Marketing budgets are swelling in 2022, up from the previous year, when high hopes were dashed by a pandemic that wouldn’t quit. In 2021, marketing budgets claimed 6.4% of the average company’s total revenue. This year, it’s up to 9.5%, according to the Gartner 2022 CMO Spend and Strategy Survey.
This brings the spend level, relative to revenue, up to pre-pandemic budgeting, where it held between 10.5% and 11.2% in 2018, 2019 and 2020. (Budgets were already locked in before the pandemic spread globally in 2020).
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Over the last two years, organizations have been grasping for any sign of normalcy. The lower percentage in 2021 marks a tentativeness in the timing of the recovery and, in many industries, pent up demand that might not have required big spending. Fast forward to the end of 2021, and supply chain issues and COVID subvariants added new question marks that kept spending lower in the new year.
Digital-first. The report also looked at the digital-first shift accelerated by the pandemic. Digital channels claim 56% of budgets this year, with social media the top digital channel for spend. Paid search and digital display were a close second and third.
Why we care. Comparing marketing budget to annual revenue attempts to track two moving targets during unstable times. Some industries, not to mention individual companies, were hit unevenly. One surprise is that Tech Products, as a category, dropped all the way down to 5% of revenue in 2021, and came back to 10.1% in 2022. That was even lower than Travel and Hospitality, which dropped to 5.4% in 2021 and has come back up to 8.4% this year.
Holding more steady is Healthcare, which only dropped to 7.4% of revenue in 2021 and is back up to 9.7% Consumer products were at 8.3% of revenue in 2021 and dropped slightly this year to 8%, perhaps because of the lingering supply chain issues. Every CMO has their own reason for waiting and seeing, but that’s the pattern across the marketing world at the moment. The relative rise in spend this year shows a careful optimism as marketing teams wait for a full rebound.
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