AI saves the day as CMOs are forced into the era of less

Consumers might still be wary of artificial intelligence but more and more marketers are adopting the technology to boost productivity as as slashed budgets are forcing them to do more with less.

That is the standout conclusion from Gartner’s Annual CMO Spend Survey, which reveals 2024 average budgets have fallen 15%, and are down to 7.7% of overall company revenue, from 9.1% in 2023.

Conducted in February and March 2024, the survey quizzed 395 CMOs and marketing leaders in Northern and Western Europe, as well as in North America, across 10 different industries, company sizes and revenue. The vast majority of respondents reported median annual revenue of over $5.3bn.

Gartner Marketing Practice VP analyst and the chief of research Ewan McIntyre said: “CMOs are living in an ‘era of less’. In the four years preceding the Covid-19 pandemic, average marketing budgets were 11% of overall revenue. In the four years since, they’ve dropped to an anemic 8.2%.”

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

McIntyre added: “We’ve seen a major shift in investment strategies, reflecting tightened budgets and higher growth aspirations.

“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 clearly prioritising media spend as they seek to drive revenue growth.”

Digital dominates 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.

McIntyre continued: “In these tough times, CMOs are prioritising investments that have demonstrable impact.

“However, there’s a mismatch between the channels CMOs are investing in and their perceived impact. For example, CMOs ranked digital video/streaming as the most impactful digital channel, despite it only coming in 4th when it comes to spend.”

As CMOs chase revenue growth despite budget cuts, AI has emerged as an important tool. McIntyre explained: “Reduced budgets are only a problem if marketing leaders are working with the same tools as before – that’s not the case now that CMOs have AI. GenAI is delivering enhanced productivity, despite constrained resources.”

In fact, GenAI investments are most likely to be cited as delivering time and cost efficiencies – more than one third of CMOs identified these as their top three benefits when considering the ROI of AI investments.

McIntyre concluded: “Despite financial challenges, the majority of CMOs believe AI may save the day. Some 64% say they lack the budget to execute their 2024 strategy, but GenAI offers the opportunity to grow the marketing function’s impact far beyond its budgetary constraints.”