Marketing has changed a lot in recent decades, and the pace of change doesn’t seem to be slowing down. In fact, the old adage, “Change is the only constant,” could very well be a great tagline for the marketing profession.
One proof point for the breakneck pace in which marketing is evolving is Gartner’s forecast that by 2017, CMOs will spend more on IT than CIOs do. How could we explain this phenomenon? Four factors come to mind.
1. Market growth. As marketing is constantly changing, new challenges emerge. With necessity being the mother of invention, an ecosystem of marketing tech solutions is thriving. Per economic theory, new entrants to a market space create a fragmented pie – but also increase the overall size of the pie.
2. Measurability of advertising investment. Especially for online channels (Search, Social, Display, Affiliate, Email, etc.), it is rather straightforward to understand what a business is getting for its money. As both the investment and the revenue generated are clear, ROAS (Return On Ad Spend) calculation becomes very easy, as is the ROI calculation for the ad tech facilitating it. Therefore, executives have a much easier time approving budgets for tools to manage ad spend than many other types of tech products, for which ROI “calculations” are fuzzy at best.
3. Distance from the front lines. An old enterprise “truism” is that money flows where money is coming from. That’s why, neutralizing for talent supply and demand, the sales organization is usually the highest-compensated group in any company. They are on the front lines and are most directly influencing the generation of revenue, and thus handsomely rewarded. In a way, this is an extension of the principle mentioned above – ROI (revenue/compensation) for salespeople is easier to measure than for any other part of the organization, and so budgets will more easily flow there. Looking beyond sales, it is obviously easier for marketing to show its impact on the corporation’s top line than it is for IT, and therefore, once again, executives will have an easier finger on the trigger when approving marketing expenditures.
4. The SaaS (Software-as-a-Service) revolution. In the past, almost all software was on-premise; therefore, when making purchasing decisions, factors such as space, hardware, cooling, installation, maintenance, upgrades, monitoring, etc., all needed to be considered by in-house technology experts – or at least with their heavy involvement. SaaS has done a lot to fill this moat that previously existed around IT. When purchasing a SaaS solution, the buyer is essentially “outsourcing” all of the implementation to the technology provider (who, in turn, is outsourcing some of it further “up-funnel” to the likes of Amazon and Google). Suddenly, most of what is left when making a purchasing decision is one’s domain expertise – and how closely the proposed solution meets their needs. When it comes to marketing software, no one is better equipped to make that decision than marketers, and so they own the budget.
What’s even more interesting than the reasons for this shift, are the conclusions we may draw from it. If marketing is indeed commanding more IT budget, does that mean that some of IT’s challenges are becoming marketing’s as well? Is there anything that we can learn from one corporate domain to improve another?
Over the next two parts of this series, I will explore the parallels of IT and Marketing and the role of technology in shaping the future of marketing.
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