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Gartner: Marketing Budgets On The Rise As CMO Mandate Grows

Marketing budgets continue to grow for the third consecutive year, according to new research by Gartner. The 2016-2017 “CMO Spend Survey” shows marketing budgets increased to 12% of company revenue this year, and CMO marketing technology spend is on track to exceed CIO tech spend in 2017.

“Marketing has taken on more responsibility outside of the touch points that marketing has traditionally owned and controlled,” said Jake Sorofman, a research VP at Gartner. “And it often encompasses aspects of customer experience and digital commerce, and we see marketers taking on P&L responsibility. In some cases, marketing is taking on some sales responsibility and even IT responsibility. This growing mandate for marketing is driving the need for more resources, so that’s one of the factors driving growth in spend.”

Another reason marketing is getting more of the budget: its shift in recent years from a bullhorn for the brand to actually driving profitable growth through acquisition and retention of customers, and deepening relationships with the highest value customers. It makes sense, Sorofman said, that more resources are needed as marketing takes on more responsibility for driving business growth.

Additionally, as marketers become more transparent with reporting and are able to show ROI, they’re able to command higher budgets.

“We see that directly,” Sorofman said. “In the findings, you’ll notice that marketers that own or share P&L responsibility are able to command 20% higher budgets than those that don’t. I think the interesting finding there is that we already know that with power comes responsibility, but the inverse is also true. With responsibility comes power. It earns you the right to command higher budgets when you’re willing to step up to P&L accountability.”

One of the patterns Gartner sees among high-performing marketing leaders is how they organize around and prioritize to what matters most to the CEO. They’ve created a very clear relationship between the articulated corporate goals of the business and what they take on as KPIs from the marketing organization. To that end, Gartner recommended aligning the marketing team around the company’s overall business strategy to help ensure the marketing budget increases year after year.

“Rather than just simply following what your peers and competitors are doing, you should be looking at it more strategically from the perspective of your goals and objectives, and from the perspective of the customers you’re trying to reach,” Sorofman said.

Gartner also recommends that CMOs consider bringing certain marketing disciplines in-house versus outsourcing to an agency, as that can be money put toward other marketing initiatives.

“The goal is to figure out the right blend of in-house and outsourced resources to achieve your objectives at the lowest possible cost to effectively deliver highest yield for the business,” Sorofman said. “There’s a view of cost that factors into this and closing skills gaps, but there should be also a view toward ultimately what’s core to your business and what skills should you have in-house on a longer horizon for the purpose of competitive advantage.”

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