STAMFORD, CONN: Marketing budgets are falling as a proportion of company revenue, according to a new study which suggests CMOs will be faced with some hard choices in 2018 as a result.

The 2017-2018 CMO Spend Survey, published by research business Gartner, was based on responses from 353 marketing executives in North America and the UK at companies with more than $250m in annual revenue.

This found that marketing budgets hit a plateau in 2017 after three years of growth, with budgets falling from 12.1% of company revenue in 2016 to 11.3% in 2017 – a return to 2015 levels.

And only 15% of respondents expected a significant increase in budget for 2018; 52% anticipated only a slight increase, while the remaining third were braced for frozen or cut budgets.

The dip in the budget-revenue ratio, while small, “poses difficult questions for chief marketing officers”, according to Ewan McIntyre, research director at Gartner, who observed that previous budget increases had come with weighty expectations, not all of which had been met.

“The time has come for marketing to show its financial management credentials, proving it can deal with financial constraints, assume accountability for business performance, build budgets based on future returns rather than past assumptions, and grow the business while making hard choices,” he declared.

The survey further found that two-thirds (67%) of CMOs plan to increase investment in digital advertising, including websites (61% plan to increase investment here) and mobile (59%).

CMOs also showed a strong and continued commitment to social marketing, with 64% planning to boost these budgets.

Meanwhile traditional media faces budget losses. More than half of CMOs expected their investments in event marketing and partner/channel marketing to fall or flatline, with 63% anticipating flat growth or cuts in offline advertising investment.

While the shift to digital is a reflection of changing media consumption habits, McIntyre warned that “without capabilities like marketing mix modeling (MMM), CMOs risk cutting away at channels based on gut feel”.

The multichannel consumer journey, he advised, requires marketing leaders to go further than channel performance metrics and to employ advanced analytics to answer the total marketing ROI question.

Sourced from Gartner; additional content by WARC staff