At first glance, the main takeaway from Gartner’s 2025 CMO Spend Survey seems discouraging: Marketing budgets average 7.7% of companies’ total revenue, flat compared to last year and down from 9.5% just three years prior. What’s more, half of the 402 marketing leaders surveyed this year are working with budgets that are 6% or less than their company’s revenue.

Some industries are suffering more significant budget blows than others. IT and business services providers are seeing the most dramatic decline, with marketing budgets down from 9% of company revenue in 2024 to 5.8% this year. Media, healthcare, travel/hospitality and insurance businesses also saw appreciable decreases.

Nonetheless, Ewan McIntyre, VP Analyst and Chief of Research at Gartner Marketing Practice, doesn’t believe it’s an entirely negative story in 2025. For one thing, CMOs in some market sectors are enjoying an increase in budgets as a percentage of company revenue. Consumer products marketing budgets, for instance, grew to an average of 9.7% from 6.7% in 2024, in what McIntyre says is a continuance of CPG’s “budget volatility” over the past few years. Manufacturers and pharma companies are seeing a similar lift: from 6.7% to 9.5% and from 7% to 9%, respectively.

Another promising finding is that 61% of this year’s survey participants said their company viewed marketing as a profit center rather than a cost center, up from 53% last year. Businesses that recognize the importance of marketing to the top and bottom lines are less likely to subject the department to budget cuts.

Then there’s the fact that marketing leaders have learned from the “prolonged period of budget austerity” that followed the pandemic, McIntyre says. “While that has been a story of privation, some CMOs are turning the corner and realizing they have to make the best of the situation. AI is an interesting element of this, but there’s also good old strategic management. We’re starting to see more of that behavior.”

AI: Friend or Foe?

For 11% of the CMOs surveyed, using AI and other technology to automate key tasks is the number-one action they’re taking to boost marketing productivity; for 40% it ranked in the top five actions. Only leveraging data, analytics and measurement—which AI often facilitates—was prioritized higher, with 12% citing it as their top action and 41% placing it in their top five. And though a more modest 8% of marketing leaders are making the integration of AI and other tech to enhance efficiency their top action, 37% included it in their top five priorities.

While CMOs see AI as a boon to productivity and efficiency, their teams might feel threatened by the technology. That 39% of CMOs are planning to reduce labor costs also raises alarms. The same percentage also plan to cut their agency allocations, and McIntyre believes “they’re going to look to their third-party partners first before they look at their in-house team.” And though reducing headcount is one of the three primary ways marketing leaders anticipate reducing labor costs, those hoping to cut labor costs are also looking at simplifying overlapping roles and centralizing critical capabilities.

McIntyre adds that much of the cost-cutting talk might simply be wishful thinking: “Whether they can replace these resources with AI remains to be seen.”

Digital Spend Continues to Rise

One area marketers aren’t cutting back on is digital marketing. Online channels account for 61.1% of available spend, the highest percentage since Gartner launched the survey in 2013. Of that digital spend, the largest share was spent on paid search (13.9% of digital allocations), display advertising (12.5%) and social advertising (12.2%).

Event marketing received the highest allocation among offline channels, with 19.3% of the available nondigital spend. Sponsorships accounted for 17.4% and linear TV 16.2%, rounding out the top three.

Overall, paid media accounted for 30.6%, the largest proportion of marketing spend. It’s also the only segment that has grown in terms of share of budget during the past five years. Martech (22.4% of 2025 marketing spend), labor (21.9%) and agencies (20.7%) have all seen their share of budget erode.