Marketers’ optimism about the U.S. economy lost strength, as a three-year-high in confidence levels recorded last spring was dampened by election uncertainty and lingering inflation worries. But despite macroeconomic and political concerns, marketing spending at U.S companies grew by 5.8% during the last year, up from a growth rate of 2.5% in the last survey.

This is according to the 33rd edition of The CMO Survey, directed by Professor Christine Moorman of Duke University’s Fuqua School of Business, and co-sponsored by Fuqua, Deloitte LLP, and the American Marketing Association. 

The survey found that overall marketing spending is bouncing back to the four-year-high levels notched in Fall 2022, after a two-year slump. Despite this, marketing spending as a percentage of companies’ budgets and revenues is lower, showing that both revenues and overall budgets are growing at high rates.

The use of artificial intelligence in marketing grew at even higher rates, bolstering customer satisfaction and sales productivity, and lowering marketing overhead costs. Spending on traditional advertising showed positive numbers for the first time in two years (and only the fourth time in a decade). Brand building and customer relationship management spending are also projected to double in the next 12 months.

The Fall 2024 edition of the survey was conducted September 4-25. The survey sampled 260 marketing leaders at for-profit U.S. companies, 97% of whom hold positions at VP-level or higher.

Macroeconomic forecasts

Marketers’ optimism about the U.S. economy dipped to 63.8 on a scale 0-100 — where 100 would be most optimistic — after reaching a three-year-high of 67 in Spring 2024.

Uncertainties about the presidential election, the threat of lingering inflation, and the not-yet discounted possibility of a recession have likely impacted CMOs’ cautious outlook, Professor Moorman said.

 “The uncertainty about the election and its aftermath is looming large in people’s minds,” Moorman said. “They know there will be winners and losers in the marketplace depending on tariffs, inflation-reducing strategies, and consumer confidence.”  

Comparing industries, the consumer packaged goods and transportation sectors expressed greater pessimism — probably affected by inflation pressures, Moorman said — while marketing executives in banking, finance, and insurance were the most hopeful.

Marketing officers also believe inflation is a major factor that may affect marketing budgets, the survey found. Nearly half of marketing leaders (48.7%) reported that inflationary pressures may have a negative effect on marketing spending levels, up from 45% in Fall 2023.

Marketing budgets

Despite marketing budgets as a percentage of company budget and revenue continuing to fall (10.1% to 7.7% from Spring 2024, the lowest level in more than three years), overall marketing spending is increasing at a faster pace (5.8%) than six months ago (2.5%), with predictions of further increases in the next 12 months.

The survey found that digital marketing spending continues to grow at a faster pace than other aspects of marketing, increasing by 11.1% over the last year and is projected to grow to 12.7% in the next year. Marketers also expect to spend more next year on customer relationship management (+6.9%), customer experience (+5%) branding (+7%) and new product introduction (+8.1%). 

More spending on marketing technologies and AI 

Spending in marketing technology (martech) and AI is currently 19% of marketing budgets and is expected to grow to 31.7% in the next five years, the survey found. Approximately 55% of marketing activities are using martech tools and/or systems.

However, marketing leaders said martech tools are underperforming compared with expectations, with 55% reporting a gap between the payoffs they receive from martech and their hopes for these payoffs. This gap has increased by 6% compared with Spring 2024.

 On top of that, only half of martech tools purchased are used in company operations (down from 56% last spring).

“I think part of this is just expectations,” Moorman said. “There is a learning curve to these systems, and organizations have not quite tuned themselves in to how to approach and implement martech at scale.”

 “The other piece of this is that companies have not developed the organizational infrastructure to turn the burner on high for martech,” she added. “We find that only 24% of companies have fully integrated their digital investments across the company and only 5% have fully established these systems in a complete digital transformation. This means that 70+% of companies are either at the very early stages or just starting to build non-integrated digital elements. In this state, it’s hard to exact all the benefits of martech.”  

The survey also found that the use of Generative AI (GenAI) has significantly increased in the last six months, with marketers signaling they are using it in 11% of all marketing operations, up from 7% in Spring 2024 (59% growth). Marketers also predict using GenAI in 34.5% of activities in three years (an increase of 163.4%).

“AI is often part of these martech systems, but it can work more as a plug and play,” Moorman said. “You can get AI to do something for you — like writing emails or creating other content — whereas martech is often part of a system that works on bigger problems, and you need to fully integrate it to get more power out of it.”

Companies adopted AI and machine learning to automate and optimize workflows, the survey found, allowing them to spend more time on more strategic tasks.

Respondents also said that such technologies will enhance employees’ work rather than replace workers. However, they also said these concerns may rise in the next few years.

Digitization and privacy 

As digitization increases, so do customers’ concerns about data breaches and the risks of AI on privacy, prompting companies to adopt measures aimed to strengthen trust in their brands, the survey found.

Among the top three actions marketers reported: promising not to sell customer’s personal information (60%), asking for consumer consent to use personal information (57%), and investing to increase trust in brand reputation (57%). Of these, only investments to increase brand reputation showed a lift over time (+13%). Other measures also increased, such as the use of privacy notices (+20%) and developing a brand privacy policy (+29%).

In general, marketers reported their companies as being more transparent on data collection and usage than on other topics such as environmental impact and social & political issues.

Concerns about marketing spending cuts

Marketers reported that executives, when profits do not meet targets, are generally more likely to cut expenses than to try to grow revenues. And among the first expenses to be cut, marketing is disproportionately impacted: 44.6% of the time, executives would cut marketing expenses over other areas, the survey found.

“This has historically been true: marketers tend to be the first place to cut,” Moorman said. “I think it's because most companies don't fully appreciate the critical long-term effects that marketing has on customer relationships, revenue growth, and profits. Even though the stock market seems to be happy with earnings in the short term, research shows that in the long run, the investors ultimately realize the negative effects of these marketing cuts and adjust their valuations of companies.”

Marketing Jobs, Remote Work

Marketing departments grew their workforce by 5.3% this Fall, up from a 3.9% growth in Spring 2024. However, next year predictions hover around 4% — a slight decrease compared to previous forecasts — possibly reflecting marketers’ macroeconomic and election concerns, as well as uncertainty regarding how the nature of marketing work will change over the next decade.

The survey does find that marketing leaders are no more concerned by employee-replacing technologies than they were five years ago. However, these concerns are predicted to rise over the next three years. 

In terms of remote work, fewer marketers are working remotely all the time (from 48.7% in Fall 2022 to 37.8% now). About the same percentage of employees reported working from home some of the time.

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The CMO Survey was founded in 2008 and is the longest-standing survey of marketing leaders worldwide. Find more details, industry breakdowns and past results at https://cmosurvey.org/