Latest analyst firm marketing technology survey shows utilisation of martech platforms has declined in the last two years. But just what does optimum usage for maximum ROI look like?
Marketers are utilising less martech platform capabilities on average than ever, with rates dropping 16 per cent to 42 per cent over the last two years, Gartner has found.
But even as the analyst firm raises concerns over underutilisation, another question is emerging: Just what does an optimum usage rate of martech platforms for maximum return on investment look like?
The latest Gartner 2022 Martech Survey: New Insights to Maximise ROI report surveyed 324 marketers over May and June 2022 to explore marketing technology acquisition, adoption and use. Two years on from the last report, the analyst firm found marketers utilising 42 per cent of the breadth of capabilities available in their marketing technology stack overall, down from 58 per cent in 2020.
Credit: Gartner The lower utilisation rate was attributed to an overlap of features among martech solutions (30 per cent), difficult identifying and recruiting talent to drive adoption/ utilisation (28 per cent), and complexity or sprawl of the martech ecosystem (27 per cent).
Overall, CMOs reported allocating one-quarter of their entire marketing expense budgets to marketing technologies this year.
“Despite turbulent budgets in previous years and current economic headwinds, tech investments are a priority for CMOs and proving their ROI is more crucial than ever,” Gartner Marketing practice VP and analyst, Benjamin Bloom, commented. “Yet the challenges associated with martech underutilisation, such as new business models and disrupted customer journeys, are making it difficult for marketers to demonstrate technology’s value.”
Across marketing channels, nearly one in three respondents said they’ve deployed technology to support social commerce (32 per cent) and 30 per cent are piloting such solutions. Just over one in four (26 per cent) also said they’re deploying technology to support advertising in the metaverse, while a further 37 per cent are piloting related solutions. NFTs (non-fungible tokens) are also popular and 59 per cent of respondents are exploring or piloting technology to enable creation of these Web 3.0 tokens.
Another popular technology investment area is streaming audio and podcasting advertising: 25 per cent have deployed tech solutions for this purpose, and 66 per cent are exploring or piloting associated technologies.
“The fact that marketers are already leveraging technology to support emerging activities underscores their desire to outfox the competition and get a head start on controlling their own destinies in a world of more fallible identifiers,” said Bloom.
But while Gartner’s survey gives us an idea of what underutilisation looks like, is there in fact a standard utilisation rate of features marketing teams should be striving towards in order to achieve the best possible return on their martech investment?
In the former iteration of its martech survey, Gartner found CMOs utilising 70 per cent of their martech stack’s capabilities were achieving 20 per cent better marketing ROI than their peers. But when CMO asked other industry experts as part of our recent martech assessment investigation if there is a nominal percentage of features and functions use CMOs can use to gauge how well they’re utilising martech currently, most agree it isn’t that clear cut.
“The question of whether that level of utilisation is sufficient should be broken into two others: Are you able to monitor the evolution over time? You can’t improve what you don’t regularly measure,” Bloom told CMO. “The second is a business/financial question. It can be useful to refer back to an original business case that may have been created for the investment here. Have original objectives been met, and can use of half of the functionality in the tool return more than half of the total spend?”
In some cases, it might be a need to invest in people to unlock more value, Bloom continued. As an example, he said improving collaboration between a marketing manager, analytics lead, and creative lead could reduce the cycle time of testing and optimisation. As a result, insights from those tests influence the market more quickly, improving conversion rates or increasing average basket size.
For a $2 billion retailer with 70 per cent of its sales originating from digital commerce, and with a $50 average order value (AOV), an increase in AOV of just 2 per cent would yield an annualised impact of $40 million.
“This increase in revenue would be well worth the cost of a few extra platform seats and could easily justify a new team member,” Bloom said.
Read more: Making martech work: Building the right organisation capability
According to Accenture Song managing director, Abhishek Malaviya, the percentage of features being utilised in a martech platform is dependent on the use case in question.
“For example, if you are looking to centralise and augment your customer data to get a 360-view of your customer then one would consider higher percentage use of a Customer Data Platform [CDP] or content and asset management,” he said. “On the other hand, if you are looking at empowering your marketers to use new tools, improve analytics to drive a better customer experience, then there will be a higher percentage focus on customer journey analytics and decisioning.”
Against this, Malaviya noted it’s common for nearly 70 per cent of Accenture Song customers facing challenges in utilising the full breadth of capabilities in their martech stack.
“It’s ideal to use about 70 – 80 per cent of the features in your solution. Many of the current platforms have become fairly mature and most of which are SaaS-based. This would mean 50-60 per cent of the features could be delivered via configuration while the remaining require customisation to meet the business needs,” he added. “There will be cases where more customisation is needed, but ideally, that's what you look at when doing the assessment and the use cases.”
