Marketing Leaders Urged to Reorganize 2027 Budgets Functionally

Image credit: Search Engine Journal

Global marketing leaders should prioritize new functional budget categories over increased artificial intelligence spending in 2027 to adapt to rapid technological shifts and evolving consumer behavior, according to a recent analysis.

Chief marketing officers currently allocate 15.3 percent of their budgets to AI initiatives, but only 30 percent are prepared to scale these investments, indicating a disconnect between allocation and readiness.

Awareness and conversion now account for 62.6 percent of total media spend, a more than 10 percent increase since 2024, while spending on loyalty and retention has dropped 29 percent, researchers reported.

Ewan McIntyre, a vice president analyst at Gartner, stated that marketing leaders need to stop organizing their budgets by legacy channels and instead organize them by function to adapt to AI and evolving customer journeys.

The analysis proposes five new functional budget categories for 2027: AI visibility and citation management, trust verification, distribution engineering, human judgment and editorial oversight, and measurement rebuild.

Generative engine optimization, a new category in recent surveys, is already being utilized by 40 percent of companies, underscoring the rapid emergence of new marketing disciplines.

Despite expectations from chief marketing officers to reduce labor costs, labor spending in marketing budgets unexpectedly rose from 21.9 percent to 24.5 percent this year, according to Christine Moorman, a professor at Duke’s Fuqua School of Business and founder of The CMO Survey.

The shift toward functional budgeting aims to address the complexities introduced by AI and changing consumer interactions, moving beyond traditional channel-based allocations.

Organizations like AMEC, the international association for the measurement and evaluation of communication, have also emphasized the importance of measurement rebuilds to accurately assess the impact of these new functional investments.

The findings suggest a strategic pivot is necessary for marketing departments globally to remain competitive and effectively engage with consumers in an increasingly AI-driven environment.

Source: Search Engine Journal