2008 Outlook for Tech. Mktg. Investment

Well, we've just completed our 6th annual technology marketing barometer study, and I have some good news and bad news to share with you. Let's get the bad news over with first. As marketers, we have our challenges cut out for us in 2008:

1. Challenging economic environment in 2008: An unsteady marketplace is introducing significant aversion to risk by tech executives.
2. Drive for overall marketing efficiency and effectiveness will continue with mounting budget pressure and market competitiveness.
3. Market and marketing channels will continue to proliferate, creating challenges and opportunities.
4. Tech marketing budgets will increase by 4% for the full year 2008. Although this is an increase, it is the lowest that IDC has forecast in the past four years and portends further pressure on the marketing function for cost control and productivity increases.

Now a bit of good news. For the companies that have been diligent in improving their marketing operations and effectiveness during the past five years, you are best positioned to "weather the storm", and may even have an opportunity to take share.

Here are some top level insights and guidance:

• Be prepared to withstand a budget reduction while still being able to keep the core elements of the marketing business model in place and productive. The best marketing leaders are always in a position to shift marketing investment as needed in a calculated manner to reduce any potential short or long-term implications on marketing's strategy.
• Don't just talk about aligning marketing and sales; but take clear steps towards improving this problem. For example, integrate marketing and sales operations either directly or indirectly and focus on improving key processes such as lead management; increase field marketing’s strategic role, moving beyond a pure support function to contribute to marketing and sales' local go to market strategy; and better enable sales, such as improving the value of marketing assets, enabling greater accessibility to those assets and improving channels of communication.
• Continue transforming your marketing organization to prepare for the next 12 to 18 months, and communicate this strategy to your executive peers: reduce the silos within corporate marketing and between corporate marketing, business unit marketing and the regions; better understand and engage the customer, both internally and externally; and increase your speed of measurement and action as a team.

Feel free to contact me at mgerard@idc.com for a copy of my recent telebriefing which offers more details to help guide your strategy and execution in 2008.

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An Inconvenient Truth for Marketers: The Role and Value of Information

An inconvenient truth for IT vendors: The factors least considered by vendors in go-to-market programs are those most valued by technology buyers:

• IT vendors focus on the ROI of their marketing programs and their sales programs. They might also talk about the ROI a buyer can expect to achieve with their product (i.e., product ROI). Few sufficiently consider the ROI a buyer expects to achieve by spending time with a vendor’s information and people -- the relationship ROI.
• Technology marketers build marketing mix plans based on format (e.g., advertisement versus conference versus blog) and communications channel (e.g., TV versus Web versus print). But, in making IT purchase decisions, corporate buyers value content relevance and credibility over format and channel.
• When it comes to mobilizing a sales force, most tech vendors subscribe to one sales methodology or another and institute a sequence of selling stages. Meanwhile, the buying process is far from standard.

According to a recent IDC study, buyers spend up to 4.8 hours per week, on average, with third-party information to support current or future IT purchase decisions. Of this, about three hours per week are spent on information related to new purchases or general education that can lead to new purchases.

Meanwhile, IT vendors invested over $174 billion in marketing and sales in 2007 to reach and influence technology buyers. This investment creates a lot of competition for that three hours per week per IT buyer. To engage and deepen relationships with buyers, vendors must strengthen a buyer’s return on time spent with their information, whether delivered online, at events, or through their sales teams.

I expect to see a more pronounced industrywide shift within IT sales and marketing driven by these buyer priorities. Relevance, content, and credibility will become the increasing focus of marketing mix planning and sales enablement. The catalysts of the change are rising sales and marketing costs that outpace the growth in IT spending, the commoditization of IT solutions, and the fact that savvy buyers are becoming more protective of their time. The implementers of change are many: IT marketing and sales, channel partners, content providers, content management vendors, marketing and sales consultants, media partners, and other participants
along the vendor’s go-to-market chain.

By Clare Gillan, SVP, IDC Executive and Go-To-Market Programs

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B-to-B Online and Interactive Marketing - Cutting Through the Hype

Online advertising, social networking, search engine marketing (SEM), Internet broadcasting, wikis, Web 2.0 … what do these terms mean for your marketing strategy? How do you harness the power of this new medium without straying from your current strategy? The new and constantly changing digital marketplace represents great opportunity for your marketing organization and your company; however, many tech marketers are off to some operational false starts in this area. I recently completed a study of the online and interactive marketing area and related processes of 15+ tech marketing leaders. This included in-depth interviews with marketers as well as spending a full day with ~20 leading tech marketers discussing these issues as part of an IDC Marketing Operations Board meeting. Here is some key insight and guidance based upon this research:

• Consolidate online and interactive marketing efforts from a process, infrastructure, and governance perspective, yet continue collaborating with business units (BUs) and the field (e.g., integrated marketing councils). The resulting benefits will include greater branding and messaging consistency and improved efficiency and effectiveness across your marketing organization, enabling you to do more with less.
  
