Marketing's AI budget grew slower than every other department this year, Menlo Ventures finds

Marketing posted the slowest AI budget growth of any department tracked in Menlo Ventures' fourth annual State of Enterprise AI report, climbing just 1.8x to $1.2 billion in 2026 even as total enterprise AI spending surged 5.4x to $176.8 billion.

The report, published November 3 and based on a survey of roughly 400 U.S. enterprise decision-makers who together control more than $4 billion in AI spend, breaks out AI deployment spending by business function for the first time this year. Every department grew its AI budget. Marketing just grew it the least.

What changed

Customer success spend reached $2.7 billion, up 4.3x, led by vendors like Sierra and Decagon. Sales spend hit $1.4 billion, up 3.6x, with Clay and Monaco cited as the fastest-growing names. IT spend grew 2.3x to $1.6 billion, and HR grew 2.5x to $900 million behind Workday's AI push. Marketing brought up the rear at $1.2 billion and 1.8x growth, the only function in Menlo's breakdown without a vendor the report considered large enough to name.

The department numbers sit inside a bigger structural finding: most of this year's AI spending increase did not come out of existing budgets at all. Menlo found 55% of incremental AI spend came from entirely new, net-new budget lines. Only 22% was redirected from software budgets, and of that 22%, 13 points stayed with incumbent vendors as customers converted existing seat licenses to AI tiers, while just 9 points, or $12.6 billion, went to AI-native challengers.

"Products that have to win a software budget are competing for the smallest pool," wrote SaaStr's Jason Lemkin in his analysis of the report.

Why marketing is falling behind

Scale matters here. Coding alone pulled in $34 billion in 2026, up 7.7x, with Claude Code and Codex accounting for $24 billion of that figure. Workplace assistants and chatbots added another $25 billion. Together, those two categories make up the large majority of all application-layer AI spend, leaving a much smaller pool for every other function to split, marketing included.

The report also found that Anthropic, OpenAI and Google captured 69% of total deployment spend between them, up from 50% a year earlier, and that their own spend grew 7.5x versus 3.3x for everyone else. Menlo found little evidence that enterprises are replacing systems of record, the CRMs, HRIS platforms and ERPs that much of enterprise software marketing still sells into, with AI outright. Instead, the firm estimates AI adoption trimmed overall application SaaS growth from roughly 13% to roughly 11%, or about $12 billion of growth that did not happen on a market worth more than $600 billion. Marketing's slow AI budget growth is one symptom of that same squeeze.

Who it affects

Two groups of software marketers should read the department numbers differently. If you sell into marketing departments specifically, in martech, analytics or creative tooling, the 1.8x figure is a budget-growth ceiling you are not going to out-pitch your way past this year. Marketing's buyers simply have less fresh AI money moving through their function than their counterparts in customer success or sales, where growth ran more than double.

If you are an AI-native vendor competing for the conversion dollars inside any department's software budget, the 13-points-to-9-points split matters more than the department total. Incumbents are winning most of the software-budget money that does get reallocated to AI, by upgrading the seats they already sell. A challenger pitching a net-new tool has to win budget that a renewal conversation would otherwise keep with the incumbent by default.

What to do differently

The report's clearest implication for go-to-market is about who actually holds the money. Since most new AI spend is landing in budgets that do not report through software or marketing lines at all, the buyer with discretionary dollars increasingly is not the person who owns your category's existing line item.

• Find out whether your prospect's AI money sits in a net-new budget, a converted software line, or a labor budget. The pitch and the approver differ for each.
• If you are an incumbent with an AI tier, lead renewal conversations with the upgrade path. Menlo's data says that is where the software-budget dollars are actually landing.
• If you are AI-native and selling into marketing, build the business case against a net-new AI budget, not a martech-stack swap. The swap pool is smaller and slower-growing than in any other function.
• Do not assume marketing's AI spend will catch up on its own. Nothing in the report suggests convergence. Customer success and sales pulled further ahead this year, not closer.