$43.6B U.S. agency revenue
Budgets are, and will remain, under pressure. The main culprit is the sluggish pace of tech spend, at least in our more mature economies. Management teams are simply not willing to spend until better signs of demand pick up. We see the average large tech vendor is in receipt of a 1.7% budget increase this year. That is about one-half the increase of the 2011 rate (See Figure 1). The second factor that leads to slower budget growth is media shift: executing via less-expensive digital v. more-expensive traditional media. The average large tech vendor today "goes to market" with 30% of its marketplace execution in digital formats (if you count everything from email through to virtual events).
For the budget gains that vendors are making, almost 100% of new money is going toward marketing programs (discretionary spend) and almost nothing is going toward people (new hires). Watch out for the organizational impact of this. "Doing more with less" is not an uncommon refrain from the marketing staff, but the data really supports that, this year.
Social marketing will see greater investment this year, albeit from a very low basis. As shown in Figure 2, less than a percentage point of total "programs," and also total "people," spend is allocated to social marketing.
A bright spot within the budget is for marketing automation. Investments will increase to over 3% of the marketing budget this year (Figure 3). It will be interesting to watch the "split" of funding for this area, and how that will fall to the CMO or CIO as deployments get more aggressive.
As I speak with CMOs in and around the tech vendor community, there is absolutely no question that the marketing transformation effort is accelerating. Many vendors have been at this effort for a few years. But as we now start accounting for actual results, we see as many false starts as we do successes. And so there are renewed and bigger efforts underway to transform. The best evidence of this is in the many recent, aggressive marketing budget overhauls and larger, more sweeping reorganizations of the marketing function.
The good news is that top marketing execs and C-level execs DO understand that "future" marketing can and should be the game-changer function, and so they are going to keep at the transformation efforts until they see results.
As you think about the marketing transformation at your company, what is the dynamic? Are you acting, or are you getting acted upon? Acting might include your own efforts at cost savings, or budget redeployments, or automation initiatives, or skill set improvements, etc. Getting acted upon might mean where you show up to a management meeting wherein you are handed the new organization chart….and you realize that you were not one of the architects.
Here are three major outcomes to watch for and benchmark, on your own transformation journey. If these are happening, then marketing transformation success is taking hold:
- Shorter purchase cycles
- Reduced overall cost of (combined) marketing + sales in your SG&A line
- Vastly improved customer analytics as a result of integrated marketing plus sales automation efforts.
Good luck in your 2013 budgeting meetings!