IDC Study Establishes Key Benchmarks and Performance Indicators for Technology Marketing
FRAMINGHAM, MA – OCTOBER 1, 2003 – Three years of budget cuts at technology firms have yielded marketing departments that are leaner and more focused than ever. With overall marketing spending by technology vendors down 2.2% in 2003 and similar downward pressures expected into 2004, a new study from IDC finds that technology marketing executives are pushing hard for greater control over their budgets and improvedmeasurement of results.
"For years, technology marketing has been steered by ‘rules of thumb’ and ‘best guesstimates,’ but the days of 'good enough' marketing are over," said Richard Vancil, vice president, Technology Marketing research at IDC. "As the technology industry matures, its approach to marketing is being forced to evolve. Measurement mandates from CEOs and the demands of shifting distribution models are propelling marketing professionals toward much more sophisticated methods that utilize benchmarking, key performance indicators, and ROI calculations."
IDC found that technology vendors currently spend an average of 2.8% of revenue on marketing, including spending on
programs and people. However, the amount allocated varies significantly by sector and distribution model. Software companies spend nearly 7% of revenue on marketing, while hardware companies spend more than 3% and IT services companies spend just under 1%. Similarly, vendors that generate less than 25% of their revenues through direct sales spend about 6% on marketing while those companies that rely on direct sales for 75% or more of their revenues spendjust 1.8% on marketing. With nearly two-thirds of technology companies undergoing changes in their sales and distribution models, IDC believes many marketing departments will be pressed to remain aligned with their sales efforts.
Overall, IDC believes that senior technology marketing managers are seeking and obtaining greater control over marketing spending across the organization. Centralized spending now accounts for 52% of the total marketing budget, with centralized budgets adding more than 2% of the total budget spend to their control in the current year. This shift in budgets provides corporate marketing with greater control, but reduces the budget available for marketing to execute field support and localized demand generation programs.
With budget constraints forcing companies to scrutinize every dollar spent, nearly 50% of technology marketers have received specific measurement mandates from their CEOs. While IDC found that more than two-thirds of all technology vendors have some standardized marketing metrics in place at the program level, less than half have similar metrics in place at the corporate or line of business (LOB) levels. The common barriers to creating a consistent marketing measurement program include lack of time and budget, the absence of standard marketing metrics, and difficulties tracking and assigning costs and revenues to specific programs.
The IDC study, Marketing Budget Planner 2004: Program and Staffing Benchmarks (IDC #30152), examines benchmarks for marketing budgets and organizational issues. Its finding are based on IDC's landmark CMO Advisory 2003 Technology Marketing Benchmarks Survey, which includes interviews with approximately 200 senior marketing executives from over 100 of the world's largest hardware, software, and IT services vendors. The survey focused on a thorough auditing of marketing spending across the technology industry, and establishes benchmarks for marketing priorities, organization, staffing, spending and budgeting, functions and measurement. The research will be expanded as part of IDC's CMO Advisory Service, beginning October 1, 2003.
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