If you’re struggling to decide the most strategic and efficient way to allocate your 2025 marketing budget, the Fall 2024 CMO Survey offers insights. This twice-yearly survey of American CMOs in all sectors often reflects the sentiments and views of all marketers.
Here’s what the latest survey reveals about 2025 planning:
- Marketing budgets as a percentage of company budgets have declined, averaging 10.1%, down from a three-year high of 13.8% in 2022.
- Actual marketing spending is rising, particularly in digital. Digital marketing investment grew by 3% last year, and CMOs expect it to increase by 12.7% over the next 12 months.
- Spending priorities are shifting toward customer relationship management, customer experience, branding, and—surprisingly—traditional advertising, which is seeing its first growth in two years.
- Social media spending has grown, comprising 12.1% of average marketing budgets.
Despite this planned investment, CMOs report their companies are more likely to cut expenses (5.8%) than focus on growth, with marketing often the first to face reductions. To safeguard your budget, you’ll need concrete evidence of its impact on customer acquisition, retention, brand awareness, or revenue growth.
Steps to Strategic Budget Planning
Successful budget planning starts with the following:
- Understanding your 2025 goals and objectives
- Reviewing your past campaign and channel performance
- Evaluating your internal capabilities and outsourcing needs
- Identifying priority channels
- Researching industry trends
This article will expand on that last step by outlining some of our team’s expert opinions and thoughts on recent marketing trends that’ll help you successfully plan your 2025 marketing budget. First up, investing in artificial intelligence (AI).
Use Generative AI Thoughtfully
2023 was the year AI and machine learning (ML) joined mainstream culture. 2024 was the year marketers embraced it. The CMO survey reports that marketers now use AI and ML 13.1% of the time. These same CMOs predict they’ll use it 34.5% of the time by 2028, a growth rate of 163.4%. They say AI improves sales productivity, increases customer satisfaction, and lowers marketing overhead costs.
It’s tempting to rely entirely on AI tools for writing and deploying marketing content, but it’s important to know their limits and set realistic expectations. These tools can make your marketing team more efficient and save time, but they can’t replace content created by real people with a deep understanding of your brand and a smart marketing strategy. Marketing messaging requires many subtle aspects that AI simply can’t grasp or replicate. Real experience and human insight are irreplaceable.
We caution our clients to be careful when using AI in their marketing efforts where they may need a human touch. AI's speed and automation come at a cost. There’ll be more digital noise, more competition, and more consumer distrust, for example. So, instead of spending more on AI as a way to reduce your overall marketing budget, reallocate your marketing funds to strategy, messaging, and creative, all things that AI can’t do.
Don't Skimp on the Paid Media
The CMO Survey shows that CMOs may need some help understanding the power of paid digital advertising if they plan to spend more on traditional advertising. But they also reported a boost in their planned social media spending. Gartner's 2024 CMO Spend Survey reported that those CMOs increased their paid media spend to 27.9% of their budgets this year, mainly because they can track performance and show ROI. If you’re interested in benchmarks to measure paid media campaign performance, check out these resources.
Adopting a digital-first approach to advertising is no longer a choice—it's a strategic imperative for business success. Our team views digital media as a cornerstone of every successful marketing strategy.
Benefits of Paid Digital Media
Digital media is a powerful channel to connect with the right audience, amplify a brand message, and drive results. Its advantages include:
- Precise Targeting: Engage an ideal audience with pinpoint accuracy based on demographics, behaviors, and interests.
- Re-targeting & Geofencing: Stay top-of-mind with past website or social media visitors or tailor campaigns to specific locations for hyper-localized outreach.
- Audience Insights: Use detailed data to understand an audience on a deeper level, uncovering trends and opportunities.
- Multi-Channel Optimization: Coordinate efforts across platforms for a cohesive and effective campaign strategy.
- Testing & Budget Control: Fine-tune messaging and creative through iterative testing and keep spending aligned with performance.
Balance Efficiency and Authenticity
Focus on crafting meaningful, authentic creative that engages your audience and aligns with your brand values. Use your AI tools to streamline processes like targeting and optimization while maintaining the human touch in storytelling and messaging. For example, turn off default platform recommendations to maintain control and ensure campaigns align with your specific goals rather than generalized settings.
As third-party cookies phase out, digital targeting strategies are evolving to maintain precision and relevance.
Rethink Behavioral Targeting
Once almost completely reliant on third-party cookies, behavioral targeting is undergoing significant changes to adapt to new regulations and laws on user privacy. Here’s how to pivot your targeting strategies to maintain personalization while respecting privacy.
Focus on First-Party Data
As third-party tracking diminishes, first-party data will be the cornerstone of your behavioral targeting. This involves collecting insights directly from customer interactions on your digital channels, including:
- Website visits
- App usage
- Purchase histories
- Email engagement
First-party data is incredibly valuable. It provides deep insights into your customer's needs and preferences. Because you collect this data through interactions about your products, it's also more reliable and accurate than third-party data.
If you're unsure where to start, tools like Google's Privacy Sandbox and ad server tracking help you manage and use aggregated, anonymized customer data without breaking any privacy laws.
