Will Marketing Outspend IT by 2017?
Laura McLellan, VP of Marketing Strategies at Gartner, rocked the MarTech boat when she predicted that CMOs will outspend CIOs by 2017. The ripple effect which McLellan’s prediction created made marketers sit up and take an interest in technology, and it prompted companies like Oracle and Adobe to acquire other marketing tech vendors like there is no tomorrow – but how accurate is her prediction?
The simple economics are this: IT budgets are bigger, as most marketing budgets allocate less than 20% of their spend on marketing tech. In fact, a well-known asset manager that we work with had to convince the Exec team that just 5% of the traditional marketing media planning budget be allocated to marketing automation.
So will it happen? Maybe, but probably not. IT spend is approximately 2-4% of an organisation’s revenue; smaller in enterprise, larger in mid-market. Companies’ marketing spend also varies depending on the size of the organisation: Enterprise corporations spend around 11% of the budget on average, while smaller companies spend around 9%.
So, marketing spend might be as much as three times that of IT. On a like for like basis, marketing spend on tech as a percentage of overall marketing budget would need to be at least 30% larger for this inflexion point to happen.
Of course, this 30% is a growing space, and the understanding of tech in marketing is now a given. While it is in vogue to say that ‘digital marketing is no longer digital, it is just marketing’, the reality is that until the marketing tech stack becomes the norm and digital becomes pervasive, Gartner’s prediction could be another five years away.
In five years’ time, the IT function will too have been reinvented and will fully embrace cloud over on premise, and so the slight pendulum of influence on marketing tech spend will swing back their way.