CMOs shift big budgets toward digital growth and customer acquisition

CMOs are prioritizing digital channels and customer acquisition as AI reshapes marketing budgets

Marketing is shifting fast. Most CMOs are putting more money into digital campaigns and top-of-funnel growth. The reason is clear, AI is making it easier to target customers, personalize messaging, and measure results in real time. This is about efficiency. When data flows faster and models improve every week, you can optimize campaigns in ways that were impossible before. That’s why awareness and conversion now account for most media spending. Marketers are looking for measurable growth that AI can deliver at scale.

But this focus on quick wins has a cost. The same leaders who push for digital speed are cutting back on loyalty and retention programs. Since 2024, spending on retention has dropped nearly 30% and now makes up less than 15% of media budgets. This signals a pivot from long-term brand relationships to short-term acquisition metrics. For a while, this may fuel visible growth numbers. Over time, it will test how sustainable that growth really is when customer loyalty starts to weaken.

Executives should think strategically here. AI can unlock huge value, but it doesn’t replace judgment. The easy wins in digital are tempting, but sustainable growth depends on both retaining existing customers and attracting new ones. The companies that can balance those forces, rather than chasing one at the expense of the other, will lead the next evolution of marketing.

According to Gartner’s 2026 CMO Spend Survey, awareness and conversion activities now represent 62.6% of media spending. Digital media alone accounts for more than two-thirds of all investment. It’s a clear signal: the future of marketing budgets is digital, fast-moving, and data-driven, but it still requires human leadership to keep it strategic.

Organizations with advanced AI maturity are focusing more on customer retention and strategic balance

The most advanced organizations aren’t just using AI to make digital ads smarter. They’re using it to gain a clearer understanding of customers and strengthen long-term relationships. These companies recognize that data-driven optimization only goes so far. Growth based purely on acquisition eventually plateaus if retention is neglected. That’s why AI-mature businesses allocate more of their budgets to keeping customers engaged instead of spending everything on attracting new ones.

Ewan McIntyre, Vice President, Analyst, and Chief of Research at Gartner, summed it up well: “AI can help marketers optimize faster, but optimization is not the same as strategy.” This distinction matters. Optimization refines existing tactics; strategy defines direction. Companies that treat AI as a core part of their strategic planning, not just a performance booster, tend to achieve more consistent results over time. They use AI to understand customer behavior at a deeper level, personalize experiences, and anticipate needs before they are expressed.

For executives, the takeaway is clear. AI maturity isn’t simply about tools or budget, it’s about leadership mindset. The goal isn’t only to get more clicks or conversions but to use AI insights to strengthen customer loyalty and lifetime value. Organizations that expand beyond surface-level AI applications to integrate it across retention, service, and experience design will build a far stronger market position.

The message from Gartner’s research is consistent: companies with higher AI maturity stand out not because they spend more on technology, but because they use it with purpose. Their marketing budgets reflect balance, an equilibrium between acquiring new customers and building lasting relationships with existing ones, and that’s where lasting growth happens.

The integration of AI in marketing has not reduced labor costs

AI isn’t cutting marketing headcounts; it’s changing what teams need to know and how fast they have to adapt. Many leaders expected automation to reduce labor costs, but what’s happening is the opposite. As AI becomes more embedded in marketing operations, companies are investing in people who can manage, interpret, and scale these systems effectively. Skilled professionals, those who understand both technology and business, are now one of the most valuable assets in marketing.

This is not an operational error; it’s evolution. AI tools deliver better results when paired with human oversight. Teams need to manage algorithms, verify data integrity, and ensure that automated systems align with strategic priorities. Without strong internal expertise, AI can amplify inefficiencies rather than eliminate them. The technology provides leverage only when the people using it know how to align it with clear goals and measurable outcomes.

The data confirms this shift. Gartner reports that labor’s share of marketing budgets grew from 21.9% in 2025 to 24.5% in 2026. At the same time, 70% of CMOs said their processes aren’t mature enough to implement and scale AI effectively, and 38% named lack of internal AI expertise as their biggest challenge. These numbers point to a widening gap between ambition and capability. AI is advancing quickly, but many organizations are still building the internal frameworks needed to use it effectively.

Executives should treat workforce investment as the foundation of AI adoption. Hiring the right talent, training existing teams, and defining clear AI operational models create the conditions for sustainable performance gains. AI doesn’t reduce the need for human contribution, it amplifies it when supported by skilled, adaptable teams that understand both the tools and the strategy behind them.

Growing consumer skepticism toward AI-generated content is challenging marketers to rebuild trust and credibility

Consumers are becoming more aware of AI’s role in shaping digital content, and that awareness is creating skepticism. Many people now question whether what they see online is authentic or purely machine-generated. This shift is forcing brands to rethink how they communicate. The challenge for marketers isn’t producing more content, it’s producing credible and meaningful content that sustains trust.

A growing part of the audience, especially Gen Z and millennials, perceive AI-generated material as lower in quality and value. They expect brands to be transparent in how AI is used and to maintain a clear human editorial voice in communication. Kate Muhl, Vice President Analyst at Gartner, explained it directly: “AI-generated content is increasing the volume of media that consumers encounter, but not necessarily the value.” The gap between volume and trust is what organizations now need to close.

According to Gartner’s consumer survey, 49% of U.S. consumers believe generative AI has made content quality worse, with that number rising to 57% among Gen Z and millennial consumers. These same audiences are also consuming information across multiple platforms at the same time, nearly six in ten report multitasking across different media technologies. That means attention is fragmented, and skepticism is heightened.

For executives, this trend highlights the importance of authenticity. AI should support creativity and insight, not replace it. Strong governance over AI-generated content, consistent quality control, and clear disclosure of when AI is involved will help restore trust. The brands that achieve transparency and maintain high ethical standards in how they use AI will stand out as credible leaders in an increasingly crowded and skeptical marketplace.

Key takeaways for decision-makers

• Digital budgets dominate marketing strategy: CMOs are prioritizing digital channels and customer acquisition, with awareness and conversion activities now comprising over 60% of media spending. Leaders should maintain balance by safeguarding retention investments to sustain long-term brand growth.
• AI maturity shapes smarter spending patterns: AI-mature companies are investing more in customer retention rather than only optimizing digital throughput. Executives should integrate AI into strategic planning, using it to strengthen loyalty, deepen insights, and drive sustainable growth.
• AI drives talent investment: Labor’s share of marketing budgets has risen as teams build AI skills and operational maturity. Leaders should focus on workforce development, training, and process refinement to unlock real value from AI adoption.
• Consumer trust depends on authentic content: Nearly half of U.S. consumers, rising to 57% among younger generations, believe AI has reduced content quality. Executives should enhance transparency, oversight, and authenticity in AI-driven content to build credibility in a skeptical, fragmented media environment.