Forced marriage of IT and marketing gets off to a rocky start
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Marketing departments are shifting significant amounts of their own budgets toward IT-related products and services, independent of what the IT department spends, to the extent that Gartner predicts that by 2017 chief marketing officers (CMO) will spend more money on IT than chief information officers (CIO).
Whether Gartner’s prediction comes to pass or not, Forrester analyst Sheryl Pattek predicts that, out of necessity, CMOs and CIOs will team up to become a `C-suite power couple’. But she adds that at this early point, the CMO/CIO power sharing relationship “is in need of serious couple’s therapy.”
Pattek, who focuses on CMOs, recently published a study in which she said, “While on the surface, CMOs and CIOs seem to agree, only one in 10 marketing and IT executives (in an Accenture study) said collaboration is at the right level.’’
Pattek also cited another 2013 survey, a joint effort of Forrester and Forbes magazine, which showed that while some progress has been made, “true collaboration remains a long way off in the areas of technology selection and joint project implementation.’’
Some of the reason for the rocky start is that CMOs and CIOs are focused on different priorities. CMOs are pursuing marketing goals while CIOs are focused on back office operations and on controlling costs.
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Also, while IT and marketing are coming to an understanding about joint goals, “marketing wants the tools delivered yesterday,” she wrote, while IT prefers a more deliberative approach. She also notes that marketing technology is still in the fairly early stages of development.
“The company’s ability to succeed depends on how customer-obsessed they are and how much they understand their customers and their wants and needs. And to do that, what’s needed are great insight, an understanding of the market and really good technology,” says Pattek.
The Motorola mind-meld
One way to avoid conflict between CMOs and CIOs is to put both functions in the hands of one person.
Motorola Solutions – the part of the communications technology company not acquired by Google in 2011 – did just that, appointing Eduardo Conrado senior vice president of marketing and IT.
“What prompted Motorola Solutions to have marketing and IT under the same executive committee member was a desire to take IT and put a greater focus around the customer and the front office,” says Conrado. “Previously, IT was reporting into the head of operations and products, which meant a lot of focus on back-office operations. We saw that IT can be a differentiator for our company when it is focused around the customer.”
When realigning the IT function, he says, Motorola saw that if it is not directly reporting to the CEO, marketing was a natural alignment due to its focus on sales, channel partners, customers, and other groups. And Conrado made a point of saying that marketing and IT were not in competition for budget dollars.
Over the last three years, Motorola has been transitioning to a whole series of digital tools that included social media tools, marketing automation tools, sales force automation, customer and channel portals and analytics tools.
“What we see going forward is a strong collaboration between marketing, sales and IT, with a holistic strategy and a roadmap for all systems of engagement,” Conrado says.
Marketing goes digital
According to a Gartner study of enterprise budgets for 2013, marketing’s budget averaged 10.5 percent of revenue across all industries – and that’s all marketing spending, not just on IT. By contrast, IT budgets averaged just 3.0 to 3.5 percent of revenue, says Yvonne Genovese, a vice president and distinguished analyst at Gartner.
Digging deeper, the marketing budget for “digital marketing” based on IT, was 2.5 percent in 2012 and rose to 3 percent this year, Genovese says, adding that Gartner believes that IT spending by marketing departments will rise by an average of 9 percent a year going forward.
A big part of the reason that marketing is spending more on IT is that marketing can no longer depend on traditional forms of media, such as print advertising, television or putting the company logo on a blimp flying over a football stadium. A marketing or advertising campaign now extends to Internet and mobile platforms, Genovese says.
“What’s happening is that all of that [marketing] has been transferred into a digital format, but also magnified because you really can’t say, ‘Oh, I’m just going to do one ad,’ you have to do content every day. So everything is being magnified and is all dependent on technology,” she says.
This trend was identified a few years ago by a Forrester survey of marketers specifically at technology companies – not across all industries. When asked in 2010 what percentage of their budgets for 2011 would be devoted to “marketing operations,” or IT, the average response was 10 percent, says Peter Burris, a vice president and research director for Forrester.
When asked again in 2011 what percentage they would spend in 2012, the number shot up to in the range of 22 percent to 23 percent.
“A lot of us looked at that and said, ‘the data’s wrong,’” Burris says. “We did some subsequent interviews and discovered that what was happening is that that was all the net new technology that they were buying. That’s a data point that this whole thing suddenly popped.”
Being tech companies they might be expected to be early adopters of digital marketing technology, he says, but there are other indications companies in other industries are following suit.
Providers of new digital marketing tools, particularly in the software-as-a-service sphere, are witnessing a significant sea change across the board.
“This is by far the most exciting shift ever in technology,” says Marc Benioff, co-founder and CEO of Salesforce.com, at the company’s recent Dreamforce 2013 conference in San Francisco.
He added that marketing has evolved from a one-to-many communication with customers to a one-to-one communication through things like targeted e-mail, analysis of a customer’s shopping history and the like. The emphasis on delivering apps for marketing purposes is evidenced by Salesforce’s $2.5 billion acquisition of ExactTarget in June.
The takeaways, Forrester’s Pattek says, are that in this new “power couple” relationship, traditional boundaries between the two previously siloed departments no longer apply.
CIOs and CMOs now have to jointly evaluate and acquire new technology for data analytics, customer engagement, and other digital marketing efforts. At the same time, the business needs of the CMO need to be mated to the vendor selection experience, integration skills, and security awareness that are the capabilities that CIOs bring to the joint effort.
Mullins is a freelance writer. He can be reached at mullico@gmail.com.
