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Underground Recession: The Hidden Strain on B2B CMOs

Drew Neisser

The United States’ macroeconomic indicators appear robust. Since the beginning of 2024, the S&P 500, America’s main stock market index, has increased by 446 points, or 9.34%. The Federal Reserve has pushed back its initial cut in policy rates due to continued growth resilience and firmer inflation data.

However, buried within this robust economic data is a different reality: an “underground recession” affecting U.S. and global marketing departments.

Below, we present the findings from an in-depth survey of 121 B2B CMOs, revealing the hidden economic pressures in the marketing industry.

Here are the quick stats: 

The report digs deep into marketing leaders’ current reality to provide insights into their ongoing challenges and how they impact them professionally and personally. It also discusses actions CMOs can take to adapt to these tough times.

The 4 Key Challenges B2B CMOs are Facing

Our survey data underscores the shared experiences of B2B marketing leaders, who are grappling with 4 trends that are making their jobs difficult:

  1. Budget cuts and revenue declines
  2. Longer deal cycles
  3. Staffing cuts and layoffs
  4. Increased pressure to deliver more with less

These challenges have undeniably made the past 12 months one of the most professionally challenging periods for many marketing leaders – 61% felt it was the most difficult period of their careers.

“The last 12 months have been an epic pressure cooker. Fortunately, I seem to thrive under pressure. Or at least that’s what I tell myself,” says Narine Galstian, CMO at Sada. Grant Johnson, a 6x CMO, agreed, saying, “This past year was unlike any I’ve seen.”

“The pressure to deliver results is at an all-time high. Not just for me, but I’m hearing it from my peers in Silicon Valley.”

Heidi Bullock, CMO, Tealium

1. Budget Cuts and Revenue Declines

The current economic environment has led to significant budget cuts and revenue declines across various industries. Over one-third (38%) of marketing leaders indicate their companies are experiencing flat or declining revenue.

However, the impact of slowing revenue isn’t felt equally across all departments. IT, for instance, is unlikely to see any contraction in spending, according to IDC. Marketing departments, on the other hand, are among the hardest hit.

“This research is consistent with what I’m seeing. The overall market is softer, competition has heated up, and marketing budgets are getting pegged at a smaller percentage of overall revenue. My challenge is to focus on the initiatives that matter the most, help my leaders to manage through the increasing pressure, and foster a thriving micro-culture for my team.”

James B. Stanton, VP, Go To Market, Empyrean

Key Causes

Several key factors contribute to the observed budget cuts and revenue declines:

  1. Higher interest rates and inflationary pressures: Higher interest rates and inflationary pressures significantly contribute to reduced marketing budgets. According to Deloitte, due to the impact of inflationary pressures on spending, most companies reported a decrease in marketing spending levels (52.0%) or no effect (31.4%), with only 16.6% reporting an increase. This suggests a cautious approach to marketing spend driven by concerns over sticky inflation.
  2. Underwhelming progress on digital transformation: Digital transformation has not yielded the anticipated results for many companies, further straining marketing budgets. A 2022 Gartner survey found that 67% of CFOs say the last three years’ of digital spending has not met enterprise expectations. This sentiment has likely dampened enthusiasm for continued tech investment from investors and the rest of the C-suite, making it increasingly challenging for CMOs to secure the necessary budgets for digital initiatives and technology investments.

The Impact on CMOs

The combination of budget constraints and revenue challenges are profoundly limiting CMOs’ ability to execute, This is evident in Gartner’s 2023 CMO Spend and Strategy Survey, where 70% of CMOs reported their enterprises lack sufficient budget or resources to deliver their marketing strategies successfully.

However, companies may pay later for slashing the marketing budget. Research by Analytic Partners indicated that companies that cut their marketing spend versus those that didn’t fare much better. For those brands that maintained or increased their marketing budgets in a downturn, 54% saw a return on investment (ROI) improve, and 52% of brands recorded an ROI uptick over a two-year window. Conversely, brands that cut media spending saw an 18% contraction in incremental sales. Two-thirds of losses in incremental sales resulted from lower investment, not a drop in ROI.

“A heavy focus on top-line growth while returning bottom-line performance has forced many B2B CMOs to prioritize immediate revenue generation over brand-building activities. While this approach might help in the short term, organizations that can combine growth acquisition with brand awareness will be best positioned to win the long game.”

Kristin Russel, CMO, symplr

2. Longer Deal Cycles

In recent years, marketing departments have also faced increased pressure due to extended sales cycles, significantly affecting revenue timing and marketing budgets. According to our research, 54% of marketing leaders are experiencing longer deal cycles.

The rise in interest rates and overall economic uncertainty are logical explanations for businesses postponing or avoiding new purchases. One study’s data showed that the average startup has experienced a 24% increase in sales cycle length from early 2022 to 2023. What used to be a 60-day sales cycle is now 75 days. Startups selling to enterprises have seen a 36% increase in sales cycle duration.

The impact on marketing departments

The financial implications of prolonged deal cycles are significant. Slower deal cycles often lead to reductions in marketing budgets and growth investments. Conversely, even if win rates remain constant, reducing a deal cycle from four months to three months can boost annual recurring revenue (ARR) by 46%. Further reducing it to two months can result in a staggering 143% increase in ARR compared to a four-month cycle, underscoring the urgency of addressing this issue.

