To paraphrase Thomas Paine, these are the times that try marketers’ souls.
CMOs this 12 months have faced uncertainty around the long run of TikTok in the U.S., antitrust challenges to Alphabet and Meta, agency holding company consolidation, artificial intelligence moving from hype to here-and-now and ceaseless global conflict. That’s to say nothing of tariffs and a world trade war that continues to be ongoing: At press time, the U.S. and the European Union were negotiating all the way in which as much as a July 9 deadline for a trade deal, a situation about which President Trump previously has said, “We can do whatever we would like.”
Presidents, apparently, can do what they want; CMOs cannot. Consumers and chief financial officers are feeling the bad vibes, forcing marketers to face even tighter budgets, less time to plan campaigns, a pendulum swing back to performance marketing from brand constructing and a growing must determine how AI will reshape their operating models.
“When you’re on a highway and you’re going along and someone taps the brakes, and then everyone taps the brakes, that’s what happened,” said Josh Golden, CMO at marketing experience company Quad, of the economic climate. “As everyone was waiting for post-election, and then tariffs, that uncertainty created this rippling effect.”
Those ripples are already affecting marketers’ bottom lines, as many have seen flat budgets in 2025 and may face cuts if the macroeconomic picture doesn’t improve, in keeping with Gartner data. And while holding patterns sufficed in the primary half, that won’t be the case as marketers prepare for crucial back-to-school and holiday seasons.
“This swirl of uncertainty has left CMOs in a position in the early a part of this 12 months where they were keeping the powder dry,” said Ewan McIntyre, vice chairman analyst and chief of research for Gartner’s marketing practice. “In H1, we got a bunch of nervous CMOs who didn’t know which method to jump, but they will indeed need to make some calls as we head into the second half.”
CMOs who kept their powder dry in H1 may have to make tough decisions in H2, in keeping with Gartner’s Ewan McIntyre.
Bad vibes
Gartner’s evaluation of information from CFOs suggests that budget cuts are coming down the road this 12 months — no matter what actually happens with tariffs. With even a possibility of negative economic circumstances, CFOs are already pushing for cost optimization and headcount reduction.
“After some time it just becomes vibes, and vibes, unfortunately, have a very big impact on some significant decisions that enterprises make,” McIntyre said.
CMOs are already feeling these bad vibes. Anticipation of future cuts has spurred marketers to gird themselves by shifting their budgets, with paid media now accounting for 30.6% of the full marketing spend, up from 27.9%, and 39% of CMOs planning to reduce in agency spend and in-house labor in the 12 months ahead.
“There’s actually a way that CMOs are making bets, that they are de-prioritizing another areas inside their portfolio, and they are banking on their media investments as being the thing which is able to help them to deliver their goals in a volatile environment,” McIntyre said.
Maybe that is the brand new normal, and if we all know that, we will lean into it and use it as a competitive advantage.
The desire to reduce on agency spend could favor larger agencies on the expense of specialist shops as marketers look to reduce their fee-based costs, pushing on already strained agencies to do more with less. The same issue might be faced by the in-house staff that powers the marketing engine. Cuts to either cost center could cause unintended consequences.
“CMOs must be careful,” McIntyre explained. “They may very well see a dip in productivity if they make the mistaken decisions, close to each the in-house people, but additionally their helpful and specialized agency relationships.”
The lesson of H1 2025 may be that the age of taking a look at the 12 months as an entire and even halves when making marketing plans is over. Marketers might be well served by considering in 90-day cycles as a method to avoid the disruption of successive crises.
“Maybe that is the brand new normal, and if we all know that, we will lean into it and use it as a competitive advantage,” said Lisa Cole, CMO of B2B marketing firm 2X.
The pendulum swings, again
Marketers facing budget tightness is nothing recent, from the financial crisis of 2008 to the pandemic period to this recent stretch of uncertainty. While the challenges are different, the response is usually the identical, with cash-strapped CMOs trying to placate CFOs by pulling back on brand-building efforts in exchange for the more immediate return-on-investment of performance marketing.
“It is super predictable behavior. We saw this in previous periods of economic uncertainty,” McIntyre said. “There are obvious harms to this, that if performance investments are great, but when we don’t have the brand awareness to get people to that search instance, we’re harming our growth prospects.”
