New studies show marketing budgets rising

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B-to-b marketing budgets will show healthy growth this year, led by technology companies, according to separate surveys released last month by research companies Forrester Research and IDC.

Both companies project strong growth in b-to-b marketing this year, following two years of budget cuts during the recession.

In its March 22 report, “Bigger B2B Marketing Budgets Come With Great Expectations,” based on an online survey of 563 global marketing executives in the fourth quarter, Forrester found that b-to-b marketing budgets will increase by an average 6.7% this year over last year.

“2011 is shaping up to be the turning point for marketing investment,” said Jeff Ernst, principal analyst at Forrester and author of the report. “In 2010, most marketers were still reducing budgets and were being asked to make budget cuts.”

The growth this year will be led by technology services companies, which will increase their marketing budgets by an average 17.0%; followed by finance and insurance (7.8%); high-tech products (5.9%); business and professional services (4.3%); and manufacturing (4.3%).

Pharmaceutical and medical device manufacturers are lagging, with an average marketing budget decrease projected at 2.8%, according to Forrester.

“In prior downturns, technology companies tended to be the first ones to spend money coming out of recessions. We have seen that in the last couple of downturns,” Ernst said.

Forrester also found that smaller companies will increase their marketing budgets at a much greater rate than larger ones.

Companies with between 100 and 499 employees will increase their marketing budgets an average 11.1% this year; those with between 500 and 999 employees will increase budgets by an average 17.8%; and those with between 1,000 and 4,999 employees will increase budgets an average 5.6%.

“Smaller companies tend to spend more on marketing, especially if they are in growth phases, opposed to mature companies,” Ernst said. “The survey also shows that marketing budgets as a percent of total revenue are higher for smaller companies than for larger companies.”

The marketing-to-revenue ratio at small companies (those with between 100 and 499 employees) is expected to be 4.6% this year, compared with a marketing-to-revenue ratio of 2.8% at companies with between 1,000 and 4,999 employees, Forrester found.

In its “2011 Tech Marketing Barometer Survey,” released March 21, research company IDC projects that marketing budgets at global IT companies will increase an average 8.0% this year.

The eighth annual report was based on an online survey in January and February of senior marketers at global IT companies, including Cisco Systems, IBM Corp., Intel Corp. and Microsoft Corp., representing more than $337 billion in total revenue.

It found that for the first time in three years, global marketing investment will increase at a higher rate than global IT revenue, which is expected to increase by an average 6.8% this year.

In 2009, global IT revenue decreased by 4.5%, while global IT marketing investment decreased by 8.3%. Last year, global IT revenue grew by 5.8%, while global IT marketing investment grew by 3.7%, IDC found.

“During the depths of the recession, marketing budgets declined nearly twice as much as revenues,” said Joe Ferrantino, research analyst at IDC's CMO Advisory Service. “Marketing budgets should at least track revenue growth, and we expect to see marketing budget ratios rise again.”

IDC also looked at where IT companies plan to spend marketing dollars this year.

It found the greatest increases will be in website content and development (with 69.0% of marketers planning increases); followed by social networks (60.0%); marketing support and sales tools (56.0%); advertising (47.0%); and direct marketing (42.0%).

The survey also found that 42% of senior IT marketers cited measurement and ROI as the single greatest challenge in increasing proficiency with digital marketing and social media.

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