Marketing budgets hit 7.8% of revenue in 2026, but AI visibility is redirecting where the money actually flows

Marketing budgets grew just 1.3% in 2026, their first increase since 2022, but the headline figure obscures a more uncomfortable reality: as a share of company revenue, those budgets have dropped to 7.8%, down from 11% in 2020, according to Gartner data reported by ALM Corp. CMOs are being asked to do more with structurally less, even as costs in nearly every budget line keep climbing.

The cost squeeze tightening around every budget line

Paid media spending rose 12.5% over the past two years and now consumes 31.4% of marketing budgets, per Gartner. Personnel costs have also climbed, with the share of budgets going to labor reaching 24.5%, up from 21.9% in 2025. Those two line items alone account for more than half of the average marketing budget, leaving less room for experimentation.

Martech has not been spared. Its share of the budget fell from 22.4% in 2025 to 19.4% in 2026, according to Gartner, even as 56% of marketers plan to increase spending on consumption-based Martech models this year. Agency spend followed the same trajectory, declining from 20.7% to 19.2% over the same period. The compression is happening across the board.

Leadership expectations have not adjusted to match. A BCG survey cited by ALM Corp found that 94% of CMOs believe their departments face significantly higher expectations today than two years ago, much of it driven by pressure to deliver measurable AI results.

AI is the top priority, but execution is far behind the ambition

On average, 15.3% of marketing budgets are allocated to AI, and 70% of CMOs name it their top priority for the second half of 2026, according to Gartner. Martech currently leads AI spending across all departments. The intent is clear. The implementation is not.

BCG data shows almost all CMOs believe AI is transforming their role, and 42% are already using it to handle tasks previously done by people. But only 8% are running campaigns with multiple autonomous AI agents, according to ALM Corp's synthesis of BCG findings. That gap between declared priority and operational deployment is the defining tension in marketing technology right now.

Part of the reason for the lag is visibility ROI itself. According to WARC data reported by ALM Corp, 63% of LLM visibility comes from long-term brand building, while marketing spend accounts for just 22% of it. Brands chasing AI citation share may find that content quality and brand authority matter more than direct ad spend.

Digiday's reporting on brand behavior confirms that picture. Brands are not pulling dollars from broadcast or paid search to fund AI search placements. Instead, they are repurposing organic content budgets to produce material better structured for LLM citation, a shift that Go Fish Digital president David Dweck described to Digiday as 'more of a shift from organic to organic than from paid.' Budget increases for AI visibility are real but marginal, he noted.

Real deployments reflect that posture. Butterball hired agency of record Carmichael Lynch this year with AI visibility capabilities listed as a key selection criterion, according to Digiday. The brand is also testing Google AI Max for summer and grilling search terms to extend reach into AI Overviews. Priceline, meanwhile, has increased social spend across TikTok, Meta, and Pinterest and is running a pilot with ChatGPT ads as part of a broader effort to map the new consumer shopping journey, Digiday reported. Neither company disclosed specific budget allocations.

Creators are outperforming follower counts as a buying signal

While AI visibility debates dominate CMO conversations, influencer and creator programs continue to deliver some of the most concrete purchase-conversion numbers in the data. Sprout Social found that 67% of consumers bought a product based on an influencer recommendation in 2026. That figure reaches 73% among millennials and 81% among Gen Z, according to ALM Corp's reporting on the Sprout Social data.

Frequency matters too. Sprout Social data shows 33% of consumers discover new products through creators at least once a month, and 22% do so weekly. These are not passive impressions; they are active discovery events translating into purchase consideration.

The traditional proxy of follower count is losing its grip on media planning. Sprout Social found that 47% of social media users cite subject matter as the primary factor in who they follow, compared to only 17% who weigh follower count. More pointedly, 36% of consumers follow smaller creators specifically to get product recommendations, versus 32% who say the same about high-profile accounts. For procurement teams evaluating influencer marketing platforms, that data argues for filtering by topic relevance and audience alignment rather than audience size.

Sports viewership is creating new scale for brand reach

One area where marketing budgets appear to be finding clear return is live sports. Nielsen data reported by ALM Corp shows auto racing viewership grew 44% in 2026, basketball climbed 27%, and golf rose 12%. Hockey is seeing some of the most notable momentum: NHL regular-season viewership averaged 540,000 views per game, up 25% year-over-year, and the league's TikTok following grew 83% over the 2025-2026 season.

Women's sports are opening new inventory at scale. The Professional Women's Hockey League drew approximately 133,000 viewers to its first nationally televised game on March 28, with 45% of that audience being women over 18, according to Nielsen. For brands targeting that demographic through traditional media buys, it represents a relatively uncrowded channel with documented, growing reach.

Heading into the second half of 2026, the operational picture for marketing leaders is specific: budgets are growing nominally but shrinking structurally, AI is consuming a growing share of those budgets before clear ROI benchmarks exist, creators are driving purchase decisions at a higher rate than most brand media does, and sports viewership is expanding the addressable audience for live placements. The next test is whether the 70% of CMOs who call AI a top priority can close the gap with the 8% who have actually put autonomous agents to work on campaigns.