IDC's Tech Marketing Benchmark Survey, 2017: Executive Summary of Results

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1 TDC I Arkatyze the. Future -rz-a. - - _-. w. grl,j _,4 wir "'op,. IDC PERSPECTIVE IDC's Tech Marketing Benchmark Survey, 207: Executive Summary of Results Warren Lane Kathleen Schaub EXECUTIVE SNAPSHOT FIGURE Executive Snapshot: Gaining Insight from the 207 Tech Marketing Benchmark Within tech companies. marketing is gaining influence (and budget). As per IDC's 207 Tech Marketing Benchmark Survey, the tech CMO received an average of 4.2% budget boost. Marketing is also gaining more share of the sales-to-marketing cost envelope. While some aspects of program and people spend remain perennially true (advertising still tops the list of program spend, for example), other trends such as the rapid rise of content marketing are surprising and compelling. Key Takeaways Marketing investment patterns vary, sometimes dramatically, by product sector, business model. and grov...th percentage. To gain most useful insights, CMOs should look at the practices of similar corn ponies. - Companies are adopting modern marketing competencies but at significantly different rates. - As companies' dependency on marketing rises. CMOs must accept greater responsibility for being customer experts. better controllers of their resources, and collaborators. Recommended Actions Next 6 months 6-2 months Obtain the expanded version of IDC's Tech Manrceting Benchrnark Suivey-results andfor a custom analysis comparing your company with closer peers. lnfomi your 208 budget with benchmark data. The goal is not to copy every company is unique. But be curious about where you make different decisions. initiate discussions on short-term "nudges" and longer-term transformations that will be needed for scale, new markets. or customer experience improvements. Participate in ldc's 208 Tech Mgrketing Benchmark Surveyto receive the full Tech Marketing investment Guide for 209 (materials available in June 208). Source: IDC, 207 December 207, IDC #US

2 SITUATION OVERVIEW About the Executive Summary IDC publishes a 60-page version of its 207 Tech Marketing Benchmark Survey results called IDC's Tech Marketing Investment Guide for 208: Benchmarks, Key Performance Indicators, and CMO Priorities. This executive summary provides highlights of that more extensive document. For more information about obtaining the comprehensive Marketing Investment Guide for 208 or obtaining a custom version of the document comparing your company's results to a cohort of similar companies, contact your IDC account manager or Warren Lane at wlane@idc.com. Tech Marketing Budgets (and Influence) Are Growing The 5th annual Tech Marketing Benchmark Survey from International Data Corporation's (IDC's) CMO Advisory Service finds that marketing budgets among the 79 technology companies surveyed will increase by an average of 4.2% in 207. Those same companies also expect an average revenue increase of 4.2% for the same period. IDC's finding shows that 206 and 207 represent the best two years in a row for marketing investment change since 2006 and 2007 (see Figure 2). The 75% of companies in the survey that reported revenue growth increased marketing budgets by 6.3%. Healthy marketing budgets indicate a company's confidence in its future. IDC believes that sales sell today and marketing sells tomorrow. FIGURE 2 Year-On-Year Company Revenue Growth Compared with Marketing Investment Change, ,3 2, Z Average company revenue growth Average company marketing investment growth n = varies Source: IDC's Tech Marketing Benchmark Survey, IDC #US

3 In 207, the average tech company marketing budget is 2.4% of revenue. However, this percentage varies widely by company size, sector, sales model, and growth. Software companies with greater than 50% of revenue from cloud have an average of 6.4% market budget ratio (MBR), with some companies' budgets being even larger. Marketing Gaining a Greater Share of the Sales-to-Marketing Cost Envelope Within the group of tech companies participating in IDC's Tech Marketing Benchmark Survey, marketing is also gaining ground within the sales-to-marketing cost envelope. In the survey, IDC asked participants "if your company had a dollar to spend across marketing and sales, what percentage would be allocated where?" In 207, the companies surveyed reported that 9% of that dollar would be spent on marketing and 8% on sales. In 206, companies stated within that same dollar, marketing would be allocated 6% of the share and 84% to sales. IDC finds that the percentage of that dollar spent on marketing is even higher among growth companies and among those companies that utilize a customer journey model. Marketing Staff Is Gaining Share Marketing, and especially data-related marketing, jobs are growing faster than sales jobs. Data from the U.S. Bureau of Labor Statistics for the years (see Figure 3) forecasts tech-related sales jobs to grow at the same rate of overall job growth (approximately 7% over the period). Sales as a job category remains much larger than marketing (i.e., there are many more salespeople in the workforce than marketing staff). However, marketing's higher-than-average job growth rate means that marketing is "taking share" in the labor force. IDC believes that this change is happening because, as customers increasingly spend more of their buying time in digital channels, companies find that marketing skills at communicating via media and audience persuasion are essential to gaining revenue today. These shifts of investment from sales into marketing are further evidence that the marketing and selling process is a mirror reflection of the buying process. FIGURE 3 U.S. Marketing and Sales Job Growth Rate, Sales jobs or. Il. Average U.S. job growth r- I. i Sales manager Sales rep: Sales Average tech and engineers science I Marketing Marketing manager analyst Marketing jobs Source: U.S. Bureau of Labor Statistics, IDC #US

