Gartner Says Marketing Budgets Dip To 6.4% Of Overall Company Revenue In 2021

According to Gartner, Inc., marketing budgets have fallen to their lowest point, dropping from 11% in 2020 to 6.4% of the company’s revenue. in the UK, France, and Germany from March 2021 to May 2021, tracking critical areas marketers are investing in and cuts being made in workforce, programs and technology.

“Despite budget cuts in 2020 due to the pandemic, most marketing managers expected budgets to rebound in 2021. This budget optimism was out of place as marketing budgets fell to their lowest point in the world. history of the Gartner Marketing Director Spend Survey (see Figure 1), ”said Ewan McIntyre, co-chief of research and vice president analyst at the Gartner for Marketers practice. have been slow over the past year, where many marketing budgets have not recouped what was originally lost. “

Figure 1.

Gartner’s annual Marketing Director Spending Survey, 2021, found that no one, regardless of company size or industry, has escaped deep cuts in marketing budgets. In fact, no industry has hit a double-digit budget in 2021 (see Figure 2). Travel and hospitality, manufacturing and technology products businesses suffered the largest declines in 2021.

Meanwhile, consumer goods and goods (CPG) companies reported the largest marketing budgets in 2021, accounting for 8.3% of the company’s revenue. Large companies were hit the hardest – companies with revenues over $ 2 billion reported the lowest average marketing budget of just 5.7%. On the other hand, companies with revenue below $ 500 million reported the highest marketing allocation with an average budget of 8.6% of revenue.

Figure 2.

Marketing directors redefine their spending amid major budget cuts

Gartner research shows that marketing managers have shifted their spending commitments across all of their channels and programs, with pure digital channels – owned, paid, and earned – dominating these priorities and accounting for 72.2% of the total marketing budget.

When looking at the larger allocation of resources – agencies, media, labor, and paid media – agency spending continues to decline. “Despite a slight decrease from 23.7% in 2020 to 23% in 2021, this continual shift indicates significant internal activity as marketing managers reinvent the capabilities that can be supported by their internal teams,” added McIntyre .

Marketing managers report that 29% of the work previously done by agencies has moved in-house in the past 12 months alone. The focus of in-housing is also evolving – with branding, innovation and technology, and marketing strategy development being the three main areas of capability, marketing directors are transferred to internal teams. . Meanwhile, marketing technology (martech) continues to dominate, taking up 26.6% of the total budget.

Digital commerce exceeds program spending

2020 and 2021 have seen drastic changes in customer buying journeys – both B2C and B2B, forcing even digital latecomers to accept the inevitable shift to online channels. Looking at budget allocation by programs and operational areas, marketing directors indicate that digital commerce represents 12.3% of the total budget. Likewise, marketing operations and branding represent 11.9% and 11.3% of the total budget.

However, while marketing analytics still accounts for 11% of the total budget, its focus has steadily declined – now in fourth position in 2021. “Marketing managers continue to invest in data and marketing analytics, but for many, the results failed to live up to expectations, ”McIntyre said. “Given recent and upcoming regulations and changes in data collection, we anticipate that this area of ​​investment will continue to be a strategically important capacity, but that it will also continue to fluctuate until uncertainties arise. disappear. “

For more details, log on to the Gartner CMO Spend Survey 2021 webinar: Redefine Spending Priorities to Fuel Postpandemic Growth on July 14, 2021 at 10 a.m. ET. Gartner for Marketers customers can learn more in “The State of Marketing Budgets in 2021: Insights from Gartner’s Annual CMO Spend Survey”.

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Barbara M. Stokes