• Incorporate online and interactive marketing efforts as part of broader awareness-building and demand-generation strategies, but think "engagement" and longer-term relationship building — not just generating a lead.
  
• Don't hesitate to experiment; build it into your plan. Changes are happening fast in the digital marketplace, and those companies that are able to quickly identify and harness the benefits of the best technologies and applications will be first to achieve competitive differentiation. After all, shouldn't technology companies be first to demonstrate thought leadership in this space?
  
• Marketing must partner and collaborate with IT, something that marketing hasn't historically been good at. Leverage your strong marketing operations team and other process people in the organization to develop a longer-term IT strategy for the marketing organization, and team with IT to provide the foundation for a comprehensive digital marketing strategy.
  
• Don't abandon your more traditional marketing knowledge and experience! Just as in the real world, you can build it online, but that doesn't mean that they'll come.

Feel free to email me at mgerard@idc.com if you'd like some additional information about this study or post any questions/comments directly to this blog.

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The Marketing Operations Function - Can we Maintain the Momentum?

I first studied the rise of the marketing operations (MO) function early in 2005; and MO professionals and teams have made significant progress since then. However, much work still remains; and the momentum of marketing operations leaders' strategic impact is at risk of being lost at many organizations. Here are some key findings/insight from my 3rd annual study of the MO function to help ensure the continued success of this important role in the marketing organization:

1. Make the case for an MO function that reports to the CMO if you haven't already, and leverage IDC research to justify staffing levels for this function. Based upon IDC's Marketing Performance Matrix, 90% of companies in the Marketing Leadership quadrant have one; and your position and your marketing organization's success depends upon the strategic planning and process discipline that this role brings to the table. IDC's overall guidance or "rule of thumb" for staff allocation to the MO function is 2–4% of total marketing staff and one MO staff person for every $10 million to $15 million of marketing budget.

2. Know your CMO's priorities. To ensure that the marketing operations team remains highly relevant and successful at a strategic as well as a tactical level, its objectives and priorities must be in alignment with the needs of the CMO. The more advanced MO teams will help to identify these priorities for the CMO.

3. Maintain Your Team's Focus on your Top Priorities. More and more MO teams are becoming overwhelmed with the quantity of projects that they're involved with, resulting in a loss of focus; which is impacting their efficiency and effectiveness. Be realistic about your goals, and focus on the areas where you can make the greatest impact in your organization in the short-term while laying the foundation for longer term efforts.

4. Drive the MO team towards continuous improvement and innovation. This may include improving existing processes or acting as the catalyst for development and execution of new, innovative ideas.

Want more information on this role? Feel free to send me an email at mgerard@idc.com and I'll be glad to share some of the results of this study with you.

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Top Ten Attributes of a World Class Tech Mktg. Org.

The archetype of the world class tech marketing organization, Top Ten characteristics:

1) The senior-most marketing leader is viewed as a being a business-person by the CEO or COO or equivalent.

2) The senior-most marketer is perceived by the other peer-level direct reports to have equal weight and reporting status in the politics and influence of overall management.

3) If it is primarily a B2B tech vendor, the senior-most marketer has an especially productive and collaborative relationship with the senior-most Sales exec.

4) The marketing organization has a good grasp of its "marketing business model"; that is, what are the ingrained programs, practices, etc. that represent the foundation to the company's marketing platform. There is an annual "rhythm" to this marketing business model so that there is a good sense, across the marketing team, of a solid operating pattern. In other words, the team does not feel as if the marketing strategy changes frequently and is the "flavor of the month".

5) In addition to the foundation of this marketing business model, there is also the room, the operating space, to try new marketing initiatives. These should be one or two (at the most) major initiatives that are tested and tried during the year, lead by the CMO.

6) There is a good balance to the art plus the science of marketing. The foundational elements of the marketing business model should be ingrained enough so that there is a steady and relevant stream of performance metrics that can be driven out of the activity. To the extent that the CMO is able to produce and manage towards these metrics for the core activities, he/she will be allowed more latitude for creating and testing new activities - which by definition will be hard to apply the science to at the beginning.


7) There is good attention to the marketing operations aspects. The marketing organization is right-sized; it is balanced appropriately for the resources and activities that are at corporate vs. elsewhere. There is good attention to budgets(marketing's managerial accounting process); a strong marketing performance measurement process; marketing's short-term and long-term technology needs; and there is enough awareness and circumspection about the marketing budget and the overall company income statement that the CMO, if requested, can with-stand a budget reduction while still being able to keep the core elements of the marketing business model in place and productive.

