Navigating Marketing Budget Trends
In building a budget for 2024 and beyond, marketing executives face constraints from struggles to hire and retain top talent to increasing pressure from stakeholders to prove results. With many chief marketing officers (CMOs) working within tighter limits over the past few years, understanding how to make the marketing spend stretch farther is more important than ever. Adapting to the current marketing budget trends means making the most out of less. With that in mind, CMOs must shift focus from adding on more and more tech in past years to optimizing current processes and ensuring their tech stack is used efficiently. Overall, marketing initiatives and their associated budgets need to be closely tied to business goals to win stakeholder buy-in and help businesses stay competitive.
Why Marketing Budget Trends Matter
Staying updated on trends helps marketing leaders keep up with:
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Macroeconomic changes
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Shifts in competitor strategies
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Potential challenges to expect in the coming year
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Marketing resource management (MRM) techniques
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The general climate of C-suites in regards to marketing strategy
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Expected marketing budget changes for the near future
Understanding budgeting trends and the strategies that other marketers and analysts recommend leads to better decision-making. Armed with this knowledge, marketers can use their grasp on the current market and environment to make strategic plans that defend against industry obstacles.
Current Landscape of Marketing Budgets
According to the 2023 annual CMO Spend and Strategy Survey from Gartner, marketing budgets have yet to return to their pre-COVID average of 11% of total revenue dedicated to marketing initiatives. In 2022, marketing budgets rose 3% from 2021’s low of 6.4% to reach 9.5% of total revenue, showing the start of a healing process in the wake of COVID-19.
However, this percentage remained relatively flat in 2023 at 9.1%. Marketing experts expect to see a similar lack of growth in 2024.
These averages can, of course, differ across industries, company sizes, and types of businesses. Business-to-business (B2B) companies, for instance, once trailed business-to-consumer (B2C) companies in marketing and sales digitalization, but now that gap is closing.
COVID-19 restrictions forced B2B brands to create better digital and self-serve experiences that didn’t exist pre-pandemic. Now, B2B brands who have made strategic decisions about their marketing tools and processes in recent years may actually achieve better stakeholder buy-in for digital marketing initiatives moving forward.
Factors Influencing Marketing Budget Decisions
When allocating marketing budgets, businesses consider these key factors:
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Economic conditions: Currently, high interest rates affect many companies? ability to allocate sufficient resources across departments. In light of high rates of staff turnover, top talent is making bigger demands of companies. Additionally, investors are applying increasing pressure on companies to see shorter-term returns versus holding out for longer growth plans to come to fruition.
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Market dynamics: Within every industry, market dynamics shift over time as competitors change, technology advances, consumer needs evolve, and supply chains are modified. Highly regulated industries, like medical and food and beverage, also shift their strategies to adapt to new rules as they surface.
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ROI on past marketing spend: Marketers that adapted to digital transformation earlier now face stakeholders? growing need to prove the value of past spending on new marketing tools, teams, and processes. Marketing technology, once new and uncharted territory, now requires fine-tuning and optimization to show operational efficiency and reliability to key decision makers.
Emerging Channels and Technologies
As new marketing channels and technologies arise, marketing executives have to get more creative and clear with their budget allocation. To address these challenges, CMOs should consider:
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Discovering how new technologies can integrate with and optimize existing tools, instead of fully pivoting away from the pre-existing tech stack
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Implementing marketing resource management software to better manage and track budgets, digital assets, content, and collaboration within marketing teams
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Analyzing past performance across different channels, including their specific role in the average buyer’s journey to justify planning for the next year’s content and spend
Trends related to digital advertising, social media, and emerging platforms also evolve quickly, further affecting CMOs? spending and strategy decisions. A few important current digital marketing trends include:
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The use of artificial intelligence (AI) continues to grow, helping marketers in use cases like content coaching and research
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Instagram Threads surged as a platform for consumer and customer engagement, with companies like Canva and TedTalks finding success in creating connective conversations with their audiences
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Google is developing a generative AI-powered search experience called its SGE (search generative engine) in 2024. Using this, searchers will essentially be able to have a conversation with Google to find better-quality answers to their queries, which is expected to decrease organic click-through rates
Adapting to Change: Agility in Marketing Budgets
Marketing budgets need flexibility to address changes in the economy, market dynamics, and emerging channels and technologies. When creating an annual budget, businesses should consider these tips to better adapt to unforeseen changes and challenges:
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Set aside a portion of the budget for experimentation: Balance this with grounded budget allocation plans based on process optimization within current systems
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Make strategic talent and outsourcing decisions: Prioritize understanding which areas need an in-house specialist and which would be best left to external professionals. A new year is a great time to refine roles, responsibilities, and processes, as well as revisit how well past technologies and tools have been implemented by personnel
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Optimize MRM technologies and processes: Review which parts of current processes are working, which aren’t, and the available solutions. Consider better educating employees on tool usage, finding new strategies to make existing technologies more efficient, and finding new technologies to integrate into the tech stack to fill gaps
