The recession is having a drastic impact on tech marketing spending this year, with budgets expected to be down by double digits, according to a new report from research firm IDC.
IDC this week will release its 2009 Tech Marketing Barometer, a report based on online, phone and in-person interviews with senior marketers at 44 global technology companies. The technology companies are among the largest in the world, representing $260 billion in annual revenue and more than $7.5 billion in marketing spending.
“We're forecasting a 10% decline in marketing investment for '09,” said Michael Gerard, VP-research, CMO Advisory Practice at IDC. “The first half is really taking the brunt of that, with about a 15% decline.”
Last year, tech marketing spending was up 3.5% over 2007.
While tech marketing spending is down significantly, global IT revenue will be up 0.5% this year, compared with growth of 4.2% last year, according to IDC.
The research firm found that 61% of tech companies plan to cut their marketing budgets in the first half, while 14% will increase budgets and 25% will keep them flat.
In the second half, things will improve, but not by much, IDC projects.
The survey found that 46% of tech marketers plan to cut budgets in the second half; 18% will increase them; 11% will keep them flat; and 25% don't know.
Gerard said that in this economic climate, marketers are becoming much more reluctant to take risks with their marketing budgets. The survey found that 53% of marketers classified themselves as “highly risk-averse” with their marketing investments, compared with 36% last year and 30% in 2007.
“If you are extremely risk-averse, you are more cautious about how and where you are spending your marketing investment,” Gerard said. As a result, “There is a large mass-market shift into digital marketing and channel marketing, as well as programs that will better enable the sales folks.”
IDC found that 68% of tech marketers plan to increase their digital marketing spending this year, and nearly 40% will increase channel marketing and sales enablement programs. Also, about one-third of tech marketers plan to increase their direct marketing budgets. On the down side, 62% of marketers plan to decrease spending on traditional marketing programs, including print, broadcast and corporate sponsorships.
“Companies are taking a much closer look at their lead management processes and lead nurturing processes. There is a big difference now [in the recession] from what we've seen in the past,” Gerard said. “Before, companies just wanted to get more leads to sales. Now, it's more sophisticated.
“Companies want to get higher-quality leads to sales. They are developing lead-scoring algorithms, and they are leveraging better technologies for event-triggered programs.”
Gerard also said that despite the tough climate, marketers are in a good position to respond with sound strategies.
“As I look at marketing in a downturn today compared to after the Internet bust, marketing has never been in a better position to respond to this environment,” he said. “There are a lot of battle-hardened executives out there who have put together good strategies for demonstrating fiscally responsible marketing practices.” M