IDC: Tech spending on the way back up

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It's official: Technology marketing spending is rebounding this year, according to a new report from research firm IDC.

Tech marketing spending is projected to increase 6% this year, compared with a decrease of 1.7% last year, according to the IDC Tech Marketing Benchmark Survey released last month.

"The good news is that tech marketing really is coming back," said Rich Vancil, VP of the IDC CMO Advisory Service, which conducted the research.

Significant in this year's research, based on interviews with 102 marketing executives at technology companies, is that marketers are spending more on building awareness, Vancil said.

According to the report, 57% of respondents' total marketing budgets will be spent on generating brand awareness, up from 52% in 2003.

"During the downturn over the past three to four years, marketing has been relegated to tactical roles, with a focus on lead generation and supporting sales," Vancil said.

"The full equation includes awareness building and demand generation."

James Richardson, chief marketing officer at Cisco Systems and a participant in the research, said the marketing trends at Cisco reflect the overall trends noted by IDC.

"Our marketing investment went up [this year]," Richardson said, although he declined to give exact budget levels. In BtoB's Top 100 Advertisers report (page 23 in this issue), Cisco is reported to have spent roughly $60 million on b-to-b advertising in 2003, up 284% over 2002, according to data from TNS Media Intelligence/CMR.

Richardson said that due to economic challenges posed by the slump in the technology sector at the beginning of the decade, Cisco had to cut its marketing expenses and invest in research and development to leverage its technology innovations.

"We had to get the message back into the marketplace on awareness that we have survived and we are in new service areas," Richardson said, pointing to security, voice, home networking and wireless services.

"Last calendar year, it was a lot more on awareness," he said. "We spent a lot more on TV. This [fiscal] year [beginning Aug. 1], we are getting more focused with our targeting. We are spending less on TV in the current fiscal year-more on cable as opposed to [broadcast] network-which is a little more targeted, more on print, more on online and more on direct."

Advertising a larger portion

According to the IDC research, advertising is making up a larger portion of the total marketing spend this year-roughly 35%, compared with 32% last year.

Within the advertising pie, 58% of the budget will be spent on print; 12% on broadcast TV; 10% on online; 7% on corporate sponsorships; and 13% on other advertising activities.

In terms of how they will spend on other awareness-generating marketing activities, marketers on average will spend 12.9% of their overall marketing budgets on events, compared with 11.1% last year; they will spend 6.7% of their marketing budgets on events, compared with 5.6% last year.

"We are beginning to see a shift to brand investment as communicating positioning becomes a top priority for tech marketers," said Michael Gerard, research director at IDC.

"Marketers need to increase the focus of their marketing dollars to develop brand and increase the precision of their campaigns to reach targets with the greatest growth potential."

When asked to describe their top three marketing challenges, 56% of marketers said brand awareness, 22% said channel marketing and 20% said marketing ROI measurement.

Other marketing challenges are pricing and packaging strategy (19%), lead generation (18%) and new market segment growth (15%).

"During the heavy growth decade, a lot of the sales and marketing equation was more heavily biased toward sales," Vancil said. "Now, we have more selective users and savvier buyers. Marketers need to better segment and understand narrower niches and segments and market to them in a very scientific way."

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