The State of UK Marketing Budgets in 2023

UK Marketing Budgets Stabilize, but Marketing’s Cost of Living Crisis Erodes  CMOs’ Spending Power in 2023

Gartner’s annual CMO Spend and Strategy Survey dropped today (Gartner subscription required). I’ve just come off stage presenting fresh data from the survey to attendees at Gartner’s Marketing Symposium in Denver Colorado. But, as a British analyst, it would be remiss of me to forget about CMOs and senior marketers back home.

For those of you unfamiliar with the CMO Spend Survey, it’s an annual survey that captures the priorities of CMOs and senior-most marketing leaders across North America and Western and Northern Europe. We’ve been running this survey since 2012, but this year’s survey has been a particularly interesting one to work on, as it captures the state of marketing at a difficult juncture – post-COVID, but still mired in a seemingly endless set of disruptions.

In the face of all these disruptions, UK-based CMOs are doing better than their counterparts in other Western European countries surveyed. UK marketing budgets actually grew a little year-over-year, from 9.2% of company revenue to 9.3%, significantly higher than reported budgets in France and Germany.

Taken in isolation, this may seem like a good news story, but a number of factors have contributed to a situation where marketing’s spending power continues to face ongoing challenges, with rising costs and falling yield of marketing’s key investments creating marketing’s own cost of living crisis (more on this below).

Budget Volatility and Weak Growth Prospects Curtail UK CMOs’ Budget Growth

While UK budgets have grown a little in 2023, they still lag behind pre-COVID averages. Like their colleagues across the globe, CMOs in the UK saw their budgets fall steeply at the height of the pandemic, with a drop to 6.9% of company revenue in 2021’s survey. Contrast this with the recent high water mark of UK marketing budgets – 2018, when Gartner reported average marketing budgets of 11.4%.

But volatility has long been a factor facing UK marketing teams. Over the last decade, CMOs have faced a budget rollercoaster, with significantly greater budget fragility than colleagues in North America. Put simply, over the last 10 years the only certainty has been uncertainty for UK enterprises. COVID and the Russian invasion of Ukraine are only the couple of a long list of disruptions that have ricocheted around UK-based enterprises. The result has been violent movements in marketing budgets year-over-year.

And there may be more disruption to come. While the economic outlook in the UK is less negative than had been predicted in the latter half of 2022, with the Office of Budget Responsibility (OBR) revising upwards its forecast in March of 2023. 

However, even the most positive predictions are of weak growth and structural economic issues persist, which will continue to anchor the performance of UK enterprises.

UK CMOs Facing Pressure to ‘Do More With Less’, as Higher Labour Costs Bite Into Marketing’s Buying Power

70% of UK-based CMOs reported that they are under pressure to ‘do more with less’ in 2023, a challenge compounded by persistently high inflation. Furthermore, 70% agree they don’t have enough budget or enough resources to execute their strategy in 2023. Meanwhile, as wages rise in response to inflation, UK CMOs dedicate the highest proportion of their budget to people costs of any country surveyed:

• 25.7% of marketing budget is allocated to in-house labour costs
• 22.2% is allocated to agencies supporting marketing capabilities and programs

The inflation of marketing’s input costs, coupled with declining yield from investments in technology and media further erode marketing’s spending power and makes for a challenging environment that drags down marketing’s productivity.

UK CMOs need all the help they can get in the year ahead to ensure to build a business case to maintain budget growth  and drive efficiencies through their operations. Now here’s the good news – Gartner has the research, tools and expertise to help.