The pendulum swung back toward brand constructing last 12 months but appears to now be heading in the other way — with great risk for marketers. Chris Kelly, CEO of name analytics platform Upwave, illustrated the problem with the analogy of an apple farm that stops planting seeds for six months.
“Sure, you saved time and money on seeds in the short term, so perhaps your results look higher, but… you’ll be able to only stop planting seeds for thus long,” Kelly said. “We need to plant those seeds this 12 months, or we’re going to harm ourselves in 2026.”
That’s a tough lesson that Nike and Starbucks needed to learn… to acknowledge that for those who get too focused on the quarterly results, you’ll lose the essence of your brand over time.
The trade-offs of finite budgets are much more acute during economic uncertainty, but marketers that see brand constructing as a “nice to have” and not a “must have” will see negative effects in the next 12 months, if not sooner, in keeping with Upwave data. Savvy CMOs will seek to balance each needs, while being thoughtful about measurement and attribution.
“There’s definitely a theme of increased accountability for dollars spent… increased conversations about measurement based on the different sorts of dollars being invested, upper funnel versus lower funnel,” Kelly said.
This 12 months has seen major brands including Nike and Starbucks reinvest in brand constructing after years of concentrate on performance marketing and channels like digital and mobile, respectively. Nike has returned, as with its best-of-the-night Super Bowl spot, to the blockbuster promoting on which it built its brand, while Starbucks also kicked off back-to-basics promoting around the massive game. Results have been mixed thus far. While Nike last quarter saw the most important financial hit of its turnaround, Starbucks has said its broad-based marketing is making inroads with customers.
“That’s a tough lesson that Nike and Starbucks needed to learn, and other brands, frankly, needed to learn, to acknowledge that for those who get too focused on the quarterly results, you’ll lose the essence of your brand over time,” said Quad’s Golden. “My goal in marketing is at all times constructing the brand and driving demand. It is dual, and you’ll be able to’t say we’re just going to drive demand this 12 months, since you’ll lose.”
Key to integrating artificial intelligence into the marketing function in H2 and beyond will probably be having clarity on a brand’s operating model.
Courtesy of Publicis
The reason for, and solution to, all of life’s problems?
The elephant in the room when discussing tight marketing budgets is the impact of AI, which has moved from the hype stage kicked off with the launch of ChatGPT in November 2022 to turn into the engine driving an already significant and still growing share of promoting, if not entire parts of the economic landscape.
Nearly half (49%) of CMOs surveyed by Gartner said that AI helps them improve time efficiency, with 40% putting it in their top three causes of improved cost efficiency. Those figures represent significant positive sentiment around the power of AI to make marketing more productive, but could cause other C-suite executives to overestimate the ability of AI.
“AI helps get through a few of these bottlenecks which have been apparent in marketing for a very very long time, and that’s great,” McIntyre said. “I believe the challenge that we’re going to see in the second half of the 12 months is that now we have non-marketing, senior business executives, who challenge all the enterprise leaders [to] start cutting away at their people and costs.”
Major use cases for AI in marketing include creative generation, content verification, ad operations and the generation of insights and reporting, in keeping with Upwave’s Kelly, who said marketers are still trying to find out what’s real and what’s “BS” relating to AI.
“The through line appears to be historically pretty human-heavy tasks,” the chief said.
That doesn’t necessarily mean headcount reduction at brands or at agencies. Large language models can’t necessarily make a TV ad, but they may help creatives draft 10 commercials in the time it took to previously draft one — real value that may be passed onto the client. Generative AI could also handle much of the labor-intensive work around measurement, with humans handing the keys on wrap reporting to computers.
Key to integrating AI into the marketing function in H2 and beyond will probably be having clarity on a brand’s operating model and where AI matches inside the model. One method to determine how AI will probably be used is by adopting a three-layer framework, explained 2X’s Cole.
The first layer is a marketer’s source of competitive advantage: the positioning, messaging and strategy work that can not be outsourced or automated. Second are functions that aren’t a part of the corporate’s value proposition but still require best practices, perhaps including email, social media and search discovery; this layer may be outsourced. The final layer consists of tasks that may be automated with AI, from creative versioning to campaign optimization to research.
“If you get those three layers… then you definitely can take a look at the budget you have got,” Cole explained. “How much headcount do I really want? What roles do I really want? What partners do I would like for that outsourcing piece? What tools and training do I would like for AI?”
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