Marketing Budget’s Share of Company Revenues Almost Cut in Half From 2020

By: Matt Sonnhalter, Vision Architect 

Entering 2021, companies anticipated to have budget growth of more than 5% as they expected to have a swift recovery. A recent report from Gartner reveals that the share of company revenues allocated to marketing expense budgets has fallen drastically this year.

The survey of 400 marketing leaders across 5 global markets found that marketing budgets as a portion of revenue have fallen to 6.4% this year. The previous lowest year was 10.2% back in 2014. From the results we can see five trends happening.

Trend Number One:

The first trend that reflects this decrease is from the downward pressure on marketing spend induced by the pandemic. When budgets are getting cut, marketing budgets are usually the first ones to be on the chopping block.

Trend Number Two:

All nine industries analyzed had cuts in budget as a portion of revenue. Manufacturing experienced the biggest percentage-point drop in revenue allocated to marketing…12.7% in 2020, but only 5.8% for 2021! With the digital enterprise accelerating investments, spending priorities began to shift.

Trend Number Three:

With digital commerce dominating, marketing budgets started to spread across all different channels. 72.2% of investments were split between marketing channels like websites, digital ads and social channels.

Trend Number Four:

A lot of external agency capabilities are now moving to in-house strategic tactics. The three that have moved focus are brand strategy, innovation and technology and marketing strategy development.

Trend Number Five:

Lastly, with the shift to digital commerce that meant companies needed to change their spending on analytics. With having to invest in online programs to fuel digital success, this ended up taking 12.3% of the total budget.

I know manufacturers across the board are struggling with supply chain, labor shortages and other issues, but hard to believe marketing spending dropped so much in just one year.

Where is your company’s marketing budget share trending as a percentage of the company’s revenue?

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