2013 Tech Marketing Budget Trends: 3rd Platform Companies and Products Lead the Growth

Yesterday, IDC's CMO Advisory Service had our annual Tech Marketing Benchmark Webinar. This study goes out to close to 100 senior lever marketing executives and represents the largest B2B Tech companies in the world (this year the average company revenue was $9.1B.) The webinar was packed with great information and was a great success. However the overlying question each year is where will marketing budgets sit at the end of the year and what direction are they moving. The results are some good news mixed with trends that point to hard work that marketers need to do around their budgets. 

Good News: More Organizations are Increasing their Marketing Spend Than Decreasing

As seen in the graph below, across the entire tech industry a net of 15% of companies are increasing marketing spend versus those decreasing. While it may not always feel like it, there are marketing budget increases out there to be had!

Challenge for Marketers in 2014: Finding the Right Areas that Should Receive More Marketing Budget

Despite the fact more companies across the tech industry are increasing marketing budgets than decreasing, budgets at the aggregate levels are flat to slightly negative. IDC expects Marketing budgets to decrease 0.5% year-over-year from 2012 to 2013. So that leaves us with an interesting juxtaposition, more companies are increasing budgets than decreasing, but at the aggregate weighted level the data shows a slight decrease in overall budgets. Three reasons we are seeing this:

1. The largest companies within the Tech Industry are seeing flat to declining marketing budgets due to continued transformation within the industry. This brings the weighted levels down. 
2. Hardware companies (as seen in the above graph) are the only sector where more companies are decreasing marketing budgets than increasing. Companies within this sector are typically larger and the Hardware industry is feeling more affects from the industry's transformation. 
3. 3rd Platform companies and other high growth product lines and business units are driving much of the revenue growth and in turn are receiving much of the increases within marketing budgets. These companies are smaller, so they add the "n" value of companies increasing, but do not affect the weighted average as heavily. 

Illustrating the final point (#3) you can see in the graph below that Cloud Software Vendor's (who are right smack in the middle of IDC's 3rd Platform) Revenue Growth, Marketing Investment Growth, and Marketing Budget Ratio (total marketing budget / total revenue) are all at least 3X  that of their on-premise peers. Some of this can be attributed the size of the Cloud Vendors (typically smaller), but the growth being seen in the 3rd Platform areas is undeniable.

Note: If you would like to discuss cloud vendors marketing benchmarks further please email me at smelnick (at) idc (dot) com!

In closing the 3 budget takeaways we are giving for budgets in 2013 - 2014 are:

1. More companies are increasing (vs. decreasing) marketing spend. (This is good news!)
2. There is not enough "Peanut Butter" to go around... (so an even spread will not work this year)
3. Marketing Investment will inevitably find growth areas: products; markets;  segments; or geos. (So, work hard to find those areas and invest wisely)

Sam Melnick is a Research Analyst at IDC's CMO Advisory Service and manages the entire benchmark survey and study. You can follow him on twitter at @SamMelnick

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Marketing Must Lead the "Customer Experience" in B2B - Thoughts from #Inbound13

Is all this talk of "Customer Experience" within B2B Tech fluff?

This is the question I asked Hubspot's two cofounders Darmesh Shah and Brian Halligan after their keynote speech at Hubspot's annual Inbound Conference. Their answers added to the momentum I have been observing and hearing. Yes, they felt Customer Experience, or whatever your organization names it, is massively important and is here to stay.

At Hubspot their shift to a Customer Experience Company, or an Inbound Company as they call it (for a great detailed overview on this read @thesaleslions recent blog post), is just another signal that providing and mapping a full Customer Experience will be an important part of the future of B2B companies. I believe marketing has an opportunity set the path to success.

Below are some areas I see patterns around "Customer Experience" as it continues grow in B2B Tech:

• Marketing > Sales > Services: This is a trio that the HubSpot executives spoke about and it's also something that we have consistently seen from salesforce.com and Marc Benioff. These are the 3 key areas of interaction with the customer and like it or not, one can't live without the other.

