IT vendors ramp up marketing budgets steadily
Information Technology vendor marketing budgets are set to increase by 6.4% this year, representing the biggest increase of the past four years, according to IDC's recently completed Technology Marketing Benchmarks survey.
IDC analysts found that, as technology vendors begin to realise that revenue and share gains are harder to come by in a slower growth IT economy, sustained marketing investment is required to make real progress in revenue and marketing share. IDC expects IT marketing investment to continue to show strong growth over the coming 12 months, and to further increase by 7% in 2006.
Rich Vancil, vice president for IDC's CMO Advisory Service, believes that we are only now witnessing the dawn of technology marketing: "The only technology vendors who will survive and thrive will be those whose marketing organisation is highly skilled both for internal and external execution."
Looking inward IDC says that, as technology marketers try to build up their capabilities, many of them are turning their attention inside the marketing organisation to improve their back office skills (such as improvements in processes, people development, and organisational alignment).
According to Vancil, the industry's leading marketers are focusing on developing their infrastructure and organisation because the job of marketing is getting harder by the day. As a result, IDC foresees a renewed investment in marketing hiring and professional development.
Programs vs. people IDC continuously tracks the industry average programme-to-people ratio - the percentage of each marketing dollar invested in programmes compared to people who execute those programmes. This currently stands at 63.5% (a 4.2% decrease over 2004), which suggests that CMOs are making "net new" hiring decisions. Key areas for new marketing staff include product marketing, direct marketing, and marketing operations.
In IDC's opinion, the rise of the marketing operations function is one of the more significant trends for 2005. Approximately 75% of technology vendors now have some level of formalised marketing operations staff in place, while the average technology vendor has three marketing operations staff for every 100 full time marketing staff.
The report The full study 'Marketing Budget Planner 2006: Benchmarks and Key Performance Indicators' is available directly from IDC, and provides an analysis of qualitative and quantitative marketing investment priorities, marketing mix decisions, and operational and organisation information for many leading technology vendors. The study was based on 95 interviews conducted with senior marketing executives of major IT hardware, software, and services vendors.