CMOs spending power continues to increase... Here's what you need to know
Here's what we know so far: CMOs now hold more power than CIOs on budgeting and spending on technology; budgets have increased steadily from 9 - 12% of company revenue in past 3 years; 75% of CMOs control tech spend for marketing, ecommerce and similar areas, and also own more of sales funnel; 80% have P&L responsibility.
As the MarTech world offered up a plethora of valuable automated marketing tools in 2017, Chief Marketing Officers across the globe allocated 22 percent of their marketing budgets to related technology in 2017, says Gartner.
Though that number was down from the 27 percent realized in 2016 after several years of growth, it continues to represent significant investment. And some pundits see marketing spending growing again this year; for example, researcher WARC predicts enterprise marketing technology budgets through North America and the U.K. will grow by an average 10 percent to put spending at $36 billion to $43 billion.
“(It’s) a testament to just how far the marketing technology industry (and profession) has come in the past five years,” notes Scott Brinker on Chiefmartec.com. “It will change even faster in the next five years ahead.”
So how will CMOs across the globe spend this year’s MarTech budgets — and what might they avoid, according to pundits?
- Data analysis tools. Last year, marketing analytics represented the single biggest area of spend, reports Gartner, amounting to 9.2 percent of CMO budgets. Two of the best-selling categories: customer data platforms that unify customer data, and attribution systems allowing for clearer analysis of ROI. “If by using analytics they can show the value of marketing campaigns digital or otherwise, it’s likely company executives will feel better about investing more money,” notes David Roe on CMSwire.com. Looking at the next several years, Forrester says platforms that collect consumer preferences, behaviors, transactions and emotions will influence 10 percent of purchase decisions.
- Innovation. Gartner reports 23 percent of CMOs across the globe now have fixed innovation budgets, with an average 10 percent of all marketing budgets set aside for such purposes. “While this preservation of innovation budget is admirable, innovation needs to pay its way in the long term and ultimately contribute to business goals and profitability,” warns Gartner’s Chris Pemberton. “Failure to do so will mean disinvestment.”
- Artificial intelligence. Last year, Gartner reports, the most popular AI tools for marketers were those focusing on marketing-facing analytics, untargeted conversational agents and real-time personalization. AI investment will continue this year, Forrester predicts; however, some 75 percent of AI projects will produce “underwhelming” results that don’t provide inroads into new markets, products or services. Part of the problem? A lack of employees who can interpret and influence AI-driven technology, it reports.
- Blockchain. Forrester says lackluster gains via blockchain may limit investments this year. Some 80 percent of blockchain initiatives to date have underperformed, it claims, because marketers oversold the technology, blockchain testing was not comprehensive enough and/or blockchain solutions were applied to problems that could have been solved in other ways.
As technology continues to evolve, some companies may struggle to find optimal MarTech solutions while juggling budgetary constraints. But that doesn’t mean they should stop trying new solutions that could serve as competitive differentiators and save them time, money and effort.
“Marketing departments are under pressure to acquire the best combination of services while staying within their financial means,” notes Jonathan Crowl on Skyword.com. “(But) few, if any, businesses are prepared to spend what it takes to build a perfect stack right from the get-go. As a result, businesses are forced to pick and choose their most essential marketing technologies, with an eye toward continued development in the future. If this describes your current situation, you aren’t alone.”