For CMOs, the Future Starts with Smarter Spending

Generate growth in challenging market conditions. Launch new products. Reposition to capitalize on disruptions. Do it all with a flat, or maybe a shrinking, budget. CMOs are being squeezed by a set of objectives seemingly at odds with one another.

Key to meeting these expectations is repositioning marketing from a cost center to a self-funding source of business growth—one that delivers measurable business impact while increasing productivity to unlock resources that can be reinvested into even more effective marketing. Forward-looking CMOs reexamine their entire marketing budget, looking beyond ad budgets to internal cost drivers—across both working and nonworking spend—and they repeat this process over time.

It’s a big endeavor, but these measures can free up 30% of marketing budgets for CMOs to reinvest in growth, all while maintaining or even improving their performance in the market. In other words, CMOs actually can do more with less.

A Tough Market Keeps Getting Tougher

The overall economic environment is exceedingly challenging, characterized by uneven consumer and business confidence, inflation, new forms of competition, and other factors. Several trends are compounding the difficulties for CMOs:

• Media inflation has meant that marketers get less impact for the same marketing budget.
• The rapid proliferation of new channels, from retail media to influencers to TikTok, has made reach, and thus media planning, even more challenging.
• Volatile economic sentiment and reduced spending by concerned consumers have led to a volume recession in many categories.
• Tariff-based cost concerns have forced companies to squeeze marketing budgets to preserve margins and find the capital to invest in innovation and growth.

Add these elements together, and CMOs face growing pressure to do more with fewer resources.

Some companies respond by slashing budgets. Yet aggressive cuts can harm brands, particularly when markets are this volatile. A 2023 BCG update to our brand analysis found that cutting marketing budgets during periods of uncertainty leads to long-term damage in sales growth, conversion, market share, and total shareholder return.

Improvements in Both Working and Nonworking Spend

To stay competitive in the current environment, CMOs can take a clean-sheet approach to deploying marketing dollars and reallocating resources toward higher-ROI and brand-building activities—across both working and nonworking spend.

Working spend: Dynamically adjust the allocation. Working spend makes up the largest share of marketing budgets (55% to 80%), and it is where ROI is most commonly measured—in tracking everything from impressions, clicks, and conversions to unaided awareness and net promoter scores. The biggest opportunity to improve working spend lies in dynamically adjusting the allocation across marketing channels.

When, where, and how consumers interact with brands are all changing: traditional formats are giving way to short-form, influencer-driven content on platforms like TikTok, YouTube Shorts, and Instagram Reels. Yet many brands continue to fund channels that no longer reflect where consumer attention has shifted, or they spread budgets too thinly across too many tactics without a clear linkage to business impact. Moreover, for both maximum impact and cost efficiency, the content will need to be fit for purpose rather than retrofitted. Allocations that fail to reflect this shift miss key opportunities for engagement, reach, and conversion—especially among younger audiences and in trend-forward categories.

By using advanced analytics to dynamically tailor investment to the most effective channels, adjusting the overall media mix, and ensuring that the company’s content and business strategy are aligned, CMOs can be confident that they are maximizing productivity.

Other levers to improve working-spend productivity include:

• Adjusting the mix according to distinct business objectives (such as acquiring younger consumers, retaining the existing consumer base, or expanding the basket size)
• Balancing the amount spent on brand versus product versus performance marketing (see “A CMO on the Perils of Performance Marketing”)
• Moving from national campaigns to more geo-targeting, weather-based, and other demand signal-based targeting
• Scaling back nonincremental, margin-dilutive tactics, such as large investments in coupon sites

Collectively, these measures can improve the productivity of working spend by 20% to 30%.

Nonworking spend: Use AI to increase productivity. Across industries, nonworking spend can account for 20% to 45% of the total budget. Spending on agency fees, content production, marketing technology, data and analytics, campaign strategy, measurement, and overhead is often fragmented, duplicative, or misaligned with business priorities.

