CMOs lean into AI as flat budgets prompt cuts to labor, tech, and agencies

As marketing budgets remain flat for the second consecutive year, CMOs are turning to artificial intelligence to deliver on strategic goals with fewer resources. According to Gartner’s 2025 CMO Spend Survey, brand marketing budgets will hold steady at 7.7% of company revenue—a level that many marketing leaders say is inadequate to execute their plans effectively.

Among the 402 marketing executives surveyed, 59% reported not having enough budget to achieve their objectives. In response, CMOs are prioritizing productivity gains by reallocating resources and embracing AI and data analytics to extract more value from static budgets. While marketing technology (martech) once served as a buffer during economic downturns, current trends show a pivot away from non-performing tech investments toward areas with more immediate ROI.

Generative AI (GenAI) is central to this shift. Roughly 40% of CMOs are automating tasks such as creative development and ad operations using AI tools, while 37% are leveraging custom AI-driven bidding algorithms to optimize ad spend. In parallel, 22% reported a reduced dependence on agencies for creative and strategic services thanks to GenAI capabilities. Just 1% of respondents indicated that AI is not a priority in their marketing strategy.

The drive for efficiency is also reshaping labor dynamics within the marketing sector. A significant portion of CMOs—39%—plan to reduce headcount, often by consolidating overlapping roles or cutting positions outright. Similarly, another 39% intend to scale back agency partnerships through contract renegotiations, roster reductions, or complete elimination of underperforming relationships.

Despite these cuts, CMOs are protecting paid media investments. On average, ad spend accounts for 2.4% of company revenue in 2025, a modest increase from 2.1% in 2024. This indicates a strategic emphasis on maintaining market visibility even as other areas absorb budget cuts. However, inflation in media costs continues to erode the purchasing power of marketing dollars, adding further pressure on performance expectations.

The survey results also show a growing expectation for AI and analytics to deliver tangible outcomes. CMOs cited improved time efficiency (49%), cost savings (40%), and increased output capacity (27%) as the primary benefits of GenAI investments. Data-driven optimization emerged as the most cited strategy for boosting productivity, with 41% of respondents ranking it among their top five initiatives.

While broader economic conditions—such as the evolving impact of U.S. tariff policy and rising operational costs—remain a backdrop to these decisions, the stagnation in marketing budgets reflects a deeper shift. CMOs are navigating a landscape where delivering more with less has become the norm, not the exception.

The long-term sustainability of this model remains uncertain. Some industries, including CPG, manufacturing, and pharma, actually increased their budgets based on optimistic forecasts set in 2024. But as consumer confidence wanes and macroeconomic pressures mount, many marketers are questioning whether they can retain even the current 7.7% allocation.