One of the most pressing questions facing marketers today is this: How should AI change the way we allocate our budgets?

The assumption underlying the question is that budgets should change. And they should. AI has shifted from experimental to essential, and it’s no longer about “first movers.” It’s about how quickly and effectively you integrate AI into marketing to create measurable business impact.

Current Budget Reality

Marketing budgets are under pressure. Gartner’s 2025 CMO Spend Survey pegs budgets at 7.7% of company revenue—flat year over year and still below historic norms. Many CMOs are expected to deliver more with less, reallocating spend while also absorbing new expectations around AI, data, and personalization.

At the same time, the distribution of spend is shifting. Digital channels continue to dominate, but CMOs are also signaling cuts to labor and agency allocations to free resources for technology investments. The tension is real: how do you fund innovation when the overall pie isn’t getting bigger?

AI Is No Longer Optional

McKinsey’s latest AI research shows 78% of organizations now use AI in at least one business function, up from 55% last year. Marketing and sales lead adoption. The opportunity is clear: productivity gains, cost savings, better personalization, faster execution.

But adoption alone isn’t enough. An MIT study found that 95% of generative AI projects fail to deliver measurable impact, usually because they aren’t tied to clear business problems or integrated into workflows. The lesson: AI investment must be structured, deliberate, and accountable.

From Cuts to an Investor Mindset

Too often, budget conversations are framed around cuts. But leading organizations are reframing the discussion with an investor’s mindset. Where can you trim inefficiency? Where can you reallocate for higher ROI? And how can AI fit into that equation?

McKinsey notes that companies can often cut 10–20% of inefficient marketing spend and reinvest those savings in initiatives that drive growth. AI can—and should—be one of those initiatives.

A 55/35/10 Framework for Today’s Market

• 55% Digital Marketing
  Research, SEO, content, email, targeted campaigns. Anchor your spend in strategy, not tactics. And when it comes to content, prioritize unique perspectives—because as AI models continue to train on web data, distinct, owned ideas will only become more valuable.

• 35% Traditional Marketing
  Trade shows, events, print, direct mail, out-of-home. These channels still deliver impact in building awareness and trust. Don’t neglect them, but be selective and intentional.

• 10% AI Initiatives
  This is where many organizations fall short. Too often, AI is treated as a side experiment rather than a defined budget line. Create an AI council, set clear policies, pilot tools, and track outcomes. Whether it’s deploying AI chatbots, automating campaign creative, or building proprietary models, the goal is the same: measurable efficiency and growth.

Why AI Deserves Its Own Line Item

Treating AI as “extra” or “experimental” ignores its growing role in marketing. Dedicated budget signals intent, creates accountability, and forces measurement. Companies like Klarna have shown the payoff—using AI to cut marketing costs by $10 million annually, speed up creative production, and scale campaigns without adding headcount.

The Bottom Line

Marketing budgets are flat, expectations are rising, and AI is mainstream. The organizations that succeed won’t be the ones that simply “try AI”—they’ll be the ones that structure investment, track impact, and rebalance spend accordingly.

The right question isn’t whether to reallocate your budget for AI. It’s how quickly you can do it with precision, discipline, and vision.