•  Continued rise of Vice President of Customer Experience and the Chief Customer Officer: My colleague Rich Vancil bloggedon this topic a few weeks ago. The title and role are still undefined, but where I see some patterns is sales, services, and marketing (yes those three again), rolling into one person. This person owns these areas and assures the departments are working seamlessly together. Sometimes product or the channel/partner org reports to this person, but sales, services, and marketing are always present.

•  Technology is Making the Customer Experience Possible: At IDC we have seen digital everything continue to grow, and on the marketing side, see leading companies aggressively investing in all things digital. The more conversations I have, the more I hear about context, personalization, and data. While these topics are not new, the difference is advanced technologies are now available. These technologies provide the opportunity for companies truly wanting to focus on the full customer experience to be exceptional in execution.   

Why Marketing is in position to be a leader with Customer Experience:

Marketing is the first touch point for each customer, each relationship, and each person a company encounters. With around 50% of the purchasing process complete before a buyer even engages, this leaves a huge opportunity for marketing to set the stage for what will be a long and (mutually) fruitful relationship. Not only is that first touch and experience important, but marketing's job is also to identify and label each prospect so they are placed in the correct persona.  This ultimately will send prospects down the path that will provide them with the most value and the best customer experience.

Without marketing's knowledge of the prospect, sales is blind as there would be minimal context and more challenges in providing the best solution for prospects. In turn, even when deals get closed, service teams would be starting at a huge disadvantage with minimal information on the type of account they are now managing.

Marketing sets the expectations for the customer, Marketing provides the playbook for sales and services, Marketing must take the lead in the Customer Experience.

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3 Steps to Move Closer to the Ever Elusive Marketing ROI

Here at the CMO Advisory Service, we recently closed up our 2013 Barometer Study which includes data from senior level marketers working at some of the largest Tech companies in the world. While there are a lot of great insights from this study, these senior level marketers made it very clear that their highest priority is "Proving Marketing's Value", or in other words, that always elusive marketing ROI. While this quest(ion) is nothing new to marketers, as our industry continues its transformation, marketing ROI is becoming an even more pressing topic. We see this truth in our surveys, we hear it from clients, and it is actively being discussed at industry events. This year we launched our  Chief Marketing Officer ROI Matrix (see the image to the right) in an effort to give participants a look into their own return on investment from marketing and continue the conversation. There is no easy answer here (otherwise my days would not be quite as busy), but I have 3 steps senior marketers can take to move closer to measuring marketing ROI.

1. Identify what matters and what does not

This might seem obvious, but to successfully prove value, first it must be understood what is providing value.  Often when we speak with clients we remind them that tactics are important, but without strategy on the front end those tactics may be wasted energy. Before creating a substantial dashboard or reporting tool, take the time to understand which data or measurements are going to further the case and which are white noise. Once done, not only will the organization be better able to prove ROI, but it will be able increase effectiveness.

Key Fact: 27% of B2B companies report they have not yet used predictive analytics to improve any marketing activities.

2. Communicate inside and outside of your department

As transformation continues within the tech industry it is creating a ripple effect to companies and then departments within each company. This means lots of change, and change can often mean confusion. Not only are marketers pushing to prove their worth, but they have to compete with this ongoing confusion. To overcome this issue, communication is a must, both within the marketing organization and across the entire company.  It is key to receive buy-in from stakeholders and make sure the steps taken are continuously aligned with expectations. It also means communicating the actions taken (and why they were taken) to staff or superiors. Remember, over communicate, as in times of turmoil "value" can be a moving target.

Key Fact: In 2013 senior marketers expect 2/3 of the marketing technology budget will come from the marketing department – the rest from IT, Sales, and other areas. Communication across these departments is key. 

