Companies spend on average 10% of their overall revenue on marketing. That’s up from when I was a CMO fifteen years go, and it’s a result of the increased competitive for attention in the busy social marketplace.
Over the past two years alone, marketing budgets have grown about 8.3%, and much of that growth has gone into marketing analytics. Companies now spend about 5.7% of their marketing budgets on analytics, which is expected to grow to 9.1% in the next three years. This increase is the result of the vague animal we know as “big data.” The promise of big data is to take the art and guesswork out of marketing campaigns and render them “scientific,” meaning provable. Did this campaign work? Yes, because we measured it. And can we replicate it? Yes. Because we know what and how it worked. We analyzed it.
And yet, most companies still don’t make good use of their marketing analytics. Services companies do better than product companies, but in the aggregate, only 37% of companies actually use their analytics to guide their campaigns. How do I know? One of the fun things I’ve been doing lately is reading the Duke University CMO Survey.
It’s cool and exciting to think that marketing campaigns can be measured, unless you are the marketing department. Everyone wants to measure the value of a teacher, too, except the teacher. The teacher knows that what she does is often mysterious and emotional, based on sentiment rather than logic. “How do we measure that?” argues the teacher.
Through the collection and analysis of mountains of data about students or customers, often collected in real time, and fed into databases that can be queried in new ways almost in record time, everything from behavior to sentiment can be measured. I am blown away by some of the new semantics-based measuring tools, like Advantix. Those who are used to SQL-based databases will find those are no longer always appropriate for the kind of unstructured data we’re now collecting.
The new tools present a huge opportunity for those who want to help marketing organizations with the challenge of big data. Someone has to step in and help them, because by 2017, the marketing department will be spending more on technology than the IT department! While IT budgets are decreasing as a percentage of overall company revenue, CMO budgets are increasing.
Marketing can expand its role, become more strategic, and expand its responsibilities if it embraces the big data possibilities. It can become the leader of a cross-functional team that determines IT buying, rather than just be forced to use what IT has bought. New upstart SAAS providers know this, and are starting to market to the CMO, rather than to the IT department. In fact, most providers of marketing technology desperately try to bypass the CIO, because the CIO often doesn’t understand marketing. On the other hand, the CMO doesn’t really understand technology, either.
And that’s why there’s been a revolving door for CMOs lately. CMOs, time to get tech-savvy:-)