CMOs Must Take a More Mature Approach to Budgeting

Chief marketing officers must take a more mature and sophisticated approach to analyzing their marketing budgets.

Too many CMOs continue to hope that existing budgets will simply roll over to the next financial year or modestly increase.


Instead they must rigorously review current spend across all initiatives and be prepared to apply more advanced budgetary criteria to their planning.

That's according to the latest CMO Spend Survey from research firm Gartner, drawing on 353 responses from marketing executives at companies with more than $250 million in annual revenue in the United States, the United Kingdom, and Canada.

CMOs need to keep their eye on the total ROI of their marketing investment, Gartner says.

"There’s evidence that CMOs may have become distracted — either by a heavy focus on operational and tactical measures of performance, or by diverting their gaze toward
large, cross-functional initiatives such as CX programs that have yet to provide hard economic
benefits to the enterprise," the report warns.

The survey points to a contraction in marketing budgets as a percentage of company revenue, dropping from a high point of 12.1% in 2016 to 11.3% in 2017.

With this in mind, CMOs should be proactive in preparing for the impact of budget cuts by conducting top-to-bottom reviews of current marketing programs and investments to identify areas for savings and efficiencies, Gartner says.

As CMOs survey the landscape, one thing is clear — previous budget increases have come with weighty expectations, some of which have yet to be met. The time has come for marketing to show its financial management credentials, proving it can deal with financial constraints, assume accountability for business performance, build budgets based on future returns rather than past assumptions and grow the business while making hard choices.
— Gartner CMO Spend Survey

The research organization advises CMOs adopt more mature budgeting methods such as zero-based and activity-based budgeting. 47% of marketing executives surveyed reported currently using such advanced approaches.

A lack of sophistication in budget planning often leads CMOs to continue investment into legacy projects and resource that are not delivering optimally for the business. CMOs need to work closely with CFOs and CEOs to ensure total marketing investment is being spent in the smartest possible way.