IDC study finds tech spending up

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Showing that the technology market continues to improve, IDC released a report last week that found tech marketing spending will be up an estimated 7.0% this year over 2005.

IDC's "Technology Marketing Spending and Resource Priorities for 2006" study is a midyear update to its annual Tech Marketing Benchmarks Study.

The most recent benchmarks study was released last September.

The current study was based on interviews with 47 senior marketing executives at technology companies representing $125 billion in annual revenue and more than $3 billion in marketing spending.

The study shows improvement in tech marketing spending for the third consecutive year since the technology market crash.

In 2005, tech marketing spending was up 6.4%, and in 2004 spending was up 5.8%. In 2003, tech marketing spending was down 1.7%.

Also for the third year in a row, tech marketing investment continues to outpace global IT spending.

In 2006, global IT investment will increase by 5.5%, according to IDC.

"It is costing more in marketing dollars to get every dollar in revenue," said Michael Gerard, research director of IDC's CMO Advisory Practice.

He said this is due to the maturity of the technology market and increased competition.

"Marketing takes a greater role," Gerard said. "Companies need to market for differentiation and customer creation."

About 16% of marketers said they would increase their marketing spending by more than 20% in 2006, compared with 10% last year that said they would spend at that level.

Roughly 10% said they would increase marketing spend by 15% to 20%, which is about the same as last year. More than 35% of marketers plan to increase their marketing budgets by between 5% and 14.9%, compared with 20% that spent in this range last year.

Twenty-two percent of marketers plan to increase their marketing budgets by 0 to 4.9% this year, compared with 45% last year.

When asked to characterize their companies' marketing investment activity for this year, 66% said "cautiously optimistic," compared with 47% last year; 10.6% said "aggressive," compared with 15.2% last year; and 19.1% said "risk averse," compared with 27.2% last year.

Executives were also asked to identify their top marketing priorities for 2006. The leading choices were: brand awareness (49%), lead generation (45%), global alignment (28%) and marketing performance measurement (28%). Respondents could select more than one answer.

Gerard said the study revealed some important marketing trends.

"Over the last two to three years, marketing leaders have implemented a lot of quick fixes," he said.

These include getting control of the marketing spend, reorganizing marketing structures and staff, developing a marketing operations function and establishing cross-functional councils for integrated marketing activities.

For 2006 and 2007, IDC identified several trends that technology marketers will be undertaking.

"No. 1 is streamlining complex marketing processes," Gerard said, citing business intelligence and marketing intelligence as areas that are being addressed.

"Companies need to understand who their customers are, [appreciate] what their needs are and tie all the information across the company," Gerard said.

Other marketing processes companies need to focus on are demand generation and brand strategy development and deployment, IDC found.

A second major marketing strategy for this year and next is boosting the ability to bring the voice of the customer into the company, particularly in areas such as product development and strategic planning, according to the report.

"The voice of the customer will help marketing increase its credibility in the organization and help the organization have a more sustainable leadership position," Gerard said.

A third strategy is continuing to drive marketing performance measurement (MPM) into the organization. "There has been a significant shift in the level of detail and advancement of the MPM practice," Gerard said.

He said companies need to continue to develop a culture of measurement, establish consistency in metrics across the organization and work on the quality of data.

Finally, companies need to improve marketers' skill sets, IDC found.

Skills that will be important for marketing organizations include focusing on customers, targeting audience segments and improving the integration of programs across marketing disciplines, Gerard said. M

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