Marketing budgets have increased to 9.5 percent of overall company revenue in 2022, up from 6.4 percent in 2021, according to the Gartner 2022 CMO Spend and Strategy Survey.
This is a big turnaround from 2021, when marketing budgets dropped from 11 percent to 6.4 percent of overall company revenue due to uncertainty around the COVID-19 pandemic and related issues. And, we all know the first budget lines to get whacked in challenging times are marketing budgets.
In fact, the 2022 Gartner survey finds that three-out-of-four CMOs reported increased budgets compared to last year. So, while marketing spend is nearly up to pre-pandemic budgeting levels, it still lags by 1.5 percent.
All of this is actually excellent news, considering the World Bank has predicted global growth to “decelerate markedly” from 5.5 percent in 2021 to 4.1 percent in 2022.
For marketing budgets to buck this trend in growth declination, adapting to digital-first consumer behaviors is being seen as a necessity for survival, not just a differentiator.
Today marketers are putting their money in advanced marketing technology solutions to not just communicate with customers more effectively, but to help optimize marketing operations, improve the performance of their planned and always-on campaigns, and provide more marketing automation capabilities to support their overloaded teams.
Finally, with the impending doom of third-party cookies, marketers everywhere must develop their own first-party data strategy and deploy the right MarTech solution, like a customer data platform (CDP) or customer relationship management (CRM) platform, so their data can be managed centrally and appropriately.
For 2022 and beyond, the ongoing pandemic and resulting cultural and business changes will continue to accelerate the investment in marketing technology overall, with a focus on MarTech solutions powered by advanced artificial intelligence (AI) and machine learning (ML) capabilities, along with sophisticated analytic visualizations.
Read more: Tracking CDP Market Size Trends
Marketing Budgets Are Going Digital First
Companies that are less mature in their digital transformation journey typically embrace earlier strategies like focusing on digital-first behaviors or customer-centric cultural shifts. But as companies have accelerated their digital transformation plans due to a massive shift in consumer behavior towards digital channels, they have advanced their strategies to be more cohesive and omnichannel.
According to the Gartner Survey, CMOs have already begun to make the shift from digital-first to embracing hybrid multichannel strategies. CMOs report that in 2022 digital channels will use 56 percent of their total marketing budgets, with social media the top digital channel for spend. Paid search and digital display were a close second and third for spending.
Marketing Spend Across Industries
According to the Gartner survey, average marketing spend has increased across almost all of the industries surveyed. Financial services companies recorded the highest budget, at 10.4 percent of total company revenue, up from 7.4 percent in 2021. While almost all industries saw budget increase, CMOs in consumer goods report their spending has stagnated.
Percentage of Revenue Allocated to Marketing
|IT & Business Services||5.9%||9.6%|
|Travel and Hospitality||5.4%||8.4%|
Where is the Money Going?
When CMOs in the Gartner survey were asked to report their budget allocations across the marketing department’s program and operational areas, brand strategy and activation accounted for nearly 10 percent of the overall marketing budget.
CMOs also identified strategic capability gaps that need to be addressed. Twenty-six percent of CMOs report marketing data and analytics as a top capability gap, while 23 percent said customer experience management. Twenty-two percent said marketing technology needs better funding.
According to author Bernard Marr, in terms of marketing technology, expect investments to focus on the deployment of AI capabilities in a variety of software applications. One of the more notable uses of this technology is for natural language processing (NLP) to create more useful and relevant chatbots that will expand their use beyond simple question and answer scenarios.
Virtual, augmented, and mixed reality (VR/AR/MR) are being adopted into various marketing strategies and business initiatives. AR is being used for virtual products and clothes, while VR is finally becoming more viable for gaming.
In 2021, 35 percent of marketers were leveraging AR or VR in their strategies. Of those marketers, 42 percent plan to increase their investment in 2022.
According to Hubspot, 44 percent of marketers have said that the change in third-party cookies will result in significantly increased spending to achieve the same results in 2022 as in 2021. Marr also comments that the death of third-party cookies will mean marketers need to spend more to achieve the same results as before.
Marketers must look for alternative methods and solutions, like a CDP, DMP, or CRM system, to track and understand their customers behaviors in real-time, and manage customer data centrally with unified, single customer view profiles.