Based on the latest IDC report on tech marketing spend, not a lot. In fact, social media doesn’t seem to even register as a discrete item on the tech marketing agenda. It is possible that social media is lumped in as part of “other” digital marketing (which constitutes less than 1pc of total marketing spend). Which seems to bear out that in spite of all the talk and promise surrounding social media, it hasn’t yet made a significant impact on tech vendor marketing spend. It will be interesting to see what happens over the next 12 months in terms of social media’s share of marketing wallet. Or will a tough economy see vendor marketers retrench into sticking with traditional marketing tactics? eg events.
IDC’s latest report on tech marketing spend came out a few weeks ago and offers some good insight into where the money is (and will be) going.
According to a story by Kate Maddox in US B-to-B magazine, IDC breaks down tech vendor marketing budget spending as follows: events will make up the largest share of the marketing budget (22%), followed by advertising (17%), direct marketing (16%), marketing support and sales tools (14%), digital marketing (12%), PR (5%), collateral (5%), market intelligence (4%), analyst relations (2%) and other (3%).
Within digital marketing, 33% of the budget will be spent on display ads, 16% on search ads, 15% on Web site, 15% on e-mail, 7% on search engine optimization, 6% on events and 8% on other activities.
Unsurprisingly, traditional advertising has fallen from its number one perch. What is perhaps unexpected is the fact that events appear to have taken the mantle of lead marketing activity, certainly in terms of budget. On the surface, this result seems to fly in the face of anecdotal evidence which suggests that tech marketeers have been finding it more difficult to justify ROI on events. Then again, the definition almost certainly includes vendor’s own events for customers and prospects. Or it may mean they are simply being more choosy about which events they go to – and upping their investment in those. Even so, for all the conventional wisdom about the rise of digital, the fact that tech firms seem to be placing over one fifth of their marketing budget on good old fashioned booths, bums on seats and “pumping the flesh” is worth noting. (IDC says total tech marketing spend is around $15bn globally – which suggests around $3.3bn will be spent on events and trade shows).
Even so, digital is clearly making significant gains, now taking 12pc of budget (or $1.8bn). Even so, the breakdown of digital spend is again insightful. Again, generally accepted wisdom suggests that SEO is one of key elements of any digital marketing approach, but tech firms seem to be continuing to place their faith in display ads, PPC and e-mail, with only 7pc of digital marketing spend going on SEO. Bizarrely, it seems the tech sector is lagging FMCG businesses in terms of SEO investment (certainly judging by the client lists of the top search marketing firms in the UK).
And what about PR? For some reason, it can’t seem to break out of its historical 5pc share of marketing budget. According to IDC, tech firms will spend just as much on producing old fashioned collateral as PR. And as Duncan Brown at the Infuse blog points out in his review of the IDC report: “in real terms, marketing spend is declining.”
Which means spend on traditional tech PR is in decline.
However, Richard Vancil, vice president of IDC’s Executive Advisory Group, does offer some clues as to what tech PR firms should do when he noted some key trends emerging within the tech marketing community: “Tech marketers are getting more input from all sides that greater transformation is required. Much of the corporate marketing agenda across the tech vendor community is really disconnected with the information or content wants and needs of the key constituents of marketing. The sales teams have never really climbed ‘on board’ to marketing’s agenda. And in IDC’s research with technical and business buyers, we see that most elements of the classic tech marketing agenda continue to fall short of how those buyers want to consume information today.” (my emphasis).
That last line seems to reflect David Meerman Scott’s mantra of: “most marketing communications activity is built on what the organisation wants to say rather than what the buyer wants to hear.” And also bears out what we’ve been saying here for some time – that much tech PR activity fails to reflect the real and significant changes in tech buyer audience media consumption and purchase behaviour. As we’ve said here on many occasions, PR needs to change if it is to claim a greater share of marketing budget and mindshare.
Having said that, IDC has some pointers for vendor side marketers too.
According to Michael Gerard, VP-Research for IDC’s CMO Advisory Practice (also in B-to-B magazine): “As we look at marketing organizations, they are far too top-heavy. There is too much spending at the corporate level and not enough in the field closest to the prospects and customers.”
IDC found that at tech companies with less than $500 million in annual revenue, 59% of the total marketing budget is spent on corporate marketing; 32% is spent on regional marketing; and 9% is spent on business unit marketing. At tech companies with more than $3 billion in annual revenue, 43% of the marketing budget is spent on corporate marketing; 36% is spent on regional marketing; and 21% is spent on business unit marketing.
Given that most tech firms have their origins in the US, IDC’s call for spending more regionally should be good news for those of us over here in the UK and Europe. At the very least, even if PR firms can’t get higher margin strategic work (because it’s already been done State side), at least getting paid for more on the ground executional activity won’t be sniffed at in the current climate. Of course, whether anyone pays a blind bit of notice to IDC in this respect is a moot point.
During the last recession in the early 90s, tech PR stood up very well – not least because the technology sector itself was a lone example of continued expansion amongst a general sea of moribund growth.
This time it is going to be different. However, there remains plenty of opportunity for those who are prepared to grasp the nettle of what really is happening out there in the world of vendor marketing departments.
Respondents participating in IDC’s survey were from hardware companies (41%), software companies (40%) and services companies (19%).
The breakdown by company size was less than $500 million in annual revenue (30%), between $500 million and $999 million (12%), between $1.0 billion and $2.9 billion (26%), between $3.0 billion and $9.9 billion (17%) and more than $10 billion (15%).