Why Marketing Budgets Are Going Up!

Key Takeaways

The State of Marketing Budgets in 2022

Marketing budgets are a reflection of how much businesses value and invest in marketing as a driver of growth and value. According to the Gartner 2022 CMO Spend and Strategy Survey1, marketing budgets have recovered somewhat from the record lows in 2021, when they dropped to 6.4% of company revenue due to the pandemic and economic downturn. In 2022, the average marketing spend increased to 9.5% of company revenue across almost all industries, indicating a renewed confidence and optimism among CMOs.

However, this recovery is not uniform or complete. Some industries, such as financial services, travel and hospitality, and tech products, have seen significant increases in their marketing budgets, while others, such as consumer goods, have experienced slight decreases. Moreover, marketing budgets still lag behind the prepandemic levels, which averaged 10.9% of company revenue between 2018 and 20201. Therefore, marketing leaders still face challenges and pressures to justify and optimize their marketing spending in the face of uncertainty and volatility.

The Reasons Behind the Increase in Marketing Budgets

What are the factors that are driving the increase in marketing budgets in 2022? According to the CMO Survey1, there are several reasons why CMOs are optimistic and bullish about their marketing spending:

The Challenges and Opportunities for Marketing Leaders

While marketing budgets are increasing, marketing leaders still face challenges and opportunities to make the most of their marketing spending and to demonstrate their value to the business. According to the Harvard Business Review2, marketing leaders need to build the business case for their marketing budgets based on the following actions:

  • Alignment with business priorities and strategies: Marketing leaders need to show how their marketing spending aligns with and supports the overall business goals and strategies. They need to identify the key drivers of growth and value for the business, such as market leadership, customer loyalty, or innovation, and how marketing can contribute to them. They also need to use relevant metrics and indicators to track and communicate their progress and impact.
  • Partnership with the CFO: Marketing leaders need to build a strong relationship and collaboration with the CFO and other financially driven peers. They need to understand the CFO’s perspective and expectations, and to provide clear and consistent information and evidence to support their marketing spending. They also need to involve the CFO in the planning and decision-making process, and to seek their feedback and input.
  • Measurement of long-term outcomes: Marketing leaders need to balance the short-term and long-term effects of their marketing spending, and to measure and report both. They need to avoid focusing only on the immediate sales revenue, which may neglect the longer-term efforts such as brand building, customer relationship, and innovation. They also need to use a mix of quantitative and qualitative methods, such as surveys, experiments, and case studies, to capture the full range of marketing outcomes.

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