Where marketing execs are spending all those tech dollars
Gartner says marketing may spend more on tech than IT, but for what?
When you think of technology spending at a company, you probably assume the IT department disperses nearly all the money, with a small percentage going to departmental tech like smartphones and cloud services. But according to Laura McLellan, Gartner's vice president of marketing strategies, 50% of IT spending outside of the IT budget goes through marketing departments -- on top of IT's expenditures on marketing technology. In fact, by 2016, 80% of marketing tech investments will come outside of IT, Gartner predicts.
What is marketing spending its tech dollars on? The list is long, including social media applications, marketing analytics (Web, social, and dashboards), content management, campaign management, search-engine optimization, and collaboration tools. In the next year, the top areas for digital marketing investment will be social media, mobile applications, customer relationship management (CRM), customer analytics, content management, collaboration tools, and predictive analytics.
These technologies break down into three broad buckets:
Marketing automation. This includes content management and social media monitoring, as well as the automation, aggregation, and analysis of social data, not to mention established technologies such as sales-force automation and CRM. The goal of this category is to increase the effectiveness of the marketing processes themselves.
Social technology and mobile technology. Both technologies produce fundamentally different interactions with and among customers. How marketers can take advantage of them is unclear. At one end is the monitoring of people's new behaviors -- what they comment on in social media and how they shop or look up information when not at a desk, for example. At the other is using these new conduits to customers to serve them actively, such as tapping into location data to provide localized recommendations -- marketers use the terms "geotargeting" and "hyperlocal" to refer to these new types of possible services.
Analytics for real-time business intelligence. Historically, companies have used BI to assess the past, then roll out changes based on that assessment. But in a fast-moving world, that insight often comes too late. Also, it's typically based on data collected for very specific purposes, so the insights that can be gleaned from it tend to be limited to those original purposes. But new, often cloud-based technologies -- collectively called big data -- are providing ways to analyze information very quickly (even in real time), from multiple sources. Companies can adjust their operations and marketing more quickly -- and even more targeted to specific types of customers.
What's pushing marketing as the new technology lead
Why is marketing so invested in technology? Because today, marketers must lead with data and insight -- and that is completely technology-driven, says Liz Miller, vice president of marketing programs and operations at the CMO Council, a worldwide network of marketing decision makers. It's the same reason that 20 years ago, IT was closely aligned to the CFO, who at the time was challenged with creating financial systems that were transparent, consistent, analyzable, and scalable in a globalizing world.
In a world where customers are increasingly found in digital venues, such as social media, websites, and apps, marketers are focused on how customers interact with companies, what companies can learn from those interactions through analytics, how businesses can better integrate and participate in those digital contexts, and how businesses can innovate the customer experience to add more value and thus increase sales and lower turnover.
Accomplishing these four goals means using technology across the board, both within the company and to interact with customers -- what marketers call "customer touchpoints." The technologies need to work together or at least let the information flow across the technology mix, whether owned by marketing or IT (it's usually a mix).
How one marketing chief's tech strategy works
At four-year-old data-storage startup Actifio, the marketing technology investment -- all cloud-based -- is two to three times that of internal IT spending. The company's investment in marketing tech is all about increasing both sales and employee productivity.
As part of that effort, Actifio uses Jive social networking software to create a living knowledge management system across its employees, which helps the sales- and support-heavy company better serve customers. "We all know what each of us know," says chief markerting officer Mike Troiano.
As its other core marketing tech, Actifio uses Cisco Systems' WebEx service for conferencing and Salesforce.com for its sales-force automation and CRM.
Actifio has also invested in HubSpot for inbound marketing, primarily for lead management automation. If you're not in marketing, that means collecting data about potential customers (leads), then segmenting them for targeted communication, personalization, relationship building, and inquiry and sales management. With some lightweight scripting, HubSpot connects the company's blog to the Salesforce.com CRM software; this way, potential customers who come to the blog are linked to the CRM system for sales and marketers to use. As a result, Troiano saw its Web leads rise from one to two per month to 60 per month.
Still, despite realizing productivity gains his marketing technology investments, Troiano says data integration and unified user experience are both lacking across the pieces he's assembled. This year, he hopes to improve integration for the reporting and tracking function across products to better monitor the customer journey at all touchpoints, so he can measure what and who works effectively.
IT's new opportunity comes from its historical strength
For most companies, systems integration is very complex, involving existing back-end operations such as supply chain management, inventory management, and order management; customer-facing interactions such as marketing campaigns, customer support, and company websites; and the analytics that marketing uses to understand and tune all the pieces in that whole customer experience, notes Paul Papas, head of global e-commerce at IBM.
Because of the complexity involved, marketing can't do it alone -- it needs IT.
IT's focus is typically on the so-called back-end infrastructure, so companies that have in-house IT integration skills can help marketing meet its complex integration challenges. This, according to Accenture, means providing a unified network and data infrastructure that link data housed across the organization, often in different forms, as well as information held outside the company so they can be tracked and analyzed. As you'd expect, the traditional IT systems vendors -- such as Adobe Systems, BMC, IBM, Oracle, Salesforce.com, and SAP -- are working to retune their offerings for the new types of data and customer interactions.
But integrating and modernizing existing information systems will take years because "most large enterprises heavily customize their CRM products or create their own combination of homegrown and package-based solutions," says Chris Davey, global head of customer engagement platforms at the digital marketing consultancy SapientNitro.
IT has historically created the infrastructure for structured data, such as those held in ERP systems and data warehouses, used for financial reporting or to look at past transactions for uncovering changes in customer purchases or comparing projections to reality. But IT has little experience in bringing in data from the outside or from customer touchpoints, such as analyzing website behavior prior to purchase or understanding the behaviors that customers go through before ever coming to a business's website. That's where big data technology comes in, so businesses can get insights from new data sources. As the name "big data" implies, there's a lot of such data, and being able to sift through it in the more exploratory fashion appropriate to marketing analysis requires different technologies and information management skills than IT has typically needed.
Because the information systems that support technology-savvy marketing involve many of the systems that run the day-to-day operations, governance is a critical area that requires attention from multiple business departments. It can't be done by just IT, by just marketing, or by any other single entity.
Technologists across the company need to focus on data protection, ownership, and access of both traditional data sources and the new types of data, such as social, mobile, and, behavioral, now available. Add to the mix the many database marketing companies (such as Epsilon, Experian, First Data, Harte-Hanks, and R.R. Donnelley) that manage captured customer information on behalf of many enterprises. The result is a web of complex -- and evolving -- agreements governing ownership and access among every participant.
The new web of technology relationships in your company
For starters, managing that web requires putting together an internal steering group composed of the marketing chief, CIO, sales and/or e-commerce chief, brand and geography heads, and one or more analytics experts.
Creating an internal steering and coordination group doesn't mean all the technology should be centralized, just coordinated, says Gartner's McLellan. She expects IT to focus on the infrastructure and back end, using a mix of internal systems and external technology providers. She expects marketing to handle the digital marketing and analysis, again using a combination of internal and external resources.
Without such coordination, companies will end up with a bunch of marketing technology silos that won't integrate well with the rest of the company -- and that will lead to a disconnect between what marketing does with and for the customer and what the rest of company does with and for the customer, creating devastating chasms in the customer experience.