Why Companies Are Cutting (or Increasing) Marketing Budgets in 2026: What the Data Shows

Marketer optimism about the U.S. economy has fallen to 56.8 out of 100 — the lowest reading since the pandemic — and companies cutting business investment now outnumber those increasing it by almost 4 to 1, according to the Spring 2026 CMO Survey from Duke University’s Fuqua School of Business, Deloitte, and the American Marketing Association. Tariffs are the specific mechanism behind much of this: 35.6% of companies have already raised prices in response and another 12.7% plan to, turning pricing into an active strategic decision rather than a cost marketers can quietly absorb.

Marketer Optimism Has Fallen to Its Lowest Point Since the Pandemic

More than half of marketers (50.7%) report being less optimistic about the economy than they were last quarter — the highest level of pessimism recorded since June 2020 — while only 22.2% report greater optimism, down sharply from 31.2% a year earlier. Overall economic optimism among marketers sits at 56.8 on a 0–100 scale, the lowest reading in the survey since the COVID-19 pandemic. This isn’t a one-quarter blip: the survey has tracked this figure through the Great Recession, the 2013 fiscal cliff standoff, and the COVID-19 pandemic, and 56.8 sits closer to those historical low points than to the more confident readings recorded as recently as two years ago.

Tariffs Are the Specific Trigger, Not Just General Uncertainty

Unlike the broad inflationary pressure of recent years, tariffs are forcing an active pricing decision rather than a passive cost pass-through:

• 35.6% of companies have already raised prices in response to tariffs
• Another 12.7% plan to raise prices in the coming year
• Manufacturers and retailers are the most affected sectors
• Among companies changing investment levels, those cutting investment outnumber those increasing it by nearly 4:1

The combination — rising prices plus falling investment — is squeezing marketing budgets from both directions: less top-line growth to fund marketing from, and less appetite for new investment even when cash is available. This also reframes what “holding budget flat” means in 2026: with prices rising, a flat nominal marketing budget is a real-terms cut in purchasing power, even before any formal reduction is announced.

Where Budgets Are Retreating To

Faced with this uncertainty, marketers aren’t cutting spend evenly — they’re redirecting it toward what already works, according to the same survey:

Strategic Response to Economic Uncertainty	% of Companies
Strengthening loyalty/retention among existing customers	43.7%
Expanding within current geographic markets	34.7%
Targeting premium segments	33.2%

This is a consistent “turn toward the core” pattern that shows up throughout the Spring 2026 survey: companies are protecting existing customers and existing markets rather than chasing new ones, a defensive posture that trades growth upside for downside protection while the economic outlook stays clouded.

Marketing vs. R&D: Who Wins the Internal Budget Fight

Economic pressure doesn’t just shrink budgets — it changes which function gets priority internally. The CMO Survey asked companies to directly compare their marketing budget to their R&D budget, and the pattern varies sharply by category. Overall in 2026, 52.6% of companies report R&D budgets larger than marketing, 39.1% report marketing larger than R&D, and 8.3% report them roughly equal — marketing’s share of that comparison has been slowly gaining ground since Spring 2022.

Sector	Which Budget Is Larger
Retail / Wholesale	Marketing 50.6% larger than R&D
Consumer Packaged Goods	Marketing 35.6% larger than R&D
Communications / Media	Marketing 28.8% larger than R&D
Transportation	R&D 29.0% larger than marketing
Tech / Software / Platform	R&D 39.8% larger than marketing
Energy	R&D 40.0% larger than marketing

By business model, B2C Product is the only category where marketing clearly outspends R&D (27.1% larger); B2B Product runs the opposite way, with R&D 26.7% larger than marketing. That split maps directly onto how each category competes: consumer product categories win on brand and demand generation, while B2B product companies win on the product itself — and internal budget fights during a downturn tend to reinforce whichever function a company’s category already treats as the primary growth lever.

The Budget-Cutting Reflex Is Getting Stronger

When profits fall short of expectations, 53.1% of companies say they cut expenses — up from 46.0% a year ago — and marketing absorbs a disproportionate share of those cuts, getting reduced 45.4% more often than other expense categories. That gap has been widening even as the strategic case for protecting marketing spend during a downturn (to defend market share while competitors pull back) is well established in marketing research — the data shows companies reaching for the reactive cut more often, not less, as pessimism has deepened.

What This Means for Planning a 2026 Budget

Three implications follow directly. First, if a company’s category includes manufacturing or retail exposure, tariff-driven price increases are already a live variable in the budget conversation, not a future risk to model — over a third of companies have priced it in already. Second, the retention/premium-segment shift means budget increases in 2026 are more likely to go toward defending and monetizing existing customers than toward net-new acquisition, a pattern worth matching in channel and content planning rather than fighting. Third, the widening reflex to cut marketing first when profits miss is a real, measurable, and worsening pattern — not a one-off — which makes a documented, data-backed case for marketing’s contribution to revenue more valuable defensively than it was even a year ago, and the R&D-vs-marketing split is worth checking against category norms before assuming a budget cut is purely reactive rather than a structural rebalancing toward how a company’s specific category actually competes.

Sources

• The CMO Survey, Spring 2026 Highlights and Insights Report — Duke University Fuqua School of Business, Deloitte, and the American Marketing Association.