Tech marketing spending will increase this year but at a slower rate than last year due to economic concerns, according to IDC's 2008 Tech Marketing Barometer, released last week.
The study found that tech marketing spending will increase an average of 4.0% this year over last. By comparison, tech marketing spending increased an average of 6.1% last year over 2006.
Also, tech marketing spending lags global IT spending, which will increase by 5.7% this year, IDC projected.
IDC's tech marketing barometer study was based on in-person, telephone and email interviews with 41 senior marketers at technology companies representing $420 billion in revenue.
“It is certainly a challenging environment,” said Michael Gerard, VP-research director of IDC's CMO Advisory service, pointing to economic weakness related to the subprime mortgage fallout, declining real estate values, rising oil prices and other factors. “Marketing is a prime suspect for potential cuts and reductions.”
The study found that 57.0% of tech marketers plan to increase their marketing budgets this year, compared with 75.0% of marketers that increased their marketing budgets last year. Fifteen percent of tech marketers will decrease their marketing budgets this year, and 28.0% will keep them flat.
“If we haven't seen pressure, we will see it coming as CEOs and CFOs take a look at the balance sheet to make sure we are prepared for a downturn,” Gerard said. “Pressure is falling on CMOs to adjust their spend. There is an increased need for marketing efficiency and effectiveness.”
He said companies that are increasing marketing spending the most this year tend to be smaller, high-growth companies, as well as companies that have historically spent less on marketing and are trying to catch up.
“After watching marketers over the past four to five years, we're in a better position than we were historically,” Gerard said, pointing to the last downturn in the technology sector. “Marketing channels will continue to proliferate. There is increased spending on online marketing, and more options and channels in which to invest marketing resources.”
In terms of where marketing program dollars will be spent this year, events will get the largest share of the pie (19.1%), followed by advertising (17.9%), marketing support and sales tools (14.6%), direct marketing (13.3%), online and interactive marketing (9.9%), public relations (6.3%), collateral (6.3%), research (5.1%), Web (3.6%), analyst relations (2.2%) and other (1.7%).
This is a shift from last year, when advertising made up the largest piece of the marketing budget (21.7%), followed by events (19.5%).
Within event spending, marketers will allocate 68% of their budgets to proprietary events, including customer and partner events, the study found.
The average marketing budget ratio, which is marketing spend as a percent of total revenue, is 3.0% this year, the same as last year.
Also, marketers will allocate 52% of their marketing budgets to demand generation and 48% to awareness, according to the report.
Lead generation is the top marketing priority for tech marketers this year (ranked 4.3 in importance on a scale of 0-5), followed by brand awareness (4.0), online and interactive marketing (4.0), alignment with sales (3.9), marketing performance measurement (3.9), customer knowledge (3.6) and channel/partner marketing (3.4).
“With aversion to risk by C-level executives, the slight downturn and concern for growth in the next year, folks are shifting more to lead-generation programs,” Gerard said. “It is important to have a strong lead management process in place. Are you tracking from a measurement perspective the conversion of leads? Do you have a feedback loop in place with the sales group and a strong lead nurturing process?”
IDC offered additional strategies for tech marketers this year.
“Be prepared to withstand a budget reduction,” Gerard said. “If your CEO or CFO hasn't come by asking you to make cuts, be prepared for that.”
However, while marketers may be expected to make budget cuts, it is important for them to keep the core elements of the marketing business model in place and productive, he added.
Another important strategy is the alignment of marketing and sales, including integrating marketing and sales operations, increasing the strategic role of field marketing and focusing on sales enablement.
IDC said tech marketers must also transform their marketing organizations to improve efficiency.
“Historically, we have seen marketing in silos,” Gerard said. “Companies need to have more of a shared services model, including advertising, analyst relations, public relations and market intelligence.”
Finally, marketers must work to improve the effectiveness of their marketing performance measurement processes, IDC said. M