For Digitas CEO, Adrian Farouk, the percentage of features used is less relevant than the usage percentage increasing across a marketing team.
“Our DMI auditing process highlights different success horizons as the organisation builds maturity over time. Our objective is to build a flexible ecosystem where features and/or platforms can be ‘turned on’ when your organisation is ready to use them,” he said. “This solution minimises the common story of buying technology today, for what you ‘may’ use in the future and ensures that there is always an increasing sense of value from over time.”
But Switch digital strategy leader, Jon Holcombe, is against nominal use of features as a guide for a martech platform’s true worth.
“Ultimately, it’s about the return and investment you’re looking for. Percentage of features utilised might speak to why you’re not getting value out of your investment, but it’s not really the thing to be focusing on,” he said.
“People shy away from hard metrics because it makes it crystal clear when you have failed or succeeded. And that becomes systemic. We talk about metrics but then don’t track or prove them. The reality is what often happens is you get that initial uplift then as the months go on, it plateaus and incremental improvements are exactly that. It requires quite a lot of investment to do that. That’s the big that is underappreciated or underestimated upfront.
“Then you get the initial outcry of not getting what you want straight away and no, it’s an evolving beast.”
What needs to be understood is what your organisation wants to achieve, what is the ultimate customer experience you’re trying to craft, Holcombe said. “Then look at the intersection between those two things and where marketing plays a role. That will tell you what platforms you require,” he said.
“Based on the value that you think it offers to your organisation, purchase the platform that’s at the right price point to deliver what you want. If it delivers 80 per cent than what you bought, happy days.
“The problem is if you have a platform with 120 features rather than 10, doing just those 10 features you need will probably be more time consuming and complex in the bigger featured one. That doesn’t make it a bad platform, it just makes it more powerful. It might speak to complexity of the tooling and your ability to get ROI from it, but at the end of the day, what matters is your ROI.”
Holcombe has also seen organisation burnt by purchasing platforms with far more capability than they would ever be able to realise.
“That created a noose around their necks. There was a race to deliver as many features and capability as possible. Spread them way too thinly as an organisation and across the board, they didn’t deliver a huge amount ROI from the platform investment overall,” he said. “The opposite of that is where you go down more of a SaaS route and buy something quite discrete for a specific job. You invest a lot of time and capability into learning that platform, and your speed to value might be quick, but then you hit the limitation that you have to redevelop your IP and relearning. I’d always been looking for a platform that will grow with you.”
Marketing return per dollar can of course still apply when striving to understand martech’s effectiveness because it’s a tool in service of that, VP and head of Capgemini’s frog creative and experience consulting division, Jason Ross, recommended.
“Tracking through to final conversion is very poorly implemented in most clients. And you won't actually be able to answer the question of ‘how effective is my marketing technology’ unless you can answer the question of ‘how effective is my marketing’,” he said.
But what ultimately is the risk if you’re not utilising martech well enough? Malaviya pointed to data reconciliation issues and overlapping capabilities that can result from a failure to assess martech comprehensively.
“Every system has different sets of IDs. From this, the challenge is profile matching, deduplication across these platforms and identity stitching. That means you won't be able to effectively serve personalised experiences to your customers,” he said.
“Another challenge is consent and privacy management. While the topic has been widely discussed in the United States and Europe, especially around the California Consumer Privacy Act [CCPA] and General Data Protection Regulation [GDPR], such regulations are not far for Australia. Issues relating to consent and privacy often impact consumer trust in the brand. We must be equally conscious of consent and privacy. This would mean that there will be more systems that one has to manage to remove data from if you are on multiple systems.”
For Gartner, the first thing marketers can do to improve utilisation and therefore ROI off martech investments is to better infuse marketing technology adoption and utilisation goals into team performance objectives to minimise wasted investments. The analyst firm also recommended better scrutiny around risks of expensive and integrated suite investments.
“Establish alternatives to preserve negotiation leverage and persistently validate the vendor’s ability to support desired martech capabilities,” it advised.
Reviewing your approach to supporting customer journey orchestration with technology also helps ensure martech and IT collaborate through capability-focused delivery teams using an iterative approach, Gartner said.
Finally, Gartner warned marketers not to leave investments in tools and technologies for social commerce, podcast advertising and CTV/over-the-top (OTT) streaming advertising to agencies or service providers by default. Instead, it advised building long-term in-house capability development around these tools and including them in their martech roadmap.
Read more: Gartner: What it takes to create an effective martech stack
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