By Adam Fraser
The “Gartner CMO Spend Survey 2016-2017” surveyed 387 organisations about their actual marketing spend in 2016 and planned spend for 2017. The companies surveyed were at the enterprise level (>US$250m rev per year) across USA and UK.
The key findings were:
- Marketing budgets continued their steady increase in 2016, representing an average of 12% of company revenue from 11% in the prior period; note this is the third year in a row this ratio has increased
- CMO martech spending is on track to exceed the CIO technology spend in 2017 as marketing looks after a growing number of customer touch points.
- Twenty-four percent of marketing leaders expect their 2017 digital advertising budget to increase significantly
- Marketing leaders who own or share P&L responsibility get budgets that are 20% higher, on average, than those without plans for a P&L
The survey showed larger companies (those with revenue of $5bn or more) spend a higher proportion on marketing (13% of revenue) than their smaller contemporaries (10% of revenue for companies with revenue of $250-500m).
The prediction that CMOs would spend more on IT than CIOs by 2017 was originally made by Gartner a number of years ago. This incredible metric does seem on track to occur based on this survey, emphasising again how important technology and data analytics have become to the marketing profession. On average companies will spend 27% of their marketing budget on technology; aligning the objectives of the CMO and CIO has never been more important.
As with last year, Digital Commerce investments are a high priority with CMOs as a means to achieve growth objectives, particularly in FMCG sectors, with at least 8% of the marketing budget allocated to this area. The top three categories for share of budget were website, digital commerce and digital advertising.
The increase in spend on digital advertising is being driven by
- A continuing and consistent shift of offline media spending to digital channels.
- Decline of organic social in favor of paid social.
- The rising importance of video, which is more expensive than other digital techniques for both media and production
The changing nature of org structures is reflected in the survey, with Sales, IT and Customer Experience Functions now reporting into Marketing in 30% or more companies.
This is a worthwhile report to review, reflecting some important industry trends.
‘My Feed’ is ABC RN’s weekly look at the curious and juicy things happening online and on 1st July Patricia Karvelas spoke to Adam Fraser.
Adam spoke to RN Drive about Facebook reportedly finally paying (some) people to post content, the top 100 brands and the mushrooming world of ‘martech’.
By Adam Fraser
A big week for transactions in the MarTech world with SalesForce acquiring Demandware for US$2.8bn, Twitter investing in audio streaming service SoundCloud for US$70m and the big one – Microsoft swooping in on LinkedIn in a deal worth a cool US$26bn, a $US9bn premium on the value based on the stock price prior to the announcement.
LinkedIn has been under pressure from the stock market since its disappointing Q4 2015 results when its share price declined an incredible 44% in a single day. The deal came somewhat out of the blue and has puzzled a number of analysts.
At a price of 7.2 times revenue it is not cheap on any measure. LinkedIn remained loss making notwithstanding its preferred measure of profitability being to add back stock based employee compensation (at which point it became profitable).
Clearly therefore this deal is all about strategic synergy. As well as hoping LinkedIn (with its 400m plus members and exceptionally strong position in B2B) will mature into a profitable stand alone business, the key factor is the way it can help the remainder of the Microsoft product stable.
The most obvious product would seem to be Microsoft’s CRM product (Dynamics). A massive challenge for any CRM system is maintaining accurate contact information – most professionals keep LinkedIn up to date, so by integrating CRM with LinkedIn this becomes an important differentiator against CRM competitors (primarily Salesforce and SAP). Deep and accurate data on this scale is valuable. Other workflow related synergies should also emerge in managing appointments and sales opportunity status – with integration to Microsoft Office also in play here.
There are many other potential synergies, including LinkedIn’s online training business (it recently acquired Lynda.com) integrating with a number of Microsoft’s productivity apps. Jeff Weiner, LinkedIn CEO outlined many ways the companies could work together in his letter to all LinkedIn staff. In particular he noted:
“Think about things like LinkedIn’s graph interwoven throughout Outlook, Calendar, Active Directory, Office, Windows, Skype, Dynamics, Cortana, Bing and more”
For now LinkedIn remains a stand alone service, so don’t expect to see too many changes to user experience in the short term.
In the medium and longer term the potential synergies are certainly there; but the price tag is not cheap and as Microsoft discovered when it bought Nokia – $7.2bn price followed by a massive write down within 18 months – potential synergies don’t always come to financial fruition.
Based on this transaction I would expect to see increased takeover talk around Twitter and Pinterest from here. Interesting and dynamic times as always in the martech world.
By Adam Fraser
The annual marketing technology landscape infographic from Scott Brinker (aka ChiefMartec) has been released.
When I interviewed Scott for Episode Number 1 of the EchoJunction podcast we discussed the 2015 landscape (circa 2,000 vendors) and hypothesised that some form of consolidation must be inevitable.
Alas the size of the market has actually expanded significantly – now hitting approximately 3,500 vendors with 3,874 solutions (some vendors have more than one product which features).
So much complexity and choice for marketers to deal with. With waves of disruption impacting across the landscape, it’s an extremely dynamic and rapidly changing field.
In the 2016 landscape, the largest categories by number of solutions are:
1. Sales automation, enablement and intelligence (220)
2. Social media marketing and monitoring (186)
3. Display and pragmatic advertising (180)
4. Marketing automation and campaign/lead management (161)
5. Content marketing (160)
There are 49 categories structured around 6 marketing technology capability clusters:
1. Advertising and promotion
2. Content and experience
3. Social and relationships
4. Commerce and sales
The cluster representation rather than the “stack” presentation in previous years reflects Scott’s updated thinking that rather than a single vendor owning the end to end stack, companies are more likely to stitch together best of breed solutions from specialist vendors across the marketing value chain.