Longer deal cycles also require more touchpoints and content to keep prospects engaged over extended periods. This increases the workload on marketing teams, who must continuously produce high-quality, relevant content to nurture leads through an even lengthier buyer’s journey

“Longer deal cycles are a huge problem, especially with investors focused on quarterly targets. Despite marketers’ dedication to driving qualified opportunities, the perception that marketing isn’t delivering quickly enough is creating mounting pressure and stress for marketers to accelerate and do more with the same or fewer resources.”

Ali McCarthy, Fractional CMO, Amplify Your Voice

3. Staffing Cuts and Layoffs

This past year’s economic challenges have led to widespread layoffs across various industries, with marketing departments being particularly hard hit. In our survey of B2B CMOs and marketing leaders:

Factors behind marketing layoffs

Several factors contribute to the higher rate of layoffs in marketing departments. Marketing is often perceived as a cost center rather than a revenue generator, even by some CMOs. eMarketer reports that 48% of financial services CMOs hold this view. This perception makes marketing departments an easy target for layoffs and budget cuts during economic downturns. 

During recessions, companies often prioritize areas that can drive quick revenue. This myopic view, as evidenced by the number of layoffs and budget cuts CMOs experienced last year, is a cause for concern as it undermines the importance of marketing departments in ensuring long-term business

Finally, some marketing staffing cuts are the result of massive layouts throughout the company, due to growth slowdowns and/or resource realignments. Amazon, for example, is shifting its investment dollars to generative AI.

The impact on CMOs

The layoffs have notably impacted marketing leaders and their departments, with many reporting increased pressure to achieve results despite reduced budgets and staff.

Layoffs are also affecting collaborative efforts with sales and product teams. With longer deal cycles and the need to create more touchpoints and content to keep prospects engaged, the remaining staff are finding it increasingly challenging to meet the increased demands with fewer resources.

“This past year was unlike any I’ve seen. The pressure to do more with fewer resources made it incredibly challenging, but savvy CMOs found a way.”

Grant Johnson, 6x CMO

4. The Mounting Pressure on CMOs

The toll on CMOs is personal as well as professional.

The role of the CMO has never been more demanding, and the pressure has taken a personal toll on many CMOs. More than two-thirds (67%) of marketing leaders say the pressure of the past year has impacted their overall well-being. 

The pressures faced by CMOs have led to numerous adverse effects. A striking 80% got less exercise, while 70% took less time off. Additionally, 50% ate less healthily, and 40% reported weight gain. Furthermore, 30% experienced a reduction in sexual activity, and 15% suffered from mental health issues caused by stress.

These personal challenges have been further compounded by increasing pressure on the CMO role itself.

“The stress level keeps ratcheting up and it’s taking a toll on my health. I’m not sleeping either.”

CMO, public MarTech company

Decline in CMO job postings

In the United States, the number of CMO job postings on LinkedIn was 62% lower in February 2024 compared to February 2023. Globally, the trend is similar, with CMO job postings dropping by 47% between February 2023 and February 2024. Additionally, only about one-third of top marketers at Fortune 500 companies now hold the conventional CMO title, a significant reduction from 74% in 2009.

Factors for the decline

Companies like Etsy, Walgreens, and UPS are consolidating marketing responsibilities under roles such as Chief Operating Officer (COO), Chief Growth Officer (CGO), or Chief Revenue Officer (CRO), reflecting a trend toward streamlining leadership structures and reducing perceived redundancies.

The economic climate has produced a sharp increase in the number of CMOs in transition. CMO Huddles saw its “Transition Team” grow from 30 in 2022 to more than 180 in 2024. Drew Neisser, the community’s founder, explains, “There’s a lot of pain in CMO-land right now, as displaced CMOs fight for a limited number of new opportunities while employed CMOs are being asked to do more with less.” Neisser notes that CMO Huddles also supports over 300 CMOs with full-time positions. 

Impact on CMOs

To maintain their roles and demonstrate success, CMOs must increasingly focus on ROI and business outcomes as critical metrics for marketing success. The Marketing Week found that almost half of marketers (48.4%) report that ROI is the most important metric for their CEO, CFO, and board members, followed by delivering business outcomes (39.9%) and new customer acquisition (35.8%).

How CMOs can adapt to tough times

Strong leadership and foresight are still needed.

Economic pressures are expected to continue. CMOs must continue to navigate these challenging times with a blend of strategic foresight, clear decision-making, and courageous leadership.

MarTech entrepreneur Jon Miller notes that “B2B marketers are seeing flat pipelines, longer deal cycles, and declining budgets. The old playbooks just aren’t working anymore, and it’s time for a new playbook (and new technology) that aligns with modern buyers.” 

What should this new playbook look like? Drew Neisser of CMO Huddles says there are four areas CMOs should focus on. These include:

The road ahead may be fraught with challenges for CMOs, but their resilience and adaptability will play a critical role in overcoming these obstacles. By embracing strategic foresight and courageous leadership, marketing leaders can ensure their departments thrive in the face of continuing economic pressures.

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