Marketing budgets have softened in 2019, reports research and advisory firm Gartner. Its survey of chief marketing officers found that marketing budgets have dropped from 11.2 percent of overall company revenue in 2018 to 10.5 percent in 2019. Gartner says that this is the first time budgets have dropped below 11 percent of revenue since 2014.

“In the face of perplexing external and internal environmental signals, CMOs remain confident about economic and budgetary outlooks, with almost two-thirds (61 percent) of CMOs expecting their budgets to rebound in 2020,” says Ewan McIntyre, vice president analyst in Gartner’s marketing practice. “However, that same percentage of marketing executives believed their budgets would increase in 2019, indicating their optimism is misplaced. While we’re not yet witnessing a precipitous drop in budgets, this year’s downtick presents a counterintuitive scenario. You could call this confidence in the face of adversity. Or you could call it hubris.”

Gartner’s survey of 340 marketing executives in North America and the UK also found that 63 percent of marketers have moved some aspects of their delivery from third-party agencies to in-house teams. However, while there may have been a shift in volume of output, it has not eroded the significant value CMOs still place in external service providers. In fact, spending on marketing agencies still accounts for nearly a quarter (22 percent) of total marketing budgets. Meanwhile, marketing technology (martech) investments dropped three percentage points year over year, falling to 26 percent of marketing budgets in 2019.

The survey revealed that marketing spending on paid media has increased from 23 percent in 2018 to 26 percent in 2019, with digital channels taking up the lion share at 16 percent of overall marketing budgets. Confidence in digital ads remains strong, with 78 percent of CMOs expecting to increase investments in 2020. However, digital ads are not the only areas experiencing continued support. Across paid, owned and earned channels, CMOs are still investing in a range of channels. Offline advertising and TV spend remain strong, both commanding a share of seven percent each of total marketing budgets.

Marketing budgets still flow to marketing analytics. CMOs in the survey report competitive insights and analytics as the two most important capabilities supporting the delivery of their marketing strategies over the next 18 months. Marketing analytics is the single largest area of investment, making up 16 percent of the budget allocated to marketing programs and operational areas.