Marketing chiefs are being urged to ditch their obsession with new technology after prioritising martech spend over all else, despite a “triple whammy” of suppressed budgets, increasing costs and lower productivity.
That is according to the annual Gartner 2023 CMO Spend & Strategy Survey, which reveals that nearly three-quarters of marketing bosses say they lack the budget to fully execute their strategy this year.
Conducted in March and April 2023 among CMOs in Northern and Western Europe as well as North America, the study covers bosses across different industries, company sizes and revenue, with the vast majority of respondents reporting annual revenue of over $1bn.
The survey reveals that marketing budgets compose 9.1% of total company revenue in 2023, remaining relatively flat but still dipping slightly from the 9.5% reported in 2022.
With three-quarters of CMOs facing increased pressure to “do more with less” to deliver profitable growth in 2023, some 86% said they must make significant changes to how the marketing function works to achieve sustainable results.
Gartner Marketing practice chief of research and VP analyst Ewan McIntyre commented: “In 2023, CMOs need to become a new type of enterprise leader. This goes beyond serving at the helm of the brand but also assuming a more business-focused role that pivots into a period of investing for profitability versus growth. Those that carry on status-quo will face significant challenges in the near-term.”
CMOs have seen technology investments tumble into new lows of unproductivity, with utilisation rates falling from 58% in 2020 to 42% in 2022.
For this reason, 75% of marketers report being under pressure to cut martech spend this year to deliver better ROI. However, the highest reported investment increase across all major marketing resources by CMOs this year actually goes toward martech, while the largest decrease has been seen in staff costs.
McIntyre added: “Like gamblers looking to write-off their losses with the next bet, CMOs are attracted to the allure of newer technologies, no doubt amplified by the chatter around generative AI.
“They are hungry to see its potential to transform marketing campaigns and content creation. While this hunger to invest is understandable, it illustrates the sunk-cost fallacy that more tech is always better.
“The willingness to let the majority of their martech stack sit idle signifies a fundamental resource disconnect for CMOs. It’s difficult to imagine them leaving the same millions of dollars on the table for agencies or in-house resources. This trade-off of technology over people will not help marketing leaders accelerate out of the challenges a recession will bring.”
Social advertising, which currently takes up the most paid media budget, was identified as the top digital channel to receive increased investment this year, followed by digital video advertising and influencer marketing. Search advertising was identified by the most respondents to receive decreased investment in 2023.
McIntyre said growth, yield and return must be foremost in CMOs’ minds as they go beyond standard prioritisation. CMOs should double-down on scenario planning and balance efficient near-term execution with investments that enable them to build future-forward capabilities.
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