4 Marketing Program Investment Highlights For technology companies, advertising and events remain the largest marketing program categories that vendors invest in. Out of the 4 categories on IDC's 207 marketing investment taxonomy, advertising and events count for an estimated 47% of the program spend. In 207, for the first time, content marketing has become the third-most invested program, switching places with direct marketing (see Figure 4). IDC views this change as positive because content marketing is a critical modern marketing competency but notes that if this rise represents more "random acts of content" and too many marketers simply jumping on the bandwagon without much planning, marketers won't see benefit. The best content is research driven, contributes to better storytelling, and is aligned to the needs of customers at different stages of their decision journey. Best practice companies are adopting what IDC calls a collaborative "supply chain" model for content development rather than having siloed marketing teams developing content independently. For more information, see The Content Marketing Supply Chain: Meeting the Demand for Content Marketing at Scale (IDC #US462626, August 206). FIGURE 4 Marketing Program Investment Mix in 207 Advertising Events Content marketing Direct marketing Sales and partner enablement MDF and co-op funds We bsite Public relations Intelligence Marketing technology Branding Social rnarketing Analyst relations Other =mm Ao.6, i n = 79 Source: IDC's Tech Marketing Benchmark Survey, 207 Marketing People Investment Highlights Each year since the benchmark survey has been conducted, product and solutions marketing have been the largest staff category. This year, the same is true, with vendors investing an average of 8% on product and solutions staff. The second-largest staff category is field marketing with companies investing an average of 5% (see Figure 5). Though content marketing is the third-largest program investment category, it is the fifth largest in staff investment. IDC recommends that companies audit their people-to-program ratio in content marketing to ensure the appropriate balance. IDC also notes the emerging job role of the loyalty and advocacy marketing staff. Though the average participant 207 IDC #US

5 invests only % in the loyalty and advocacy role, a recent IDC study showed 90% of IT vendors did not have loyalty marketing or advocacy marketing programs or staff in place (see What Is Marketing's Role in Customer Loyalty and Advocacy? Examining the Role of Post-Purchase Marketing, IDC #US42267, March 207). IDC finds that customer loyalty and advocacy are crucial to increasing company revenue, especially with new buying habits predicated by digital transformation, online behavior, and a subscription-based economy. FIGURE 5 Marketing Staff Allocations in 207 Product and solutions marketing Field marketing lnfuencer marketing* Direct marketing Marketing operations Content marketing Events Partner marketing Campaign management Intelligence and analytics** Website Creative services and brand identity Industry and audience marketing Sales enablement Marketing technology Advertising Loyalty and advocacy marketing Executive and other I rk i30...;.8.VJ m 7.7 b (%) 6 20 n = 79 * Influencer marketing includes all analyst relations, public relations, and social marketing staff. ** Intelligence and analytics include business intelligence and analytics, competitive intelligence, market intelligence, and social intelligence staff. Source: IDC's Tech Marketing Benchmark Survey, IDC #US

