Marketing technology budgets have now surpassed advertising?
Any one of the terms in the title could result in an endless debate of boundaries between marketing and advertising. But instead of focusing on semantics, let’s take a look at the big picture. Scott Brinker investigated in his recent blog post the current situation of marketing technology investments largely based on Gartner data. And his findings are intriguing, despite the fact that Gartner’s survey sample (CMO Spend Survey 2015–2016) was limited to a restricted market segment and large enterprises. The survey covered 339 companies with marketing technology budgets of USD 127.7 million on average. The companies were from varying industries, such as financial services, high tech, media, and retail.
Marketing technology’s wallet share rising
According to the Gartner survey, marketing technology already takes up a larger share of the overall marketing budget than advertising! This is big news, even if some critical comments can be made on the survey sample. In this study that covered only large companies, internal marketing staff took up the largest share (35%) of the overall marketing budget. Marketing technology investments represented 33% of the budget, leaving closely behind external marketing services (e.g. advertising, paid search, consulting), which took up a portion of 32%.
The marketing technology budget is naturally composed of a variety of elements, so the breakdown of the budget is also interesting to investigate. According to Jake Sorofman from Gartner, the media marketing technology budget was allocated in the surveyed companies as follows:
28% Infrastructure (e.g. applications, servers, storage, network)
25.2% External development, implementation and integration services
24.4% Marketing and analytics software purchased as a service (SaaS)
21.3% Cross-charges for IT
These figures reveal that large companies are now building the foundations for their future marketing activities, a “stack” for modern marketing, if you will. The over 20% cross-charges between IT and marketing also reveals that the forced marriage of the two is slowly developing into a common will and common direction. At the same time, external services play a central role by taking up over a quarter of the marketing technology budget. It will be interesting to see how the external/internal scale will balance out in the future.
The scent of IT is getting stronger. In its recent survey, Foundation Capital estimated that marketing technology spending will grow ten-fold in ten years. The marketing technology market itself has been estimated to have grown 87% over last year. Technology investments as such do not necessarily mean that marketing has improved. Shopping at a “Bauhaus of marketing” does not make anyone a data-driven marketing wizard. We are all still apprentices in this field. Content variation, increasing contextual intelligence and other elements are added to the mixture and left to simmer, and only marketing master chefs will proceed to the next rounds. But the recipes are becoming more complex and harder to follow. Below is one of the best recently published marketing technology maps, which utilises Growthverse visualisation to evaluate the suitability of each technology or solution for a certain need.
P.S. I have heard rumours about a summer wedding of Adtech and Martech, but I doubt that it will take place this summer.
Jari Perko, ASML