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Tech marketing spending slowing

By Kate Maddox

Story posted: September 15, 2008 -6:01amEDT

Tech marketers will increase their marketing budgets this year, although at a slower pace than last year as the economy lags, according to IDC's 2008 Tech Marketing Benchmark study.

According to the study, based on an onlinesurveyandtelephoneinterviews with more than 80 seniormarketersattechnologycompanies, tech marketers will increasetheirmarketingbudgets by3.5% this year over last.

That figure is down from a 4.0% growth rate projectedbyIDCearlierthis year. It is also down significantly from6.1%growthinmarketing spending by tech companies last year.

“Marketing continues to receive its share of pain asaresultofmarket pressures,” said Michael Gerard, VP-researchforIDC'sCMOAdvisory Practice, pointing to increased pressureontechcompaniesto implement cost controls in the slowingeconomy.

The study also found that tech marketing spending thisyearwilllagglobal IT spending, which will increase 5.5%thisyear,according tothe report. Last year, global ITspendingincreased7.1% over2006.

Marketing budget ratios, defined as marketingspendingasapercentage of revenue, are also down this year,droppinganaverageof 5% to 10% below last year, the study found.

“In addition to short-term budget cuts, a period isbeingusheredinof more sweeping marketing organizationalchange,”Gerardsaid.“Staffing levels continue to be under pressure,andcompaniesareshifting to new staff roles to helpincreaseefficiencyandeffectiveness.”

In its report, IDC provided some guidance for CMOsattechcompaniesto help them deal with the challenging economy.

The first step is to look attransformingthemarketingorganization.

“As we look at marketing organizations, they arefartootop-heavy,”Gerard said. “There is too much spendingatthecorporate level andnot enough in the field closesttotheprospects and customers.”

The study found that at tech companies with less than$500millioninannual revenue, 59% of the total marketing budgetisspentoncorporate marketing; 32% is spent on regionalmarketing;and 9%isspent on business unit marketing.

“As companies increase in size, there is moreshiftingtotheregions, and corporate marketing begins to own lessofthebudget,”Gerard said.

At tech companies with more than $3 billion in annualrevenue,43%ofthe marketing budget is spent on corporate marketing;36%isspent onregional marketing; and 21% is spent onbusinessunitmarketing.

“We feel this isn't enough—we'd like to see 50% beingownedandspentin the regions,” Gerard said.

PROVIDE CAMPAIGN MANAGEMENT SUPPORT
Another key piece of advice IDC offered tech marketersistoimprovethe relevance of marketing by providingmoresalesenablement andcampaign management support.

“Marketing must improve its ability to get therightmarketingassetsto the right salespeople,” Gerard said.

The report also breaks down the marketingbudgetspendingacrossprograms. This year, events will make up thelargestshare ofthemarketing budget (22%), followed byadvertising(17%),directmarketing (16%), marketing support and salestools(14%),digitalmarketing (12%), PR (5%), collateral(5%),marketintelligence(4%), analyst relations (2%) and other(3%).

Within digital marketing, 33% of the budget will bespentondisplayads, 16% on search ads, 15% on Web site, 15% one-mail,7%on searchengine optimization, 6% on events and 8%onotheractivities.

Respondents participating in the survey werefromhardwarecompanies(41%), software companies (40%) andservicescompanies(19%).

The breakdown by company size was less than $500millioninannualrevenue (30%), between $500 million and $999million(12%),between$1.0 billion and $2.9 billion (26%), between$3.0billionand $9.9billion (17%) and more than $10 billion (15%).M

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