Gartner’s CMO advice: How to create value-based martech for uncertain times

Ewan McIntyre is a VP Analyst covering marketing leadership and management. Mr. McIntyre is focused on how next-generation marketing organizations and leaders allocate resources and budgets to deliver measurable, optimized performance in a digitally led world. He has a deep understanding of how to build the right team, combining in-house and outsourced resource, having built from the ground up multidiscipline digital teams in both the B2B and B2C space.

I’ve worked on Gartner’s annual CMO Spend Survey for a number of years, but 2020’s survey has been the most interesting to work on by far. It captures marketing in a time of upheaval, as it struggles to understand how to respond to COVID-19’s immediate challenges and forge a path towards recovery and renewal.

Uncertainty abounds, and CMOs vacillate between wild optimism (almost 80% believe that COVID’s impacts on business performance will be short-lived) and deep caution (the majority of CMOs have adopted a risk averse stance in 2020). But there’s one thing that’s clear – martech has maintained a dominant position in the strategic priorities and investment choices of CMOs in 2020.

When you look at the four major tranches of marketing spending: agencies, tech, labour and media, technology accounts for the single largest area of investment. On average, CMOs in North America and Western Europe will spend more than 26% of the total marketing budget on martech this year. Furthermore, the majority of CMOs intend to increase investment in tech in 2021.

Why the focus on tech when marketing budgets are under pressure and the future is uncertain? A clue lies in CMOs’ post-COVID recovery plans. Gartner research has found that CMOs intend to focus on existing customers and existing markets to fuel growth in 2021. And they regard martech as a key strategic component, enabling them to build customer knowledge and intimacy, and ultimately share of wallet. As a result, they’re prepared to shield technology investments, cutting spend on agencies and media before they consider slashing tech budgets.

This logic presupposes that all technology investments are sound. But Gartner’s 2019 Martech Survey found that marketing is struggling to squeeze value out of its technology stack. In 2018 marketers reported using an average of 61% of their martech stack’s full capabilities. This fell to only 58% in 2019. In simple fiscal terms, this represents a significant challenge –marketing’s single biggest investment is not delivering against value expectations.

CMOs are faced with consequential challenges. They’re protecting technology above other investments, thus loading greater pressure on marketing’s resource mix. Consider a couple of potential consequences – strategically important agency relationships are jeopardised and/or share of voice is eroded in order to shore-up martech budgets. These challenges are further exacerbated if tech investments are poorly defined and underutilised.

At the risk of being sacrilegious, martech is not the most important element in marketing’s resource mix. The truth is that all four elements – marketing’s people, its partners, its channels and its tech – are of equal importance, and value optimisation and success will be the result of linking investments across all resources and capabilities to enterprise goals.

Start with objectives

Pick-up any half-decent strategy textbook and it will tell you that investments, large or small should be grounded in objectives. Technology is a means to an end, not the end itself.

Marketing strategies should avoid objectives centered on the tech’s functionality and deliverables. CMOs’ strategies should articulate marketing’s goals — the models, programs and activity that deliver value to the organisation. Decisions regarding the acquisition of martech must be able to justify themselves against the organisation’s strategic context. Even if the tool is tactical by nature, it should contribute to wider business objectives, no matter how granular its deliverables.

Think about technology in relation to Gartner’s Hierarchy of Marketing Metrics. If the enterprise goal is to grow customer profitability by 30% in 2021, the value case for technology investments should be laser-focused on how the tech will enable marketing to achieve this goal. There should be a clear and unambiguous flow of objectives down the organisation that inform technology investments, and there should be a clear flow up the organisation that reports how technology choices ladder-up to strategic success.

Adopt a zero-based mindset

Adoption of zero-based methodologies is growing in enterprises. While full zero-based budgeting can be an onerous exercise, adopting a zero-based mindset need not be. Consider the martech stack afresh, taking into account all existing and planned investments. For each investment, ask:

  • What is the measurable evidence of the technology’s value? Consider both in the context of attributable ROI and ROO (return on objectives)
  • Do the goals and objectives of the technology warrant the expenditure?
  • What would happen if we didn’t invest in the technology?
  • What are the alternatives? Are there other options that could deliver the same outcome for less cost?
  • Would it be better if a portion of the funds required to fund the technology were used for something else?

Prepare for budget cuts now

The first wave of budget cuts in H1 2020 tackled the cash-flow challenges many enterprises faced due to significant changes in demand. But as 2020 progresses, CFOs are looking at costs again, focusing on profitability. And marketing is second only to real estate in the list of functions facing the largest cuts. Martech may have dodged the first round of marketing cost cutting, but it’s unlikely to be able to keep the CFO at bay over the weeks and months ahead. Build your technology value case and optimise marketing costs today so you can right-size your investments aligned with your growth objectives for 2021 and beyond.

Read more: CMOs maintain optimism for post-Covid marketing budgets despite fears, says Gartner

Photo by Riccardo Annandale on Unsplash

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