The ceremonial scissors are a time-honored marketing staple of big launches, but soon, an all-too-real pair of scissors may loom over the marketing budgets that fund such launches.
New research from Gartner suggests marketing budgets have risen this year, but troubling macroeconomic headwinds are creating fears that they’re about to get snipped.
I’d Like to Buy the World a Break
The good news for marketing departments is that, this year, budgets have gone up in almost every industry. Gartner’s latest annual survey of 400 Chief Marketing Officers (CMOs) — a majority of whom work at companies with $1 billion or more in revenue — says that, on average, the equivalent of 9.5% of company revenue has been earmarked for marketing in 2022. That’s enough to keep Mr. Clean and the Michelin Man grinning from ear to ear.
But the catch — as ever these days — is in the neverending parade of economic headwinds: from inflation to Ukraine to supply chains. Marketers need only look in the rearview mirror to be reminded that their budgets are normally among the first on the chopping block when the economy takes a turn for the worse:
- Previous Gartner CMO surveys found that an average of 10.9% of company revenue was earmarked for marketing from 2018 to 2020. That number plummeted to 6.4% last year, reflecting the belt-tightening of early pandemic times.
- In another Gartner survey released last week, 39% of 180 surveyed Chief Financial Officers — the ones holding the purse strings — said that, should inflation continue into the fourth quarter, cost-cutting will be their main way of fighting it; 20% said cost-cutting is already underway.
“We’ve seen this in previous years — marketing budgets are generally the first to be impacted in times of economic difficulty,” Ewan McIntyre, Chief of Research at Gartner for Marketers, told the Wall Street Journal.
Memory Lane: Back in December, media-buying firm GroupM increased its growth forecast for global ad spending in 2022 from 19.2% to 22.5%, amounting to $763 billion. If they turn out to be right, many a CMO will be doing cartwheels.