Five years ago I took a year-long class on free-market economics and professional development. One day during class, the instructor asked us what we saw ourselves doing in five years. I stood up and said I wanted to be a political pundit. Five years, hundreds of op-eds, and a few appearances as a talking head on the news later, here I am writing about what CMOs will spend in 2017.
Retired Gartner research analyst Laura McLellan seems to be much better at predicting the future. In 2012 she predicted that, by 2017, CMOs would spend more on technology than CIOs.
According to analyst Jake Sorofman, “Gartner’s soon-to-be-published annual CMO spend survey suggests that, for 2016, CMOs allocated 3.24% of revenue to technology spending, which is very close indeed to the 3.4% of revenue CIOs earmark for IT.”
So if trends continue, by the end of the 2017, the average CMO will control more tech spend than the average CIO.
Here are some of the trends that I believe helped lead us here.
1. Marketing budgets increased
Marketing budgets have gone up, up, up over the past three years. In 2016, according to the Gartner 2016-2017 CMO Spend Survey, marketing ate up 12% of company revenue on average. The majority of that spend went to brands’ websites, and brands spent a greater percentage on websites than they did in 2015. Digital advertising also got a large portion of spend.
2. IT budgets didn’t
Only 14% of marketers surveyed by Gartner anticipate budget cuts. But 39% of technology decision makers predicted their company’s IT budget will stay the same or decrease in 2017 according to a Tech Pro Research survey.
3. Marketing came to own e-commerce
Digital commerce was just behind websites in terms of marketing spend in 2016. In many companies, marketing owns e-commerce. And e-commerce is a major moneymaker. According to Census Bureau data, e-commerce sales accounted for 7.7 percent of total sales in the third quarter of 2016. E-commerce has grown as a percentage of total sales every quarter since 2006.
Companies that give marketing responsibility for e-commerce give marketers accountability for profit and loss on e-commerce.
4. Marketers began measuring ROI
In the analog days, measuring whether your marketing was working was simple. “Half the money I spend on advertising is wasted,” John Wanamaker said around the turn of the century. “The trouble is I don’t know which half.” In the old days, marketers spent very little time crunching numbers, because the numbers didn’t exist.
The internet made marketing much more transparent. And with that came a ton of data.
How much is marketing spending on analytics?
IT and marketing have traditionally fought over who own analytics. In InformationWeek, Rich Wagner advises IT departments to cede decision-making to marketing. “Innovative and nimble organizations prove most successful when they empower their employees, allowing them to find and use solutions for their own specific needs, not trying to force existing platforms into unintended uses,” Wagner writes.
5. Marketing contributes to product development, strategic planning, and customer service
In 2014, Harvard Business Review advised senior corporate leaders to force R&D to share power with marketing. “Allow marketing to contribute—and contribute visibly—to your firm’s newly developed products,” wrote Ruth Maria Stock, a professor of marketing, innovation, and HR and PhD candidate Ines Reiferscheid, both at Technische Universität Darmstadt.
An article in Journal of Product Innovation Management showed that firms where marketing contributes to new product development outperform firms where the two are separate.
Jim Dickson, Director Sales & Marketing at Bedrock Concepts recently wrote for LinkedIn that product development must be aimed at meeting consumer needs, so marketing and sales convey valuable information about what customers really want.
What’s a smart CIO to do?
Get cozy with marketing.
Here’s the thing about punditry. It was a lot of work, and it didn’t pay super well. Sure, a few pundits make major bucks. But the rest of us, not so much.
Also, politics is depressing.
My advice for CIOs is to do what I did, and follow the money (and the reasonable work/life balance). Many IT departments have a testy relationship with marketing. If that’s you, 2017 is the perfect time to build bridges. E-commerce and analytics are expensive and difficult, and two areas where IT can be a huge hinderance or a huge help. Choose the latter and you’ll greatly increase the chances that there will be enough money for your initiatives going forward.
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