Nearly 40% of CMOs plan agency budget cuts this year, Ad Age reports.

Nearly four in ten chief marketing officers intend to reduce spending on external agencies this year, according to Ad Age, which published the figure from a survey of marketing leadership planning intent.

The number — "almost 40%" in the trade's phrasing — lands in a marketing-services market that has spent three years recalibrating the balance between agency partners and in-house teams. The cumulative effect of that recalibration is now visible in the budget book.

What does this change for CMOs?

For marketing leaders drawing up 2025 commitments, the practical question is where the money moves. Most planners trimming agency line items redirect spend into in-house creative operations, performance media buying capabilities, and AI-assisted production tooling. Smaller portions are held back as brand owners wait to see how agency networks respond to consolidation pressure on their own cost bases.

The cuts also signal how marketing organizations now measure value. Agency fees, headcount, and overhead draw the most CFO scrutiny because they are the easiest items to benchmark against peers. Media spend attracts less attention because it ties more directly to revenue.

What does this change for agencies?

For the holding companies and independent shops that depend on retainer revenue, the math is uncomfortable. A swing of 40% of CMO budgets away from agencies represents a structural shift, not a cyclical pullback. Agencies built on full-funnel retainers face the highest exposure, because retainer work is the first line item marketers reach for when finance pressure mounts.

The pattern is consistent with the in-housing movement that has reshaped marketing operations over the past several years, from global brand owners to mid-cap challenger brands. As brand teams absorb planning, creative production, and analytics work, the agency role narrows from partner to specialist supplier — a margin profile most networks were not designed for.

Why now?

Three pressures converge. First, the macro environment: budget approvals for 2025 have been conservative, and finance leaders are pushing marketing to demonstrate measurable contribution. Second, generative AI: production and creative tooling now lets brand teams ship work without traditional studio pipelines. Third, measurement: brand owners want clearer links between agency output and revenue, not reach and awareness proxies.

Ad Age did not publish full methodology in the headline version, but the finding aligns with what trade observers have flagged across the last two budget cycles.

What does it mean for the next planning cycle?

Marketers weighing cuts face a structural choice: trim agency scope — fewer deliverables at the same fee — or trim agency count, consolidating vendors and extracting short-term cost. The first preserves relationships and rewards agencies that show value. The second carries execution risk as integrated teams take on more work.

For agencies, the read-through is direct: defend the work with revenue data, or watch the next planning cycle shrink the same way.