Marketing budgets are earned, not granted

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Last month, IDC reported our latest forecast for tech marketing spending. The good news is that budgets are still expanding-by at least 3% this year-with room for more upside as the year unfolds. This is on top of a 6% expansion for the full year of 2004.

As good business people, we would, I hope, all agree that the objective is not to have the largest marketing budget. But IDC research does show that those marketers who are achieving greater budget increases are those who have demonstrated an ability to expand the role of marketing.

The order of this is important: New monies come after the marketing charter is expanded, not before. Marketing budgets are earned, not granted.

Tech marketers need to expand their charter. The industry stakes are rising and marketers-indeed, all of us-are working harder to find and exploit narrower niches and segments for sources of new revenue.

The primary success factor for today's tech marketing function is identification, definition and articulation of the next, new, "right" market opportunities for the company. To rise to this challenge, a new breed of tech marketers is emerging.

Based on IDC's analysis of vendors across the industry, there are at least four characteristics that identify those tech marketing leaders who are earning more responsibility. Marketers who exhibit these qualities seem to be receiving the appropriate resources (and resource increases) to execute their initiatives. These are:

  • They report directly to the president or CEO and also enjoy board-level exposure.
  • They represent the "voice of the customer" inside the company and make sure that this voice contributes to the strategy sessions that produce important decisions regarding target-market selection and product line direction.
  • They create and maintain working channels for communication with their counterparts in engineering and sales.
  • They bring leadership and creativity to the challenge of marketing performance measurement and reporting.

Contrast these qualities to those of the past, when tech marketing was a much more limited function. For better or worse, marketing didn't need to play a large role. Good double-digit growth was available in just about every sector of the industry, and marketing could be successful simply by providing basic product marketing support, communications, PR and other tactical functions.

In a sense, most target-market selection was done passively by the IT vendor: the newest application or box would be pushed to those buyers in the marketplace with the greatest hunger for new technology. In addition to producing marketing organizations that were very narrow in scope and function, this produced marketing organizations that were largely product-centric vs. market-centric.

Much of this organizational legacy remains in place today. IT vendors are largely organized by product line, and IT vendor marketing departments are largely organized by function. There are very few vendors or marketing departments that are truly organized around current or emerging marketplaces or customer bases. This will become a significant problem for many vendors.

Today's marketing leaders are earning an expanded charter that will put them in the best position to build the program initiatives and the skills they need for this very challenging next phase of tech marketing.

To repeat: IDC's current analysis shows that the average marketing budget increase for tech vendors is 3% for the first six months of 2005. For those marketing leaders who exhibit the qualities listed above, the average budget increase exceeds 10% for the first six months of 2005.

Richard C. Vancil is VP-CMO Advisory Research, IDC. He can be reached at [email protected].

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