IDC projects increase in tech budgets

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Indicating a long-awaited recovery in the technology industry, tech marketing budgets are projected to increase 2.1% during the first six months of this year, according to IDC’s Tech Marketing Barometer, released last month.

By comparison, IT marketing spending decreased 1.7% between 2002 and 2003, according to IDC CMO Advisory Service.

The research was previously conducted on a year-over-year time period. This is the first release of data on a semiannual basis.

The Tech Marketing Barometer found that 49% of respondents plan to increase their overall marketing budget during the first six months of this year relative to the last six months of 2003.

"Tech marketing leaders are very optimistic about growth expectations in 2004," said Michael Gerard, research director of the CMO Advisory Service.

For the full year, worldwide IT spending is projected to increase 5% over last year, he said.

The study also found that for those companies increasing their marketing budgets this year, the average increase is 10.8%.

The study was based on interviews with executives at 48 technology companies, representing $175 billion in revenues and $3.6 billion in marketing spending.

When asked how they would rate their company’s current marketing investment in 2004, 58% of executives said it was "cautiously optimistic"; 25% said it was "risk averse"; 13% said it was "aggressive"; and 4% said it was "highly risk averse."

"In an upswing, the aggressive ones are in the best position to take market share," Gerard said. "These companies intend to be at the forefront of the next economic growth cycle."

In terms of marketing priorities, 55% of companies surveyed plan to place more emphasis on demand generation, and 34% plan to place more emphasis on awareness. Eleven percent said both are a priority.

The survey asked companies to rate the importance they placed on various marketing communications programs, on a scale of 1 to 5.

Clarifying and communicating corporate positioning received the highest average score (4.4), followed by better alignment with sales organization (4.3), building greater corporate brand awareness and equity (4.1), and improving measurement of return on marketing investment (3.9).

IDC put marketers into two groups—marketing leaders and laggards.

Leaders are increasing their marketing spending and focusing on a full range of marketing activities; laggards are still in cost-control mode, as defined by the study.

"Marketing leaders are truly back in business," said Rich Vancil, VP of CMO Advisory Service. "They have used the last two to three years of the downturn to work through organizational issues, cost-control issues, and getting measurements and metrics in place."

Laggards stuck in cost-control

Marketing leaders are increasing their marketing spending while maintaining discipline developed during the recent downturn, Vancil said. "Laggards are still in cost-control mode," he said. "They have low expectations for growth, flat or declining marketing budgets and their priorities are still in lead-generation areas."

Vancil said for marketers to be successful, they must continue to invest in awareness as well as lead generation. "A disinvestment in awareness comes back to the laggards and will hurt their overall business," he said.

Neil Canter, managing partner, North America, for Accenture Marketing Sciences, said he agreed with IDC’s findings on the attributes that distinguish marketing leaders from laggards. Accenture Marketing Sciences is a consulting group within Accenture’s CRM practice that helps clients maximize their return on marketing investment.

"We are seeing the biggest thing that separates leaders from laggards is the ability to assess what marketing expenditure they are actually delivering," Canter said.

"Marketing is now an accountable expenditure, much more than in the past," he added, noting that companies can measure marketing ROI in ways they could not 10 to 15 years ago, as a result of new technology and analysis models.

"Companies that have that understanding are often the ones making bigger marketing investments," Canter said.

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