4 curious anomalies in CMO martech spending data
By Jodie Byass
New research into the remit of the chief marketing officer, including where they are allocating budget, presents a picture of a rapidly technologising marketing workplace – but, curiously, not in all areas.
Technology is now the single biggest area of expenditure for marketing teams, attracting 29% of marketing budgets in 2018, up from 22% in 2017, according to the recent CMO Spend Survey from Gartner.
That’s a massive 32% increase in the proportion of spend allocated to technology – and it’s happened against the background of slightly falling overall marketing budgets, which have slipped to 11.2% of company revenue, down from 12.1% two years ago.
Marketing technology now outranks internal labour, which last year was the highest area of expenditure at 27% but this year slipped to 24%. Paid media and agency spending were the other major areas of budget expenditure, both at 23% and both down from 25% a year ago.
Technology is being applied to the process of personalisation, which was a near-universal priority and attracted an average of 14.2% of budgets across all industries and business models.
Customer experience and innovation are also a priority, attracting an estimated 18% and 16% of marketing spend respectively.
However, according to Gartner, a look at how resources are being allocated and how the work is being done reveals marketing organisations have become incredibly complicated.
In fact, it found marketers have created an “organisational design headache” for themselves.
The CMO Spend Survey, taken together with earlier research from Gartner into where marketers are spending their technology budgets, also reveals some interesting anomalies.
1. Total headcount dominates spend
Even technology-enabled marketing is currently a labour-intensive business.
Almost half (47%) of total marketing budgets are still being spent on headcount to get the work done. According to the CMO Spend Survey report, “The blurring of services and capabilities offered by different service providers results in resources being split across traditional agencies, consultants, in-house experts and a plethora of other players”. Technology does not come free of headcount either: according to Gartner’s 2018 Marketing Technology Survey, 26% of marketers have a dedicated martech team and more than one-third of martech investment in general is going towards external services or IT cross charges.
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2. Planning and orchestration under-supported by tech
Despite the organisational headaches, technology spending is concentrated on channel distribution – online, email, social and so on — and measurement. Marketers are under-investing in technology to support planning, orchestration and governance – in fact, to support the burgeoning marketing org that is doing the work. In its Technology study, Gartner found email marketing, Web content management and digital marketing analytics are top of the tech shopping list. Nearly three in 10 marketers are also investing in social analytics or lead management platforms, and 28 per cent are deploying advanced analytics and data science tools.
3. Digital as the ROI vanguard outweighs transparency concerns
Advertising is still a major expense, costing most marketers more than 21% of their marketing budget this year. But paid digital advertising (including search advertising) now attracts two-thirds of that expenditure with just one-third going to offline advertising. Gartner attributes this continuing high digital spend allocation – despite widespread industry concerns over transparency, fraud and accountability — with the need by CMOs to demonstrate the value of marketing expenditure to sceptical finance teams.
“Marketing leaders must demonstrate the business value of their efforts amid uncertain times,” report author and Gartner analyst Ewan McIntyre says. “Marketers continue to invest in these tactics because they still work,” he said. “And digital channels are easy to measure during a time when it’s critical to calculate marketing ROI.”
4. Brand and growth divided
A schism remains between brand marketing and growth. CMOs have a “shared understanding” of the metrics that demonstrate marketing’s value to the enterprise, such as revenue, profitability and market share, according to the CMO Spend Survey — but despite this, awareness is still the top measure of success used by marketers overall, ahead of return on investment and customer-related metrics such as customer satisfaction and customer value.
That only changes when it comes to marketing technology – which is used mainly to support digital channels – with revenue growth (46%) and profit growth (42%) the top measures of success, the Marketing Technology survey found.
Marketers must take care not to fall into unwieldy organisational structures as they acquire technology to support new personalisation, customer experience and revenue-focused digital marketing initiatives. The application of the right technology to the planning, orchestration and brand governance part of the marketing process offers an opportunity to make the complex modern marketing organisation work more effectively, and can help demonstrate the value of marketing to business by capturing the return on the total marketing investment.
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