CMOs Want To Reduce Reliance on Agencies

CMOs want to keep strategy close.

CMOs want to keep strategy close.

CMOs want to reduce their reliance on agencies and bring strategy in-house even as their marketing spend on external agencies is increasing.

That's the finding of a survey by research firm Gartner based 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.

Ewan McIntyre, research director, said CMOs would prefer to rely on agencies to fill execution gaps after several years of being willing to lean on agencies as strategic partners.

However, the desired "in-sourcing" of marketing strategy and execution is proving difficult in practice for CMOs, who are struggling to cultivate and retain the in-house talent needed to make it a reality.

As to why CMOs are eager to dial back their external agency spend, McIntyre points to the perception that outside strategic services are expensive compared with in-house options.

He recommends agencies go heavy on communicating the value add associated with outside strategic services.

For CMOs, getting the optimal balance between
in-house and agency resources is an enduring
organizational design challenge. Together, labor
costs and services constitute more than half
(53%) of the total marketing budget, with 25%
spent on services (up from 22% last year) and
27% spent on labor (down from 28% last year)
— Gartner

The Gartner survey also revealed a like-for-like contraction in marketing budgets as a percentage of company revenue.

After three years of consecutive growth, marketing budgets fell from 12.1% to 11.3% of total revenue year-on-year, McIntyre said in a post on LinkedIn.

Businesses appear to be cost optimizing their marketing spend in order to reinvest in other areas.

The number of companies identified as having lean marketing budgets - defined as under 9% of revenue - is growing, the survey found.