Savvy shoppers wait in anticipation, while Australian retailers are gearing up for the onslaught. Amazon’s arrival is imminent.
Too many CMOs haven’t invested enough in platform-based marketing technology systems and resources to meet and drive customer expectations, according to IDC. But making that leap into marketing technology doesn’t have to mean owning the infrastructure yourself.
In its latest webcast entitled The Marketing Software revolution, IDC shared insights into the maturity and size of marketing technology adoption globally, as well as outlined reasons for why marketing chiefs must get serious about procuring comprehensive technology solutions.
According to the research firm, marketing software spending will reach US$32.3 billion by 2018, growing at a CAGR of 12.4 per cent. Marketing technology as identified by IDC includes CRM, data and analytics, content product and management, and marketing management and administration systems.
However, research manager of IDC’s CMO Advisory Service, Gerry Murray, said the marketing technology market will be worth significantly more – upwards of US$700bn by 2018 – as third-party providers and agencies increasingly look to bundle technology capability with traditional creative and advertising services.
Much like the rise of cloud-based platforms and as-a-service technology in the enterprise IT space, Murray predicted the rise of ‘marketing-as-a-service’ for the marketing function.
“Once these [marketing technology] platforms are really mature, they can be used as the basis for bundling lots of different services,” he said. “Not only will the vendors be selling these directly to CMOs, they will also be providing them through service providers such as agencies and marketing services firms.
“These firms can layer their services on top and use that technology infrastructure as a differentiator.”
There are already signs of agencies bringing these capabilities in-house to on-sell services to their clients. Examples include Adobe’s global partnership with Publicis Groupe, Salesforce’s relationship with Omnicom Group, and Marketo’s expanding channel of digital agencies worldwide.
“The reason for this is that it provides a lot of value to the CMOs,” Murray continued.
“Those CMOs who have been early adopters will continue to want to own and operate most of these technologies on their own. They are going to invest and develop expertise internally as a source of competitor advantage. But it doesn’t really work for everyone.
“For those lagging behind, or those who don’t have the investment or expertise to operate these things in an effective or correct way, they may need to outsource and rely on agencies to provide both the expertise and infrastructure and creative insight to run effectively. This will be a very interesting proposition that will provide CMOs with a great deal of flexibility.”
This growing pool of bundled creative and technology services will also give CMOs the ability to allocate traditional ad dollars to accessing technology-based services from their agency partners, Murray said. He pointed out that for every dollar spent on marketing technology today, $20 is being spent on advertising.
“If marketers buy these capabilities as part of a bundled service from an agency, they are going to be spending their ad dollars and getting part of that infrastructure capability as part of the service. That is a big opportunity,” he said.
“It solves a specific problem for the CMO around how much cost and complexity they bring into the organisation. It also provides the ability for outside service companies to run these omni-channel campaigns and real-time reporting CMOs now require.”
While clear this model won’t work for everybody, Murray expected the as-a-service model to significantly influence the market as data- and technology-driven marketing matures.
“CMOs can decide how much marketing infrastructure to own and operate or outsource, and they can coordinate activities across business units, geographies and third parties on a single platform,” Murray added.
ROI Matrix: The value of marketing technology
IDC’s research makes plain the significant benefits for CMOs investing in marketing technology. In its recent CMO ROI Matrix, the research firm found top-performing organisations today are the ones investing significantly more into marketing technology platforms and capabilities.
The matrix is based on a survey of enterprise organisations primarily in the high-tech sector and shows leading organisations (the top 25 per cent of performers) spending three times as much on marketing technology as those in the second-highest performance quartile. On average, leading organisations spend US$14 million on marketing technology programs compared to the next category, ‘achievers’, who are spending $4.2m.
“This investment puts these high-performing organisations at the top tier of their peer group, but it also providing them with a great deal more momentum than most competitors in other categories,” Murray said.
“If I use the metaphor of a train pulling out of the station: It takes a lot of energy to go from 0 to 60 miles per hour; that’s where all the hard work takes place. Once you are up and running, you will pull away much faster.
“These business leaders have put the investment into getting out of the station and are chugging along, moving fast and putting a lot of effort into that processes, even as they are still in the relatively early stages of their marketing technology program.
“But everyone else isn’t putting in the necessary investment. They are going through the motions, or experimenting, or putting in small-scale point solutions that are not really transforming their marketing organisation into this new digital world.”
According to IDC, key drivers for investing in marketing technology and specific platform capabilities include company size and growth, go-to-market models, the marketing mission of an organisation (lead generation versus brand awareness, for example), regulation and technology maturity.
“As your business gets more complicated, your marketing infrastructure will become more complex accordingly,” Murray commented. “Build around core systems and add capabilities. You can’t use size as the only drive – you’d apply the other drivers to discern what is more important for a specific business, based on where it is today.”
Up next: 6 tips for CMOs around procuring marketing technology platforms and systems