarter (22 per cent) of total marketing budgets.

According to Gartner, the data points to a trend of agencies moving away from commoditised services to higher-margin, longer-term strategic engagements, such as digital transformation, strategy or technology projects.

“CMOs still look to external agencies for creative work; almost the same proportion now look to agencies to support technical projects, strategic services, and analytics and data projects,” the authors write. 

Investing in analytics 

Analytics continues to be an area of strategic investment for CMOs as they pursue data-driven marketing. 

Marketing analytics is the single largest area of investment, making up 16 per cent of the budget allocated to marketing programs and operational areas. 

“Analytics and insights remain the most strategically important marketing capabilities, and with this the once-unglamorous function of marketing operations rises in strategic prominence,” the authors write. 

Another unglamorous part of marketing enjoying a renaissance? Marketing operations. 

Thirty percent of CMOs nominated marketing ops as a vital capability. 

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