Rich Vancil, a VP with IDC’s Executive Advisory Group, called these numbers an “unfortunate damage report” when he revealed them in “Tech 2010: Moving From Budget Bust to Budget Build,” a telebriefing held by the CMO Advisory Service last week.
But the briefing also provided CMOs a roadmap for managing during the downturn, as well as a plan for the expected upturn. IDC projected global IT spending will increase about 3% in 2010.
Suggesting that marketing departments need to be ready for this uptick, Vancil pointed out that during the 2004 turnaround—as the IT industry recovered from the dot-com bust and the economic downturn following the terrorist attacks in 2001—growth in tech marketing spending (about 6%) outstripped growth in IT revenue (5%).
Vancil said one way CMOs can manage through difficult times is to reorganize their marketing departments and better align their objectives with those of the sales operation. About 70% of the more than 90 tech companies (including Hewlett-Packard Co., Intel Corp., IBM Corp., Microsoft Corp. and Xerox) that IDC surveys for its annual benchmarking study said they had undergone “significant” organizational change in the past year.
One company that has restructured and formally addressed social media’s role is Sybase, the enterprise software vendor that hopes to double its $1.1 billion size. Michael Gerard, VP- research at IDC’s Executive Advisory Group, said that Sybase had placed all its marketing under a single CMO, hired a senior VP to oversee all product marketing and automated a number of marketing processes and metrics.
Gerard also praised Citrix for diving headfirst into social media when it hired a new VP-solutions and community marketing.
While recommending they boost their digital spending, Vancil cautioned that too many marketers don’t fully understand how to take advantage of the online medium and its ability to measure return on investment. The CMO Advisory Service figures show that advertising, including print and television, still command the highest percentage of the typical technology company’s marketing budget, at 21%.
Even at high-tech companies, digital spending typically represents only about 13% of an overall marketing budget. Within this allocation, online display advertising takes the largest portion, at 24%, followed by e-mail marketing and search marketing, each commanding 19% of the online marketing budget. Spending on a company’s Web site represents 17% of the budget. At the rear, spending on social networks represents just 3% of the digital budget, although, as IDC noted, “social networking and digital events remain high growth investment areas.”