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Tech marketing budgets to increase 1.7% this year

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Technology companies will increase their marketing budgets by a cautious 1.7% this year, according to the “2012 CMO Tech Marketing Benchmark Study” from International Data Corp. IDC's 10th annual forecast, released to clients Sept. 25, was based on a survey of 91 senior marketers at technology companies conducted between May and August. The marketers who participated in the survey work at tech companies with an average revenue of $7.5 billion. “Marketers continue to try to get the funding they need in a slow-growth industry against a backdrop of uncertainty,” said Rich Vancil, group VP-executive advisory strategies at IDC, during a webcast with IDC clients. “Management is unwilling to turn up the investment in marketing until they see more revenue growth.” Tech marketing budgets hit a low point in 2009, when they decreased by 8.3% in the wake of the financial crisis. In 2010, tech marketing budgets increased 3.7% over the previous year, and last year they rose 3.5% over 2010. “There is a lowering overall, year over year, and we believe it represents caution companies are feeling about their futures,” said Kathleen Schaub, VP-research at IDC's CMO Advisory Service. However, she added, “There is quite a bit of difference in the vendor sectors; the success story is clearly software. Software companies are investing more in marketing, and there seems to be more confidence by software vendors.” Software companies will increase their marketing budgets an average 5.2% this year, but hardware vendors will trim budgets an average 0.5% and services companies will cut them an average 3.7%, IDC found. Software companies also have the highest marketing budget ratio (marketing spending as a percent of total company revenue), at 3.9%, compared with 2.0% for hardware companies and 0.5% for services companies. “This is a story about marketing transformation,” Schaub said. “A lot of companies are retooling their products and are pulling back [marketing budgets] as they are rethinking their portfolios. The thinking is: Why invest in the current portfolio when they are going through this transformation.” IDC also asked tech marketers about their budget allocations. This year, only 9.9% of marketing budgets will be spent on traditional advertising, down from 13.4% last year. Digital marketing will make up 29.2% of marketing budgets, up from 26.4% last year, and event spending will account for 20.5% of the mix, up from 16.6%. However, direct marketing will fall to 6.9% of overall budgets, down from 9.6% last year. All other areas, including analyst relations, PR, and marketing support and sales tools, will comprise 33.5%. Within digital spending, the top areas of investment this year are display ads (making up 23.6% of the digital budget), followed by company websites (17.4%), search ads (15.9%), marketing automation (14.9%), email marketing (13.6%), search engine optimization (5.8%), digital events (4.5%), social networks (3.7%) and other websites (0.6%). “There is more emphasis on digital ads and events this year,” Schaub said. “As companies lean in closer to the customer and do more solutions marketing, events tend to be a default, go-to activity.”
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