As our own Mike Ruff explains in MarTech, CMOs have a few tools in their arsenal when budgets go stagnant: find efficiencies across AI, agencies, technology, and staffing while protecting the investments that drive future demand. Read the complete article below or on MarTech.
By Mike Ruff
A flat marketing budget is effectively a budget cut when CPMs, CPCs, CACs, and inflation keep rising. Yet some CMOs are heading into 2027 with the same budget they had in 2026, but their boards still expect growth. The challenge is figuring out where to cut, what to protect, and when efficiency alone is no longer enough.
Think of it like a farm where you stop planting. For months, everything continues as normal. Your crops grow, you eventually harvest them, and you bring in the revenue from those sales. The trouble only shows up the following year during harvest time when you have nothing to harvest.
A flat budget can be managed for a year, but repeated budget stagnation requires a different approach. You need to protect what’s working, find efficiencies across your marketing operation, and build the case for investment before the effects of underfunding catch up with you.
Protect what’s already working
Your top priority is to protect what’s working best. These are likely your lower- to mid-funnel core programs, which means your upper funnel (like planting your crops) will suffer. It’s a valid short-term, though short-sighted, strategy, but if it’s what we need to get approval from finance, then it’s where we are.
You need to identify areas to cut, but don’t fall into the trap of turning off all your experimental campaigns. It’s tempting because these opportunities don’t have revenue guarantees, but these feelings are natural to us and known as loss aversion.
Loss aversion is a psychological bias where the pain we feel from losing something is far more intense than the pleasure we feel from gaining the same thing. Kahneman and Tversky demonstrated this in a famous study where participants faced a 50/50 chance of winning or losing $100. Most participants demanded around $200 in potential winnings before they’d accept the gamble.
This tendency can cause us to pass up profitable opportunities because the potential loss feels more significant than the potential gain. As decision-makers, we need to be cognizant of our biases and not let them take over.
Another key area to explore is assessing vendors.
- Can we consolidate software with similar capabilities into a single platform, or move to a new one and end support for both legacy platforms?
- Are we even using all our platforms and licenses?
- Is it possible to send more work to an agency and, with that plus AI, avoid backfilling a role?
- Are there contracts we can renegotiate?
These are examples of maintenance that can be overlooked with always-expanding budgets.
Find bigger efficiencies when flat budgets persist
These strategies can get you through a single flat year. However, if you’ve been through multiple years of flat budgets with no expectation of reprieve in sight, you’ve likely already done what we just discussed. By now, your CAC is also rising. Combined with inflation, your power to bring in new customers is dwindling. Unfortunately, you’re not going to optimize your way out of this situation. It’s time to trade in your scalpel for a machete.
To start, you should lean heavily into AI. This would be true even if you weren’t in budget stagnation, but the lack of funds is forcing your hand. Between workflow automation and content creation, there’s ample room to reduce overhead with AI. You’ll have to lean into this harder and faster than you’d like, but you’re left with little choice.
Next, it’s time to evaluate your use of agencies. If you’re not engaged with any agencies, this may be the time to explore them, even if just for one element or campaign. With the right agency model, you could supplement your existing team with capabilities, technologies, and services at a fraction of the cost of building those capabilities in-house. You also benefit from fresh eyes, which may uncover opportunities flying under the radar of the existing team that could dramatically affect profitability metrics.
If you’re working with agencies, you’ll have to closely evaluate those relationships. Traditionally, in the face of flat or shrinking budgets, the easy answer was to cut agencies and bring marketing in-house.
That’s easier said than done, though. According to a 2026 ANA report, there’s no one-size-fits-all approach to in-housing. Organizations need to weigh the upfront investment against potential savings in agency fees.
You’ll have to compare the cost of building in-house with agency costs, including how agencies offset their fees with discounted rates, value-adds, experienced teams, technology, platforms, and shared talent. You can also explore various contract structures that can benefit you and your agencies, so be sure to make a fully informed, value-to-value comparison to make the best decision.
Make the case for marketing investment
The final step in the face of flat, multiyear budgets is to change the conversation. Partner with analytics to dig into the data and quantify the market-share risk created by years of flat budgets. You can measure how underfunding marketing increases CAC and demonstrate why future budget increases are necessary to stop leaving money on the table. Ultimately, the goal here is to show that marketing is not a cost center. It’s a growth multiplier.
Marketing can be an attractive budget to cut, especially if you haven’t used your measurement program to quantify the connection between brand-building activities and revenue. (For strategies there, check out my MarTech article on how you can better align with the CFO.) Flat budgets are a tough place to be, but with some quick action and effective communication, you can ensure you still have crops to harvest next season.
