2014 Tech Marketing Budgets: Follow the Money

Richard Vancil

Richard is the group vice-president of the Executive Advisory Strategies division at global analyst firm, IDC.

Finally, after six years since the Great Recession, we are seeing some signs of life in tech marketing budgets.

IDC's recently completed CMO Advisory Tech Marketing Barometer Study indicates two-thirds of the largest tech vendors with an average revenue of US$4 billion will increase their budgets in 2014, and that they expect an average increase of 4.1 per cent over 2013. The IDC analyst team expects the actual full-year number will be somewhat less; perhaps in the range of 2.5 per cent.

With the benefit of having administered these surveys for 12 years, I can say with confidence that we almost don’t need to analyse the survey results to tell you that sentiment is positive and improving. All we need to do is count how many completed surveys we received. In 2013 we received about 50 survey returns from CMOs. This year, we received 78 completed surveys. The truth is, when times are bad and budgets are under pressure, people are less likely to return these budget surveys to our group.

Here is a drill-down on a few key numbers:

  • The average large IT services vendor is forecast to see a slight marketing budget decline in 2014 (down by 1 per cent to 3 per cent).
  • The average large IT hardware vendor should see a 1 per cent to 2 per cent budget increase.
  • The average large software vendor should see an increase of 6 per cent to 8 per cent.
  • For every dollar of new budget in 2014, CMOs tell us they will spend about 75 per cent on ‘programs’ (discretionary spend); and 25 per cent on ‘people’ (additional staff resource).
  • Of the total program spend made by a typical large tech marketing function, IDC expects about 40 per cent will be for all things digital in 2014 including websites, search and display ads, email and social.

And here are a few observations and suggestions on how to successfully navigate any marketing-budget exercise in the course of your work-year:

Firstly, always start with identifying some budget savings area(s). I have never seen a budget where there is not some room for cutting or shifting. For the largest organisations, most savings will be found in marketing service centres that exist across multiple product lines and/or multiple field entities. Identify the savings first, make these tangible and put them on the table. Later on in the discussion, you can then explore and ask for new monies, for new initiatives.

Work on redefining what the budget is. In the B2B IT area, I suggest the budget discussion should include the total of marketing expense plus sales expense. Why? With the power of the self-educated buyer, the traditional marketing and sales motions we put in front of our prospective buyers must be re-examined; from marketing through to selling.

Set ‘timing’ expectations appropriately. Most CMOs today are leading their organisations through an arc of transformation thanks to new systems, processes, talent and execution. The smartest CMOs will level-set their c-level peers that this is a multi-year process; not a multi-month process.

My axiom: Marketing budgets will follow the revenue, not the other way around. In other words, all the new marketing funds in the world will not resuscitate a dying product line. Put your money where the revenue is (your c-level bosses won't likely let you do otherwise).

Tags: digital marketing, marketing strategy, marketing technology

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