Editorial
The Gist
- Re-evaluate agency spend. Streamlining rosters and cutting unproductive relationships frees up funds for higher-impact initiatives.
- Invest strategically in martech. Focusing on AI and analytics solutions delivers efficiency gains and sharper customer insights.
- Optimize paid media allocation. Demonstrating ROI with data ensures digital ad spend drives engagement and measurable value.
Marketers have always been bombarded by messages to experiment with new analytics software or try a new agency. Yet deciding to investigate solutions to support marketing objectives always comes up against budget decisions.
Marketers are seeing more of those budget discussions these days. The seemingly endless investment in martech and campaigns slowed down dramatically during the height of the COVID period. But in the years since, the spend recovered but at a lower percentage of revenue than before the pandemic.
The result is forcing marketers to look at budgets more discriminatingly is forcing marketers to rethink campaigns and technology spend. Many feel their budgets are insufficient. But the trend is also proving to be an opportunity to alter strategy for pursuing needed tech and campaigns while meeting budgetary concerns.
And based on recent research, the silver bullet for chief marketing officers? It may be paid media.
Table of Contents
- Marketing Budgets Flatline; Paid Media Takes Center Stage
- Marketing ROI Pressure Is Real
- Marketing Budget Trends Show Mixed Signals
- Top Spending Priorities Emerge
- How Should Marketers Respond to the Current State of Marketing Budgets?
- Customer Retention Takes Center Stage
- The New CMO Balancing Act
- What Should Marketers Take Away From the Current Budget Environment?
Marketing Budgets Flatline; Paid Media Takes Center Stage
Gartner released earlier this year findings from the 2025 CMO Spend Survey of 402 chief marketing officers, which revealed marketing budgets have flatlined at 7.7% of overall company revenue.
According to Gartner, budget growth has become elusive since 2021. Over half of the surveyed CMOs reported that their budgets were less than 6% of company revenue.
The budget restrictions are not entirely surprising. After layoffs, companies often look at reducing marketing budget, to the point of detriment for long-term strategy.
The proportion of budgets allocated to martech (22.4%), labor (21.9%) and agency spend (20.7%) has continued to fall year-on-year. Thirty-nine percent of surveyed CMOs plan to cut back on agency spend.
Paid media continues to comprise a considerable portion of marketing spend. However, digital ad budgets are still a target when marketers face competing budgetary resources. Managers mistakenly believe cutting ad budgets is saving money; to be honest, the decision does eliminate unnecessary spending. But it can compromise messaging opportunities that can draw customer engagement when practiced correctly.
The survey shows signs that marketers are working to avoid that compromise. Marketers will spend 30.6% of their marketing budgets on paid media. The amount shows paid media as a priority above martech, labor and agency spend.
Related Article: CMOs Respond as Marketing Budgets Take Hit in 2024
Marketing ROI Pressure Is Real
So is it a channel marketing leaders should be focusing on? Or skills?
Investment in tech can hold the strategic advantage in a highly competitive marketplace. CMSWire discovered the significance of martech investment in its latest research for the annual CMSWire State of the CMO report (Editor’s Note: Michelle Hawley interviewed CMSWire VP of Research Sarah Kimmel to unpack the report’s top findings).
With insights from more than 500 marketing leaders across diverse industries and company sizes, the State of the CMO report examines the evolving role of CMOs and the skills necessary for success in today's competitive landscape.
Kimmel noted a consistent sentiment that emerged from the report, highlighting that “organizations that are facing more pressure to show results from their marketing spend are actually more likely to be experimenting with emerging technologies.” That sentiment reflects that marketers recognize how vital investment in data-related skills — analysis, data literacy, data visualization — and investment in supporting tech solutions drive the ability to manage marketing spend competitively.
Related Article: CMO Circle: Inside the State of the CMO
Marketing Budget Trends Show Mixed Signals
But is it all doom and gloom? After all, 67% of marketing leaders report budget increases this year and 84% expect growth next year, according to Gartner data, the overall picture remains constrained. Large enterprises show more promise for increases, but all organizations demand intense scrutiny and ROI proof on every dollar spent.
Economic pressures including inflation and new tariffs have forced a shift from static annual budgets to agile, portfolio-style approaches. CMOs are fast-tracking initiatives that drive measurable pipeline impact while pausing low-yield activities like legacy events or broad sponsorships.
Top Spending Priorities Emerge
Further analysis finds marketing leaders are concentrating investments in three key areas: data-driven decision making, advanced analytics and generative AI adoption. However, a notable paradox exists—while martech investment rises to 22% of total spend, 39% of CMOs plan agency and labor cuts to stay within budget constraints.
The martech stack continues maturing, but organizations face significant hurdles including tool proliferation and skill gaps in AI literacy and data governance.
How Should Marketers Respond to the Current State of Marketing Budgets?
If you are a marketer leading a team that is analytics-ready yet budget-challenged in moving forward, keep these three aspects in mind to form a decision framework.
Key CMO Budget Strategies
Editor's note: Three approaches CMOs are using to maximize impact and efficiency in 2025 marketing budgets.
| Strategy | Key Actions | Rationale |
|---|---|---|
| Re-evaluate agency spend | Streamline agency rosters, eliminate unproductive relationships and renegotiate contracts and scopes of work. | The proportion of budgets allocated to agency spend has continued to fall. Savvy CMOs can plan which agencies help with moving forward on crucial campaigns and analysis. This strategy frees up funds for reallocation. |
| Strategic martech investment | Identify martech solutions, especially those focused on data analytics and AI, that support significant ROI opportunities to improve efficiency, reveal relevant customer insights and optimize campaign performance. | Although overall marketing budget allocation has fallen year-on-year, data analytics can provide crucial opportunities to blend investment spend while improving analysis performance. |
| Optimize paid media allocation | Demonstrate the clear value and ROI of digital ad spend, emphasizing its role in driving customer engagement and avoiding compromise of messaging opportunities. | Proving ROI through AI and analytics will optimize this spend so that customer insights are discovered. |
These concepts may require a different ordering of associated tasks to gain answers and develop solutions. The difference will lie in some details, such as agency contracts or how teams have been using a martech solution since initial training. Nevertheless, a good decision framework will cover the details, giving teams indicators of where to focus.
Customer Retention Takes Center Stage
With rising customer acquisition costs, CMOs are prioritizing investments in first-party data, email marketing and loyalty programs. Personalization, digital experience and cross-functional collaboration with sales, product and IT teams have become essential for driving both immediate results and long-term brand value.
The New CMO Balancing Act
Modern marketing executives must balance agility, technology fluency and data credibility while maintaining accountability for business growth. Success requires mastering near-real-time pivots, proving value in boardroom discussions and establishing regular, transparent review cycles with CFOs through data-driven storytelling about marketing's business impact.
What Should Marketers Take Away From the Current Budget Environment?
Ultimately, marketers should be prioritizing opportunities that allow teams to leverage any marketing data that supports customer experiences. Marketers should leverage AI and analytics to gain deeper insights into customer preferences. This allows for more targeted and personalized customer experiences, potentially reducing wasted spend on broad campaigns and increasing customer engagement that leads to meaningful sales growth. Gartner survey respondents ranked leveraging data and analytics at the top of the actions they took to boost productivity.
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Any business resource will face a challenging environment where budget dollars have a ceiling. The surveys indicate that marketers are reconsidering resource investment as spending is reined in. The sentiment is especially notable as external pressure, such as the current US tariff deliberations, introduces some uncertainty into forecasting budgets.
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