CMO or CIO — who should run marketing technology budgets?

US marketing technology spending forecastCMOs in the US will spend over $122 billion on investments in marketing technology (martech) and services by 2022 from $90 billion today. Between CMO and CIOs — who should run marketing technology budgets?

Forrester analysts Shar VanBoskirk and Drew Green — with Keith Johnston, Sharyn Leaver, Olivia Morley, and Rachel Birrell – have analysed the trends in marketing technology and have revealed the need for the growth in marketing technology spending.

They said the growth of marketing technology spend will outpace that of technology services as marketers emphasize building customer experiences, automating more processes, investing in innovation, and supporting more forms of mobile engagement.

Spend on advertising, operations, and strategy service is nearly 2.5x that on marketing automation, advertising technology, and database and analytics technologies. The 9.6 percent CAGR for marketing technology will surpass 3.3 percent CAGR for marketing services and narrow the gap between these investments by 2022.
CIO and CMO share of marketing technology spend
The $15 billion marketing automation market – enterprise marketing suites, campaign management, account-based marketing, and marketing resource management platforms, among others — will reach $26 billion by 2022 achieving 9.3 percent CAGR over the next five years.

Customer experience dominates budgets. For example, United Concordia Dental will spend $45 million over three years to new database management systems to improve customer billing and scheduling processes. IT services firm Dimension Data will spend incremental budget on technology instead of media.

AI in marketing technologies will enhance personalization, account selection, ad buys, and even content creation, at the expense of advertising and strategy services.

For instance, lingerie brand Cosabella improved its return on ad spend by 336 percent when it dumped its media agency for Albert Technologies’ AI engine.
CMO spending on technology by 2022
Most CMOs select the best technology companies to power their brand experiences. Cisco Systems’ martech stack includes 39 separate applications from 39 vendors, including Adobe, Oracle, and Salesforce.

42 percent of US marketers implemented content marketing tools in 2017, compared with 25 percent in 2016. Unilever saved $10 million in content curation costs when it bought content management platform Percolate.

Advertisers are curbing media exposures in the name of quality over quantity. The quantity of impressions available for sale continues to rise. Last year, Facebook launched its Canvas and collections ad units aimed at retailers.

Google’s paid clicks rose 46 percent from 2016 to 2017 due to its new mobile and shopping ad formats.

Amazon will introduce more search, video, and new TV and mobile ads in 2018. Ad giant Omnicom, Publicis, and WPP will collectively spend more than $800 million on Amazon over the next few years.

CMOs will need technologies to manage third-party data and analyze how marketing performance ties to business goals. The San Francisco Chronicle increased page views by 44.5 percent by basing email content on browsing behaviour.

Agencies like BBDO Worldwide, Grey Group, Ogilvy & Mather, and TBWA cut staff to compensate for account loses and tighter margins. Lowes and Papa John’s eschew television to spend on digital experiences.

Unilever’s announcement that it will reduce ad spend also cut its agency roster in half and sent agency WPP’s stock price tumbling.

Traditional agency models are changing. Businesses are looking for new and viable agency substitutes in the form of automation, contractors, consulting firms, and inhouse teams. Pepsi and Chobani supplement their agency material work with material developed on creative network Tongal.

Accenture Interactive became the agency of record at Maserati without a competitive agency review by leveraging its broader relationship with Fiat Chrysler Automobiles.

CMOs won’t be able to fund the spectrum of business technologies that their companies must orchestrate. CIO will support CMO leadership here: 62 percent of survey respondents whose firms have a digital transformation led by the CMO indicates their firm is experiencing double-digit growth, compared with 50 percent of respondents whose firm’s digital transformation is run by the CIO.