Advertising and marketing agencies are set to bare the brunt of a new round of client cutbacks, with CMOs planning to slash spend, eliminate unproductive relationships, streamline rosters, and renegotiate contracts as budgets flatline.
That is one of the key findings of Gartner’s 2025 CMO Spend Survey, which quizzed top marketers in the UK, North America, and Europe across different industries, company sizes and revenue.
It reveals that marketing budgets for 2025 remain flat at 7.7% of overall company revenue, exactly the same percentage as last year.
Nearly three-fifths (59%) of CMOs report they have insufficient budget to execute their strategy in 2025, down by five percentage points since 2024.
However, although budgets have failed to grow year-on-year, marketing leaders appear to be using their funds more creatively, boosting productivity by leveraging data and analytics to optimise performance (41%) and harnessing technology such as AI to automate key tasks (40%).
In fact, many claim GenAI investments are already delivering ROI through improved time efficiency (49%), improved cost efficiency (40%) and improving capacity to produce more content and/or handle more business (27%). Just 1% of CMOs said GenAI investments are not currently a priority.
Paid media continues to dominate marketing spend, accounting for 30.6% of marketing budgets or 2.4% of company revenue. However, media price inflation means CMOs are getting less for every pound spent.
Meanwhile, the proportion of budgets allocated to martech (22.4%), labour (21.9%) and agency spend (20.7%) continues to fall year-on-year.
Consequently, 39% of CMOs plan to further cut back on agency budgets, with 22% saying GenAI has enabled them to reduce their reliability on external agencies for creativity and strategy building.
Similarly, 39% of CMOs are planning to reduce spending on staff by simplifying overlapping roles and reducing total headcount.
Gartner Marketing Practice VP analyst and chief of research Ewan McIntyre said: “While marketing budgets have stabilised, marketing spending has stalled at a level that falls short for many CMOs. Given the looming macroeconomic uncertainties, marketers are now confronting the prospect of in-year budget cuts.
“With limited funds, leaders are boosting productivity in order to drive growth and squeeze more from static budgets.”
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