6 Additional Marketing Investment and Organizational Data Available The full benchmark document, IDC's Tech Marketing Investment Guide for 208: Benchmarks, Key Performance Indicators, and CMO Priorities, contains detailed data by product sector for each of the aforementioned categories. Many of the categories also have detailed subcategories of data. IDC also provides 5+ key performance indicators (KPIs), including: Marketing budget ratio (marketing budget/total revenue) Marketing investment change (year-over-year change in total marketing budget) Program-to-people ratio (program spend versus people spend) Marketing staff ratio (total marketing staff/total company staff) Awareness-to-demand ratio (percentage of marketing resources allocated to awareness building versus demand generation) Sales-to-marketing cost envelope ratio (percentage of company resources allocated to sales versus marketing) Digital ratio (percentage of marketing program resources allocated to digital marketing versus nondigital marketing) Custom Benchmark Reports IDC's CMO Advisory Service can produce custom benchmark reports comparing client marketing organizations with a smaller group of peers. Using the data from the companies that have participated in this year's benchmark survey, IDC and clients work together to create a "target group" of roughly four to seven companies to analyze their marketing data and provide KPIs and spending breakdowns. This comparison gives vendors insights into their spending on programs and staff investments. ADVICE FOR THE TECHNOLOGY MARKETER The more change that occurs in the way that customers buy, the more relevant marketing's skills and expertise become to their company's success. It's marketing's time to make its way to the forefront. The digital disruption offers CMOs an unprecedented opportunity to become revenue drivers and architects of the customer experience. But this advancement is not without its price. In the words of Winston Churchill, "The price of greatness is responsibility." IDC has identified three essential areas where CMOs and their teams must increase marketing performance and productivity to be worthy of this new power. These three areas are: Become the customer experts: Within their companies, marketers must become the team that knows more about the customer than anyone else. Strategies include accumulating and sharing tribal knowledge about customers through studies, market intelligence, and social marketing, channeling the voice of the customer and becoming the customer-metric czar. Become better controllers: As CMOs garner more people and program resources, they must also become more accountable. Improving stewardship of these resources and the resulting performance means investing in the necessary technology, data, teams, and organizational structures. Become collaborators: Use your digital and customer expertise to help sales, IT and senior executives get to the next level of customer centricity. But don't become too internally focused. Marketing does not have internal customers, only partners. There is only one customer and that is the actual customer. 207 IDC #US

7 IDC's 5th annual Tech Marketing Benchmark Survey has shown a progressive increase in marketing, becoming the go-to organization for working with today's empowered, digitally savvy customer. We invite tech and digital services companies, as well as digital divisions in other companies, to participate in next year's survey. We encourage you to reach out to IDC's CMO Advisory Service to help you get started and see how your company is doing among industry leaders. This will help you understand your marketing allocations in your company and show if you are strategically in line with industry trends. LEARN MORE Related Research IDC FutureScape: Worldwide CMO 208 Predictions (IDC #US434887, October 207) Hierarchy of Marketing Metrics: Measuring Marketing Success Like a CFO (IDC #WC , September 207) IDC's Worldwide Marketing and Intelligence Taxonomy, 207 (IDC #US42357, May 207) Building the Modern Marketing Workforce: An Interview with 0 CMOs (IDC #US , April 207) What Is Marketing's Role in Loyalty and Advocacy? - Examining the Role of Post-Purchase Marketing (IDC #US42267, March 207) Which Marketing Staff Roles Are Most Centralized? (IDC #US , January 207) Organizational Silo Busting: Collaboration Tips for Improving Customer Experience (IDC #US , December 206) The Transformation of Regional Marketing (IDC #US498076, December 206) Synopsis This IDC Perspective offers CMOs and their management teams and C-suite colleagues a window into the results of IDC's 207 Tech Marketing Benchmark Survey. A 60-page extended study with details on this survey (now in its 5th year) is available for purchase. Interested clients can contact their IDC account manager. IDC's Tech Marketing Benchmark Survey provides evidence-based quantitative insight for marketing planning, performance and productivity management, and transformation into a modern marketing powerhouse. "High-performing CMOs want to infuse data into all aspects of their decision making. IDC's research shows that tech companies' growth and revenue have become increasingly reliant on capabilities that only marketing can provide. Considering this critical dependency, marketing plans and budgets cannot be built simply on gut feelings and last year's budget," says Kathleen Schaub, vice president of the CMO Advisory and Customer Experience practices. "The marketing function evolves quickly. CMOs gain confidence when they see data on how fast and how far their peers adopt new trends." 207 IDC #US

8 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than,00 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 0 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA 070 USA idc-community.com Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or web rights. Copyright 207 IDC. Reproduction is forbidden unless authorized. All rights reserved.