Marketing Budgets Drop To 7.7% Of Revenue In 2024; AI May Save The Day: Gartner Survey

Average marketing budgets have fallen to 7.7% of overall company revenue, down from 9.1% in 2023, according to a Gartner survey of chief marketing officers and marketing leaders.

Despite financial challenges, the majority of CMOs believed that artificial intelligence may save the day. Sixty-four percent of CMOs said they lack the budget to execute their 2024 strategy, but generative AI offers the opportunity to grow the marketing function's impact beyond its budgetary constraints.

In the four years preceding the pandemic, average marketing budgets were 11% of overall revenue. In the four years since, they've dropped to 8.2%. CMOs are curtailing spending on tech, labour and agencies, but protecting paid media investments.

While paid media investments grew to 27.9% of budget in 2024, spending fell across martech, labour and agencies. Technology investments continue their downward trend, reaching the lowest level for a decade.

Gartner experts said that the drop in martech investment doesn't signal a dulled appetite for technology; rather it reflects CMOs' diminishing influence over martech as other enterprise leaders, such as IT, take more control. Meanwhile, CMOs are prioritising media spend as they seek to drive revenue growth.

Digital dominated a growing share of paid media spend, taking 57.1% of budgets in 2024, up from 54.9% in 2023. Top channels include search (13.6%), social advertising (12.2%) and digital display advertising (10.7%). Among offline channels, event marketing (17.1%), sponsorship (16.4%) and TV (16%) were the top channels for investment.

As CMOs chase revenue growth despite budget cuts, AI has emerged as an important tool. According to Gartner experts, reduced budgets are a problem if marketing leaders are working with the same tools as before, which is not the case now that CMOs have AI and generative AI is delivering enhanced productivity.

Generative AI investments are most likely to be cited as delivering time and cost efficiencies, with more than one-third of CMOs identifying these as their top three benefits when considering the ROI of AI investments.