For example, some brands rely heavily on high-cost, overproduced content with limited reach. Others have overlapping agency relationships, inconsistent payment and procurement processes, and little clarity about what to outsource and what to keep in-house. The common thread among these issues is inertia: they all stem from legacy workflows and are rarely scrutinized with the same rigor as media investments. Without better visibility and governance, nonworking spend becomes a hidden and growing tax on marketing performance.

Leading marketing functions increasingly use AI (including GenAI) to reinvent processes from consumer insight and segmentation to content creation and personalization and measurement. (See “What CMO’s Say About GenAI.”)

Additional levers to improve nonworking spend include:

• Consolidating vendors, particularly advertising and marketing agencies
• Improving internal processes such as brand brief development and setting up guardrails such as production-to-media ratios to avoid spending so much on creating an ad that there is little budget left to launch the campaign
• Evaluating the operating model, from the in-housing of select capabilities to the offshoring of low-complexity work

In the aggregate, these measures can improve productivity on nonworking spend by 15% to 25%.

What’s at Stake

In our experience, a typical marketing organization can unlock 10% to 30% of its total spend by addressing inefficiencies across working and nonworking categories. That’s up to $30 million per $100 million in marketing investment—enough to fund a meaningful shift in how the marketing function operates, improve marketing performance as much as two-fold, and fuel enterprise growth.
                                                                                                                                     
When unlocked, these dollars can be redirected into high-ROI areas to create a multiplier effect, from scaling modern content engines to enabling GenAI and advancing personalization to driving social-first and creator-led brand activity. In a flat-budget environment, leading CMOs are creating headroom to move faster, build relevance, and protect long-term brand equity.

For example, a global multibrand apparel and footwear company faced brand stagnation and cost pressure. In response, the CMO launched a year-long, four-part program to improve marketing ROI:

• Creating a Baseline. First, the team analyzed SG&A costs and marketing spend to identify value pools and inefficiencies. Among other issues, it found redundant content production processes, a highly fragmented network of agency ties, and unnecessarily high investment in media execution tactics.
• Capturing Near-Term Savings. In the short term, the company implemented measures to improve both working and nonworking spend. For working spend, it scaled back investment in nonincremental branded search and some coupon affiliates, and it focused shopping ads on high- margin products. For nonworking spend, it consolidated agencies, set new guardrails and processes for content creation, and aligned production costs with media spending on campaigns. It also launched GenAI pilots to produce content faster and at lower cost. As a result, the company identified approximately $20 million in nonworking savings and $28 million in working savings.
• Reinvesting Savings. Next, the company reallocated the savings to more effective marketing initiatives, such as social-first content and brand-building activations linked to cultural events. It also created a “tiger team” that focused specifically on social media to diversify content and boost top-performing assets.
• Updating the Operating Model. Finally, the CMO locked in the new allocation and embedded new ways of working across regions and brands. In some cases, the marketing function created upskilling programs in areas like GenAI. It also built dashboards to continuously track brand performance and codified best practices in comprehensive playbooks that clarified the end-to-end process for content creation.

By capturing savings and reallocating that capital to more efficient channels and tactics, the marketing function generated approximately $70 million in bottom-line impact.

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The challenge for CMOs is only getting more complex and demanding. Companies will continue to be resource constrained, CFOs will continue to squeeze budgets, and CEOs will demand more growth. CMOs can adapt by taking deliberate steps to improve productivity across both working and nonworking spend. In the words of Brad Jakeman, former president of PepsiCo’s Global Beverage Group and a senior advisor at BCG, “In today’s climate, the most successful CMOs aren’t just brand builders—they’re growth architects. The mandate is clear: turn marketing from a cost center into a self-funding growth engine. That means reallocating every dollar with surgical precision, leveraging GenAI at scale, and reinventing ways of working to drive measurable impact. In a flat-budget world, the only path forward is smarter, faster, braver marketing.”