Fears of a 2020 recession are mounting, with new data from manufacturers adding more fuel to the fire on Tuesday.
But 342 marketing executives surveyed by Gartner are mostly optimistic about their marketing budgets in 2020.
According to the new CMO Spend Survey from Gartner, marketing budgets in North America and the U.K. have fallen slightly from 11.2% of company revenue last year to 10.5% this year. But 61% of CMOs surveyed said they expect their budgets to increase in 2020, with 21% saying they expect their budget to stay the same and 18% forecasting further cuts in 2020. Their companies had annual revenue of $500 million to $20 billion or more, Gartner said.
"Against the backdrop of flat or declining budgets, CMOs remain largely optimistic. Although we're not yet witnessing a precipitous drop, this year's downtick presents a counterintuitive scenario," analysts Ewan McIntyre and Anna Maria Virzi wrote in the Gartner survey. "You could call this confidence in the face of adversity. Or you could call it hubris."
The survey said marketing budgets partly reflect confidence level of confidence CEOs have in marketing. Fifty-six percent of CEOs surveyed they expect to increase marketing in 2019.
Gartner said its economists have looked to indicators like yield curve inversion in the bond market as a signal of economic uncertainty, and cited another survey indicating that the "vast majority of employees across all industry verticals" think their organizations will likely make cuts in the next 12 months, with 28% saying their organization is already "actively cutting costs."
But despite what Gartner calls "perplexing external and internal environmental signals," CMOs were confident.
A whopping 86% of respondents said economic and business climates in the next 18 to 24 months would have a positive effect on the company's ability to meet business performance goals.
Part of this disconnect could be the factors that the survey respondents use to track the economic and business climates. The top three indicators of the marketing executives surveyed were consumer spending, marketing program performance in the last year and budgetary strategy. Gartner points out that two of these factors are internally focused, "indicating a dangerous reliance on easily captured indicators that present a narrow view of opportunities and threats."
"CMOs are not CFOs. So, it's not surprising that they don't naturally gravitate toward indicators like GDP or share price movements. But CMOs are the de facto "owner" of the customer, and a bellwether for culture and zeitgeist within the enterprise," the analysts wrote. "...CMOs must cast their gaze further afield to ensure that budget challenges don't happen to them."