Gartner’s 2026 CMO Spend Survey of 401 marketing leaders finds budgets at 7.8 per cent of company revenue — effectively unchanged since 2023 — while 39 per cent of CMOs plan to cut agency and labour spend, with AI-driven productivity gains being redirected into cost reduction rather than reinvestment.

Marketing budgets have stabilised. The problem is that the level they have stabilised at is not enough. Fifty-six per cent of CMOs told Gartner they lack the budget required to deliver their 2026 strategy. Fifty-four per cent report insufficient resources. The flat line is not a plateau reached from a position of comfort — it is a floor that a majority of marketing leaders consider too low.

The Gartner 2026 CMO Spend Survey, conducted in the first quarter of 2026 among 401 marketing leaders in North America, the UK and Europe, was presented at the Gartner Marketing Symposium in London in May. The headline figure — 7.8 per cent of company revenue, up fractionally from 7.7 per cent in 2025 — masks a significant internal reallocation. Where the money goes within marketing budgets is shifting materially, and AI is the primary driver of that shift.

Where the cuts are going

Thirty-nine per cent of CMOs plan to reduce agency spend in 2026, primarily by eliminating unproductive relationships, streamlining agency rosters and renegotiating contracts. Twenty-two per cent say generative AI has already enabled them to reduce their reliance on external agencies for creativity and strategy. The same 39 per cent are planning to cut labour costs, primarily through simplifying overlapping roles and reducing headcount.

The pattern reflects what Gartner analyst Ewan McIntyre described as CMOs using AI’s productivity gains not to fund growth but to prove they can do more with less. Paid media — the highest-accountability spend category — is being protected by cutting from agency and headcount where AI makes those cuts defensible. Paid media now accounts for over 30 per cent of CMO budgets.

The productivity dividend from AI is being absorbed into cost reduction rather than capability building. The CMOs in Gartner’s most AI-ready cohort — the 30 per cent with mature AI capabilities — are doing the opposite: allocating 21.3 per cent of their budgets to AI initiatives and reporting higher overall marketing budgets as a proportion of revenue. The gap between that group and the majority is widening.

The agency relationship under pressure

Thirty-nine per cent planning agency cuts is a material shift, but the driver is not dissatisfaction with agency quality — it is the combination of AI-enabled in-house capability and sustained budget pressure. The primary targets are unproductive relationships and inflated rosters, not the full agency model. Specialised capabilities difficult to replicate in-house — media strategy, advanced analytics, channel expertise — are more defensible. Generalist work that AI can produce at a fraction of the cost is harder to justify.

For agencies that survive the current round of cuts, the shift in how CMOs think about AI represents a structural change in the brief. Agencies positioning themselves as AI-augmented rather than AI-replaced are better placed; those competing on volume and speed against tools that produce at near-zero marginal cost face a structural disadvantage.

The strategic tension CMOs are navigating

Marketing is being asked to drive growth in an environment where its resources have not grown, while AI introduces productivity tools that simultaneously create pressure to demonstrate efficiency. The result is a CMO function simultaneously cutting costs and investing in AI capability — often from the same budget line.

Gartner’s McIntyre framed the productive version of this as becoming more efficient to grow — using AI-driven productivity gains to free up investment for the highest-value activities, rather than simply reducing spend. The 56 per cent of CMOs who say their budgets are insufficient to deliver their strategy are not yet in that position.

The next CMO budget cycle will test whether AI maturity — demonstrated through measurable productivity gains and revenue contribution — translates into a stronger case for investment. The evidence from Gartner’s most AI-ready cohort suggests it can. Whether the majority of marketing organisations get there before the next round of cuts is the more open question.