8) There is a strong marketing staff and constant attention to improving staff caliber and building skill sets.


9) The CMO and staff have a good grasp of the marketplace wants/needs; key industry trends that impact the work; and key competitors and trends. All this is indicative of good "outside-in" marketing and will help the marketing team to be perceived as business people that can credibly represent the voice of the customer within the organization. (for marketing, sales and product development/innovation)

10) The marketing function is perceived within the organization as a good place to work; a function where careers can be built; a function that has a high bar for job entry.

I could go on, but those are the top ten.

How long could it take? Depends on what you are starting with. If rock-bottom is the basis, it could take 2-3 years.

By Rich Vancil, VP Executive Advisory Group, IDC

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Channel Marketing Investment - How much did we spend and why?

Do you know how much of your marketing investment is dedicated to your channels? Not just co-op and market development funds(MDF), but also the investment in other marketing activities that are intended to either directly or indirectly support the channels. This may include "ground cover" as some people would put it. If your answer is no, then you're not alone. Few companies have a more holistic understanding of their investment in the channels, let alone their return on that investment. In addition, most channel-centric companies are afraid to modify their investment in the channels since they don't quite know what will happen; taking a stance of "if it's not broken, don't fix it".

With cost pressures on marketing only increasing, this strategy will need to change, and quickly. The challenge is even greater for those companies just beginning a channel marketing program. . . trying to decide how much to invest in the channels and how to manage and track return of that investment.

Here are some key findings from recent IDC research:

-IT vendors must increase their investment in marketing to support an expansion in indirect sales. IDC has modeled the change in marketing budget ratio (MBR), or marketing investment as a percentage of revenue, based upon shifts in revenue from indirect sales. This shift will vary depending upon the size of the company, segment-specific variables, and business mix or other factors, but the trend is clear that support of indirect versus direct sales requires additional marketing investment. (feel free to contact me at mgerard@idc.com to receive a report which summarizes this relationship for software companies)
-In addition to the level of overall marketing investment, the marketing mix also changes as collaboration with reseller channels increases. For example, IDC research indicates that events and direct marketing program spend allocation as a function of total program spend decrease with increasing investment in the channels. The key take-away here should be that you need to review your marketing mix carefully as your channel strategy and investment shift.
- Initiate a channel marketing performance measurement program if you haven't done do already. This strategy should include development and tracking of operational metrics (e.g., channel marketing investment as a % of revenue, investment throughput) as well as execution-focused metrics (e.g., lead generation metrics). Collaborate with your marketing operations team to advance this agenda if you haven't done so already. (what's "marketing operations"?. . . . glad to send you a copy of my recent study in this area if you're interested mgerard@idc.com)

Also, check out a recent article in B-to-B for additional information on channel marketing.

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2008 Essential Guidance for CMOs

Marketing investment across the IT vendor community will increase by 6.1% for 2007. This increase in marketing investment will lag behind the growth rate of global vendor revenue, which is forecasted by IDC to be 6.7% in 2007. Tech marketers should watch this trend closely, and monitor their marketing budget ratio (MBR) and marketing investment change (MIC) data versus the industry. My research within IDC on marketing ROI has consistently shown that tech marketing leaders tend to expand their budgets at a rate equal to or greater than their revenue growth rate. Short-term budget reductions may improve short-term operating margins while sacrificing longer-term growth. This holds especially true for disinvestment in the brand and awareness-building elements of the marketing mix, which tend to return the best results when managed with a smooth and steady investment strategy. Here are some key guidelines for tech marketing executives and their operational counterparts for 2008:

- Think more about tech marketing from the "outside-in" versus the "inside-out." Tech marketers traditionally "go to market" in a one-way trumpeting of product and feature messages. As buyers get smarter and savvier, these product-centric and very expensive techniques will be less well received, and the return on traditional marketing investments will decline.
- Embrace interactive marketing. The new online and interactive marketing mix represents an excellent launching point for better "outside-in" practices and the potential for greater returns on investment. However, many vendors are off to some operational false starts in this area. IDC suggests beginning with an investment and operational review of all Web 2.0 marketing techniques.
- Start a channel marketing measurement initiative. The return on the channel marketing dollar is one of the murkier areas of the marketing investment portfolio. Now is the time to invest in establishing a set of improved processes and ongoing measures for channel marketing operations.Improve the overall "end-to-end" marketing in your company. Reduce your sales and marketing integration challenges by creating a single view of the customer from end to end; rationalize the number of customer databases if necessary. Better leverage customer and prospect data to improve the entire customer-creation process, from initial awareness through advocacy.

Source: Marketing Investment Planner 2008: Benchmarks and Key Performance Indicators, IDC #208489, September 2007

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