âFor a long time, b-to-b technology marketing budgets were in large part fueled by equity investment or IPOs,â said Hugh Bishop, senior VP at Aberdeen Group, a technology research firm based in Boston. âThat spigot has clearly been turned off. In 2002, those [marketing] budgets were brought back into line with reality.â
The in-depth survey was completed by more than 350 marketing executives at technology companies. Of the respondents, 26% had the title marketing VP, and 25% were marketing directors. The respondents worked for companies of varying sizesâ17% were employed at corporations with more than $1 billion in annual revenue, while 32% worked for companies with less than $10 million in annual revenue. About 46% were employed by software companies, 9% by Internet companies and 8% by networking companies.
The tech marketers remained confident about the effectiveness of their marketing programs but were uncertain about their influence with other internal departmentsâespecially with accounting. Nonetheless, most respondents predicted that their budgets would increase or stay flat in 2003, despite the continued sluggishness of technology spending and the possibility of war in Iraq.
A dismal 2002
Comparing 2002 with 2001, 39% of respondents said their departments were downsized; another 35% said their departments were reorganized. In addition, 56% said their budgets decreased, while only 23% said their budgets increased Fig 1..
With less money, these marketers shifted emphasis in both strategies and tactics. Respondents said their biggest challenge was âexecuting against business strategies,â and their biggest marketing communication priority was âstrategic planning and research.â Trade shows and hospitality events ranked next to last on the list of priorities for respondents. Advertising and imaging ranked dead last.
Apparently reacting against the branding-or-bust philosophy of the dot-com era, tech marketers ranked lead generation as the most important way to measure the performance of their marketing organizations. Press and analyst influence placed second; sales closings ranked third; branding appeared in fourth place.
âMeasuring performance is really key,â said David Murray, a founding member of GlobalFluency and exec VP-principal of Neale-May Partners, a Palo Alto-based tech PR firm. âLead generation is something whose effectiveness can be demonstrated and can be measured. Things that are more measurable and efficient are getting favored over more expensive and less measurable efforts.â
Lower funding, better results
Even with reduced funding and shifting tactics, a plurality of respondents believed they delivered improved results Fig 2.. Forty-four percent said their programs were âsomewhat more effectiveâ or âmuch more effective,â while 37% said their programs were âsomewhat less effectiveâ or âmuch less effective.â
âThe self assessment of the chief marketing officers was relatively lackluster,â Aberdeenâs Bishop said. Even with this lukewarm judgment of their own effectiveness, respondents said they expected marketing budgets to increase in 2003 Fig 3.. Forty percent said they expected their budgets to remain the same this year, while 37% anticipated an increase. Just 23% forecast a decrease in marketing spending.
When it came to staffing, most respondents (57%) expected their marketing department headcount to remain the same, while 36% expected an increase, and just 5% expected a decrease.
It might be prudent to take as wishful thinking the tech marketersâ assertion that their budgets will grow in 2003. Still, some signals indicate that tech revenues are shaking off their torpor. Aberdeenâs benchmark of the 20 largest technology suppliers showed a 1.9% increase in year-over-year quarterly revenues for the third quarter of 2002 compared with the year-earlier quarter. It was the first such increase since 2001.
A boost in tech spending, however, doesnât guarantee that marketing budgets will grow, especially considering the somewhat weak internal influence that tech CMOs see themselves wielding. While 43% of respondents said that their work was valued highly by executive management and boards of directors, just 13% of respondents said the same thing about the people controlling the purse strings: finance and operational departments Fig 4..
The survey also revealed a key area of weakness that may make it difficult for tech CMOs to prove their effectiveness. Only 26% of respondents had systems in place to capture marketing best practices, such as developing return on investment criteria, communicating with the media and tracking the results of marketing campaigns. Additionally, less than half (47%) had installed software, such as a customer relationship management system, to manage marketing resources.
âIt worries me that very few have instituted best practices and methods and are doing what needs to be done to automate marketing processes,â said Donovan Neale-May, president of Neale-May Partners. âTheyâre selling technology, but theyâre not necessarily deploying it within the marketing process environment.â