10 Eye-Opening Facts About Marketing Budget Allocation

Every two years, The CMO Survey asks hundreds of senior marketing executives hard-hitting questions about their marketing performance, hiring, and budget allocation to track industry changes and predict new trends. 2017 marks the 19th administration of this survey, so there’s plenty of comparative data to dig into.

Last year, 349 U.S.-based marketers participated. The majority of those who responded to the survey (over 90%) work at the VP level and above, which means they were asked the questions everyone wants to ask: “How big is your marketing budget?” and “Where did the marketing dollars go?”

As expected, ad dollars are shifting to digital as more consumers buy online, and marketers plan to invest more in marketing analytics to close the loop between marketing spend and ROI. In this article, we’ll look at the highlights of The CMO Survey’s data from 2017.

1. Marketing budgets represent 11.4% of company’s overall budgets

Marketing’s share of the overall firm budget grew from 8.1% in February 2011 to 11.4% in August 2017, according to the CMO Survey.

Source: The CMO Survey

2. Marketing is the key revenue growth driver for over 30% of companies

According to the survey, the marketing organization now leads not just brand, advertising, PR, social media, and promotion activities, but also revenue growth (34.3% in February 2017 and 29% in August 2017). There’s no comparative data to see how the revenue function has grown over time (The CMO Survey only added this question in 2016), which will be interesting to track in the next few years.

3. Marketing spend as percent of company revenue wildly varies by industry

Education, consumer goods, and transportation sectors spend more on marketing as they see a higher return on investment (one assumes that construction, manufacturing, and energy sectors kept the money for R&D). Marketing spend as percent of company revenues is highest for education sector at 18.5% (compared to just 2% for construction).

Source: The CMO Survey

4. 72% of marketers are investing in marketing analytics

When asked “What’s in your marketing budget?”, 72% of marketers mentioned marketing analytics. Marketers are also planning to spend on social media, research, and training.

Source: The CMO Survey

5. CMOs will spend 18.1% of overall budgets on marketing analytics in three years

As more businesses use marketing analytics to guide their business strategy, marketers are making larger investments in marketing analytics. The current marketing spend is 5.5% of total marketing budgets and expected to grow 18.1% in three years.

Source: The CMO Survey

6. B2B marketers will invest more in their team’s education and training

Compared to other sectors, marketers in B2B plan to spend more on “developing knowledge about how to do marketing” and “marketing training.” Consumer marketers, on the other hand, are open to spend a little more on consulting services.

Source: The CMO Survey

According to the report, the investment in continuous learning is especially generous in banking, service consulting, and technology sectors.

7. Marketers are shifting media dollars towards digital

Digital marketing spend in consumer goods will grow 18.6% while traditional advertising spend will drop by 1.9%, according to the survey. As more ad dollars shift to digital, traditional media advertising spend is expected to drop across all economic sectors. The drop is most noticeable in the B2B sector (-3.6%), as marketers go online to reach buyers who now tend to make decisions based on extensive online research. Digital spend is increasing fastest for B2C (+18.6%) as e-commerce continues to grow.

Source: The CMO Survey

8. Marketers predict social media spend to grow by 89% in next 5 years

Social media spend as percent of overall marketing budget is currently at 9.8%, but marketers plan to boost its share significantly (up to 18.5%) in next 5 years. Consumer brand marketers lead the change, with 25-40% growth in social media spend expected in next year, according to the survey.

Source: The CMO Survey

9. …But marketers are generally really, really bad at predicting their spend numbers

Actual versus predicted social media spend as percent of marketing budget varies as much as by almost 10%. For August 2017, marketers predicted to spend 19.5% of their budgets on social media and ended up spending a little less than 10%. For the past 3 years, the social media’s share of the total spend varied slightly by just 1-2%.

Source: The CMO Survey

10. And most marketers struggle to prove the impact of social media on their business

Source: The CMO Survey

45% of marketers say they are “unable to show the impact yet,” while 38.6% have “a good qualitative sense of the impact, but not a qualitative impact.” Only 16.3% of marketers are confident in their ability to justify social media investment. This number is down by 4% from 2016, which either means that the impact is getting more difficult to prove — or marketers are finally opening up about the challenges of marketing attribution.

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Anya manages content marketing at AdStage. With half a decade of experience in digital marketing, she has worked for global ad tech companies and marketed award-winning mobile apps. A European transplant in California, Anya enjoys traveling, good weather, and lifting weights in the gym. Connect with her on Twitter at @pratsaa