3. Benchmark your progress

Identifying what provides value and then communicating as progress is made towards measurment are two great steps. However, when it's time to share the work, comparisons and baselines will be needed. The first step is measuring your own progress. How have the KPIs improved and what can be expected in the future? The next question will be, what is the comparison to competitors? Finding ways to benchmark and measure progress internally and externally will help tell the story of value added and improvement. It will also set standards and targets to shoot for, without these benchmarks there is a risk of flying blind.

Key Fact: Close to 100 tech companies participated (For Free) in IDC's Chief Marketing Officer ROI Matrix and benchmarked their marketing ROI against their industry peers. To participate this year contact smelnick (at) IDC (dot) com.

What other steps would you recommend to prove marketing value or even derive that elusive marketing ROI number?

Do you think this is fools gold and there are other areas marketers should be focused on?

Let me know your thoughts!

You can follow Sam Melnick on Twitter: @SamMelnick 

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Slide Deck - 2013 Cloud Marketing Trends

There is no arguments that the cloud software industry is currently top of mind for many, in fact enterprise companies are even receiving their share of love. While the industry as a whole has our attention, what about marketing departments at these companies. 

How are CMOs at these fast growing cloud organizations managing their marketing budget? What are they worried about? and what are their priorities for the rest of the year?

Within IDC's 2013 Marketing Barometer survey we received answers from marketing leaders within cloud organizations. In this presentation you will see the high level findings comparing these cloud marketing departments to more traditional 2nd platform companies.

I would love to hear your thoughts on these initial findings and how your marketing organization is working to compete in this fast growing market (whether as a pure play or just one of many product lines).  

For an extended deck with further analysis please contact me directly at smelnick (at) idc (dot) com or reach out to me on twitter: @SamMelnick

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Best Practices for Paid Social Media - An Up and Coming Tool for B2B Marketers

The stigma of social media is something I have been fighting for years. As someone whose education and career has mirrored Mark Zuckerberg's (minus the dropping out of an ivy league school to build a multibillion dollar company and taking it public…so really when I say "mirrored", I mean we are approximately the same age), I feel an affinity to the social networks that have matured as my own career has moved forward. Because of this I have found myself defending the merits of different social networks' "tangible" value to relatives, colleagues, and random people on the subway. So, when I received an email stating I had $100 free Twitter ad credits, I jumped at the chance to see where Twitter has taken their ad platform. While that $100 was great to boost my twitter followers (speaking of which follow me here), retweets, and ego it didn't really answer my questions around how creative B2B marketers are utilizing social networks.

To dive in deeper I tapped the knowledge of 3 digital and social marketing leaders to educate me on how their organizations are harnessing the power of social through "Paid Social" Campaigns. The experts I spoke with are listed below:

Lauren Vaccarello, Sr Director of Online Marketing at salesforce.com

Lauren Friedman, Manager of the Social Community Engagement Team at Adobe

Dan Slagen, Head of Global Marketing Relations at Hubspot. (Now SVP of Marketing at Nanigans)

You can find the full overview and guidance on 'Paid Social' within IDC's CMO Advisory Service'smost recently published document Paid Social Media: A Look into How TopBrands Are Utilizing Paid Social Campaigns. For 3 'take aways' for B2B marketers look no further:

There are Two Kinds of Marketers in Social: The Quick and the Dead: A pillar of social is the fast pace and instant reactions it provides. While moving fast is necessary, leading companies go to great lengths to make sure they are able to move quickly and effectively. The experts I spoke with all emphasized seamless communication across the organization to assure there was no misunderstandings on the current social game plan. Additionally, they each spoke about implementing technologies on the backend to measure the data and output actionable metrics.

Paid Social is a Different Kind of Advertising Buy: Social ad buys are not your father's paid advertising campaigns; marketers must acknowledge this before going head first into a paid social campaign. Social networks are built with the end user in mind; all of the marketers I spoke with emphasized this point. Think creatively when it comes to Twitter or Facebook ad buys, consider leveraging the platforms to amplify a message or push something that will strengthen your community rather than just driving leads.