Prioritize User Consent and Transparency
With stricter data laws, advertisers need clear consent to collect first-party data. Your customers are more likely to share data when they understand how you’ll use it and see value in providing it.
There are other strategies you can use to reach the right customers at the right time through digital media. One strategy is contextual advertising.
Embrace Contextual Advertising
Instead of using historical behavioral data, contextual advertising delivers ads based on the content a customer is currently viewing. For example, a user reading a blog about running might see ads for running shoes or fitness trackers on the same landing page.
Marketers can also blend behavioral targeting with contextual advertising. Find ways to align your existing customer behavior insights with the content they consume on your digital channels to balance relevance and privacy compliance.
Contextual ads are relevant to the content customers consume at the moment. They fit naturally into the customer's current experience. Leveraging these ads benefits both customers and advertisers because the content is higher quality and relevant, not clickbait. Contextual content makes a lasting impression on consumers. It also boosts campaign results and brand awareness.
A Potential Side Benefit
The move toward contextual advertising also signals a potential renaissance for traditional PR. With publishers looking for more compelling, high-quality stories, focusing on PR in 2025 can be highly profitable. Make sure your brand is ready with engaging narratives that align with this new privacy-conscious advertising era.
Demand That Your Influencers Have Actual Influence
Consumers have long depended on third-party brand endorsements to help them make purchase decisions. The influencer market has become a billion-dollar industry in recent years. It's also rampant with inauthenticity and bad actors. Note this quote from a 2024 Harvard Business Review article about influencer marketing, “It is an established global force that sometimes behaves like a ramshackle start-up, with little professional cohesion and inconsistent consequences for unfair play.” In other words, there are no guardrails.
We still think influencer marketing has a place in most brand's 2025 marketing budgets. But the challenge is to find influencers who'll credibly and authentically represent your brand. Our hope is that more brands will invest in more meaningful partnerships with actual experts than "career influencers," who may be in it just for the money. For example, we recommend that our hospitality clients partner with an actual chef instead of a random person who takes great photos of themselves eating at restaurants for free. Choose influencers who align with your brand's core values and have actively engaged niche audiences, prioritizing quality over quantity in their following.
In addition, we recommend that marketers recognize the importance of delivering an ROI for their influencer marketing investment. If you're going to double down on the strategy by increasing your budget, then you must engage and convert more customers. Earned Media Value (EMV) is a good measure of an influencer campaign's ROI and offers our clients a reasonable measure of return on their influencer campaigns.
Influencer marketing is still a powerful strategy as brands recognize the value of deeper, enduring partnerships. There is a growing understanding of influencers' power to build authentic connections that drive long-term loyalty.
Invest in Your Workplace Culture
Although your internal workplace culture may not appear as a typical line item in your 2025 marketing budget, you should recognize it as an area of investment. A successful brand engages both external and internal audiences.
Your internal brand should reflect your company's purpose or the "why" of its existence. Investing in your internal brand nurtures your company culture. A strong positive workplace culture affects how your team delivers customer experiences.
People want to do business with other humans–preferably with humans who love a brand as much as they do. Happy employees lead to exceptional customer service. Consumers are 34% more likely to believe in and purchase from a brand when employers provide outstanding service.
Employee gifts are a tangible expression of gratitude for your staff's hard work and dedication. Unique appreciation gifts (not the usual mug or key chain) can boost morale. They remind employees that you value their work. Employees who feel seen and heard are more motivated, engaged, and committed to their roles.
Investing in thoughtful gestures demonstrates your commitment to creating a supportive and rewarding work environment. This simple investment helps build a sense of belonging, enhance team camaraderie, and solidify a culture of appreciation. All drive massive external rewards through exceptional customer experiences, positive brand awareness, and customer loyalty.
Customize Your Customer Appreciation Program
We've also noticed a trend in brands recognizing loyal customers in more meaningful ways. They are going out of their way to create meaningful branded touchpoints that say, "We value this relationship, and we're invested in your long-term success."
Brands want to avoid a frivolous image. So, they are creating unique, valuable touchpoints that are relevant and have character. These gifts don't need to be extravagant but should be meaningful to the recipient. Pair meaningful branded gifts with personalized communications or exclusive loyalty offers for the greatest impact.
Whether it’s a high-quality notebook, a gourmet gift basket, or a personalized keepsake, the goal is to acknowledge your clients' value and keep your business at the forefront of their minds.
Heading into 2025
Strategic marketing budget allocation is more critical than ever in 2025. As marketing strategies evolve, use insights from trusted sources. The Fall 2024 CMO Survey is one such source. Your marketing strategy can drive real results by balancing innovation with authenticity and embracing trends like first-party data, contextual advertising, meaningful influencer partnerships, and thoughtful AI integration
Also, don't overlook the power of strong internal and external relationships. Foster them through workplace culture and customer appreciation programs. These investments improve your brand's image and build loyalty. This is vital for your company's long-term growth.
Success begins with crafting a budget that aligns with your business goals, evaluates past performance, and adapts to new opportunities. With the right mix of tech, creativity, and strategy, your 2025 marketing budget can lead to lasting success.
Ready to bring your vision to life? Contact Phase 3 today to discuss how our expert marketing team can help you build an impactful marketing strategy for your brand in 2025.