Leadership Strategies

The Three Areas Successful Marketing Organizations Invest In

Marketing budget increases lead directly to profit increases in tech companies. Explore 3 areas to invest in:
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Being in the middle of a digital transformation can be a time of excitement, confidence and risk-taking. Businesses are evolving, employee career paths are expanding and the way we market to our customers is changing. Even buyers’ journeys are taking a turn down a path that may not have existed several years ago.

No one understands this better than tech companies. Technology changes fast and so do the organizations that work within the tech space. What you spent much of your budget on 5, 10 or 15 years ago may not be relevant anymore. Buyer preferences are changing, and more evidence is emerging that marketing effectiveness is making a significant impact on company profits.

IDC’s Marketing Investment Planner for 2019: Executive Summary outlines 3 major areas that marketing organizations are investing in. Data taken over several years has shown us that marketing budget increases are leading directly to profit increases in tech companies. Here’s where many business executives are spending their money.

1. Sales, General & Administrative

The average marketing budget ratio is 2.2% across all industries; meaning 2.2% of a company’s revenue is flagged for marketing. However, in tech, the ratio is at 13%, a significant increase over other industries and a trend we’ve been seeing for the last 3-5 years.

Marketing falls under the SG&A line item. sales or marketing salaries, commissions, advertising, direct and indirect selling expenses and costs not directly related to making a product or performing a service. SG&A includes the costs to sell and deliver products or services, in addition to the costs needed to manage the company, like consultant fees, insurance, supplies, rent, utilities and more.

The ratio for SG&A tells us whether marketing is growing or shrinking as part of a company’s strategy. With a boost to 13% in tech companies, we know that this is an area where executives see budget increases as a priority. A higher percentage indicates market growth and confidence in the future.

2. Staff Growth

Another indicator of the growing importance of marketing is the marketing staff ratio. This KPI compares the number of marketing staff with the company’s overall staff. In 2016, marketing staff as a percentage of total staff was 1.5%. By 2018, that ratio climbed to almost 2.5%.

Tech leaders across the industry are reporting that they increased their staff budgets more than their program budgets in 2018. Some of the top jobs are product marketing and field marketing which has been consistent for years, but now you can add event marketing, marketing operations, creative, web, customer loyalty and advocacy staff jobs to the list.

The biggest categories to see increases in staff were advertising and events, but it’s worth noting that the way companies advertise is evolving thanks to an increase in data available. Thanks to technology like artificial intelligence and machine learning, marketers can now target the perfect customer.

3. Technology Spending

The third category ripe for investment is marketing technology. This includes technology for interactions, content management, data and analytics, and marketing management and administration. In the future, artificial intelligence will continue to make its mark in many different areas in the business world, and marketing is no exception.

With new technology marketers can personalize, customize and automate much of their advertising, customer outreach and loyalty programs. A strong focus on hiring creative thinkers with extensive knowledge in these new programs will help turn your customer base from targets into involved and loyal clients.

By using technology to segment your prospects and personalize your advertising campaigns, your buyers will get more decision-making information from marketing sources at every stage in the journey from evaluation to purchase. Marketing related sources provide 91% more information than sales during the evaluation process. Smart marketing decision-makers are turning toward digital sources, influencers and peers to reach customers where they are.

While marketing itself may not change, the way we do it will. By investing not only in the right software, but also the right people to maximize the programs’ benefits, business executives will start to see high ROIs.

When marketing departments don’t just need the right software and the right people; the right strategies matter too. Learn how to develop a winning thought leadership strategy that supports your organization’s business and marketing objectives with IDC’s new interactive eBook. Download “The Technology Marketer’s Guide to Developing a Thought Leadership Strategy”:

Program Vice President, CMO Advisory & Customer Experience