• by Laurie Sullivan  @lauriesullivan, Yesterday

Marketing budgets have flatlined at 7.7% of overall company revenue, but paid media continues to dominate where marketing dollars are being spent. Marketing accounts for 30.6% of budgets or 2.4% of company revenue.

Gartner’s study, released Monday, surveyed 402 CMOs from companies in North America, the U.K. and Europe in February.

The data suggests search advertising is a high-spend and high-impact channel that attracts the most CMO investment. CMOs participating in the survey told Gartner    search is one of the most impactful.

"CMOs especially rate search as a conversion channel, but consider it to be highly impactful across all prepurchase touchpoints," the study states. "Given its central place in buying journeys, search advertising has become a staple, meaning even CMOs with lower budgets prioritize investments in the channel."

Findings from the study show media price inflation means CMOs are getting less for every dollar spent, so they are pursuing productivity gains.

Budget growth remains obscure for most, with more than half of CMOs reporting budgets of less than 6% of company revenue. Fifty-nine percent of CMOs reported having insufficient budgets to execute strategies in 2025 -- down by five percentage points since 2024.

Although budgets have failed to grow year-on-year, marketers said they have learned to use funds in more productive ways.

Boosting productivity means leveraging data and analytics to optimize performance and harness technology such as generative AI (GAI), mostly to automate key tasks.

Some 49% of marketers said GAI investments have delivered return on investments (ROI) through improved time efficiency, while 40% cite improved cost efficiencies and 27% have seen improvements in the capacity to produce more content and/or handle more business. Only 1% of CMOs said GAI investments are not currently a priority.

Breaking down the spending, marketers said 22.4% of budgets have been allocated to marketing technologies, with 21.9% allocated to labor and 20.7% to agency spending.

All investments are down from the prior year -- especially agency spending, where 39% of CMOs plan to cut back. 

Actions taken to reduce agency costs include eliminating unproductive relationships and streamlining agency rosters, followed by renegotiating contracts and scopes of work.

Note:  The article has been updated with the findings related to paid search.