Tech Marketing Efforts to Increase
Tech marketing is on the rebound, according to a report released today by IDC.
The report, "CMO Tech Marketing Barometer: Are You a Marketing Leader or Laggard?" from the IDC CMO (chief marketing officer) Advisory Service, projects IT vendor marketing budgets to increase by an average of 2.1 percent across the industry during the first six months of 2004. This indicates a turnaround in marketing spending relative to the average 1.7 percent decrease from 2002 to 2003 found in IDC's 2003 CMO research.
According to the 2004 survey, nearly half (49 percent) of the more than 100 respondents from 48 large technology enterprises indicated their intention to increase their overall marketing budget in the first half of 2004, compared to the second half of 2003. The results represent a sharp increase over the 32 percent that expected to increase their overall marketing budget for the second half of 2003.
Rich Vancil, vice president of IDC's CMO Advisory Service, cites two reasons for the uptick in marketing efforts from technology vendors. First, an overall 5 percent growth in the IT industry is freeing up some cash for marketing initiatives. Second, marketers "have done a lot of house cleaning and are better positioned and able to effectively garner more budgets internally after three years of rationalization."
The study shows the average increase of those companies bolstering their marketing efforts is 10.8 percent. After three years of staff reductions and budget cuts, Vancil says, a clearer distinction between leaders and laggards will emerge. Some of the leaders in the IT space include such companies as Cisco Systems, Symantec, Siebel, and Oracle, he adds.
Vancil defines leaders as companies that are most optimistic about growth prospects, are increasing marketing budgets (in some cases by double digits), are effective at communicating and reporting on the results of marketing, and are investing in awareness and demand generation--the full scope of marketing. Laggards, he says, are defined as companies that are less optimistic about overall growth prospects, have flat or declining budgets, are working on internal organizational and cost issues, and primarily have demand generation-oriented efforts--the part most closely aligned with sales. "Eventually, the lack of awareness-building efforts will catch up with these companies," he says.
"We're seeing if companies are putting their money where their mouth is," Vancil says. "A lot of companies think that their growth rate will be at or above the 5 percent overall average growth in the tech industry. But even so, there are a lot of companies that are not willing to invest in marketing."
This can prove harmful, he says: "You don't want to go without a full spectrum of the marketing mix for longer than a year in a tech environment where prods and services change so quickly. Marketing needs to be a sustained effort."
Vancil says the growth in IT vendors' marketing efforts will likely sustain itself, but not outpace the IT's growth rate of 5 percent: "It's got the chance to accelerate a little bit as tech spending continues to open up. Over the course of the decade it's not going to outstrip the growth rate of the industry, which is about 5 percent overall. Marketing spending should come up from 2 percent growth rate, but will level off as rate of growth of IT."