What Can Social do for Me?: Most marketers have acknowledged and embraced social marketing as a part of their overall strategy. However, that does not mean it is accepted throughout the organization. Before asking for (or putting) advertising dollars towards paid social campaigns, marketers need to answer the question "what can social do for me?" for other decision makers within the organization. The experts I spoke with pointed towards heavy alignment with sales so the reps understand the incoming leads and how to act on them. Some companies put SLAs in place to assure that both Marketing and Sales commit to specific responsibilities. The other best practice is to create a pilot program before committing big dollars and major resources - this way you have specific proof points to set your goals on and optimize off.

What are your thoughts on "Paid Social"?

Does your organization currently run paid advertising on Twitter, Facebook, or LinkedIn?

Do you have any comments to add to what is above?

Sam Melnick is a Research Analyst with IDC's CMO Advisory you can follow him on twitter: @SamMelnick

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IDC's 2013 Chief Marketing Officer ROI Matrix: Are you a Marketing Leader, Achiever, Contender or Challenged?

IDC's 2013
Chief Marketing Officer ROI Matrix

If you are a B2B Marketer you've read the articles, heard the pundits, and attended the conferences - marketing is transforming. This is not ground breaking news. However, what you probably have not seen is a tangible and holistic way to measure your organization's marketing performance. Today you are in luck.

IDC's CMO Advisory Servicehas just released our Chief Marketing Officer ROI Matrix. This Matrix not only provides measurement on Marketing ROI for those companies who participate in our annual benchmark survey, the recently published reportalso provides fact based analysis, actionable recommendations via IDC Analysts and best practices from leading marketing organizations.

For the down and dirty on the report view our press release

For some quick and interesting facts from the study look no further, you are in the right spot!

You must have the muscle (ie: budget) to move the needle.

 #CMOFact: As a percentage of revenue, Marketing Leaders spend ~3X more on marketing than the Challenged http://bit.ly/CMOROI Tweet This!

It is important to note these properly funded Marketing organizations were not just blessed by their CEO with a strong budget, they first proved their worthiness. The first step to earning your budget is to be efficient and effectivley track the dollars given to your department. Leading companies spent years optimizing (and wisely spending) their budget before earning a larger piece of the pie.

"Marketers, tear down these walls!" 

#CMOFact: Marketing leaders staff Campaign Mgt roles at 5.4% of their staff. http://bit.ly/CMOROI Challenged staff at 1.7%... Tweet This!

The quote was once said by Ronald Reagan…ok, maybe he didn't say that, but we are seeing leading marketing organizations aggressively staffing areas that promote communication and knock down proverbial departmental walls. Leaders staff Campaign Management, Sales Enablement and Marketing IT at a significantly higher rate than the challenged.  They also staff MarCom and Executive & Admin positions at much lower rates.

Remember who keeps the lights on and bust your…you know…to make their lives easier.

#CMOFact: Marketing challenged spend 22% of their program budget on digital. http://bit.ly/CMOROI The leaders spend 33%! Tweet This!

Within tech we often think of innovation as tied to R&D and the product; however leading companies are actively innovating their marketing tools and strategy. The buyer has changed and no matter how good your product is, if the value proposition is not delivered in a way that 'speaks' your buyer's language you will risk losing business. Leading companies are pushing boundaries through new and innovative digital strategies and cap spend in areas like Email Marketing and Events.

This is research the team is excited about and truly believes it will help marketers continue to improve their organizations. What is clear from this research is the gap is widening between the marketing teams that "get" the marketing transformation (the Marketing Leaders) and the ones still wallowing in traditional ways (the Marketing Challenged). Continue working hard and using all the resources at your disposal to stay ahead!

For more information about the Chief Marketing Officer ROI Matrix and a complimentary executive summary email me smelnick (@) IDC (dot) com. To be considered for the 2014 Chief Marketing Officer, you guessed it, you should email me.

You can also download the full report here and don't forget to join the discussion on twitter by using hashtag #CMOFact

Oh, one last thing… Follow me on twitter: @SamMelnick

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