Friday, October 17, 2014

IDC's Worldwide Marketing Technology 2014-2018 Forecast: $20 Billion and Growing Fast

Organizations worldwide will spend approximately $20.2 billion on software solutions for marketing in 2014. The marketing software market is expected to grow to more than $32.3 billion in 2018. It will be one of the fastest-growing areas in high tech, with a compound annual growth rate (CAGR) of 12.4%. Over the five years from 2014 to 2018, organizations cumulatively will spend $130 billion on software for marketing departments. This forecast includes a wide range of solutions in four broad categories: interaction management, content production and management, data and analytics, and marketing management and administration. (For more information see Worldwide Marketing Software Forecast 2014-2018: $20 Billion and Growing Fast, IDC # DOC #251902, October 2014.)

Worldwide Marketing Technology Spending by Category, 2014–2018

                                                                          Source: IDC 2014

The emergence of Marketing as a Service (MaaS)

While innovation continues, the era of consolidation has begun. Many acquisitions have been made by software industry majors to bring together key pieces of the marketing and advertising software landscape. This activity has been coincident with the transformation of the larger IT industry to what IDC calls the 3rd Platform where technology and maintenance services are offered "as a service." This model is a game changer for marketers and marketing software suppliers. Even though almost all current marketing solutions are cloud based, they are just beginning to be integrated enough to provide seamless operations and reporting across the diverse activities of a large marketing organization. Furthermore, newer platform solutions can be leveraged by third parties such as agencies and marketing BPOs to provide value-added services in a bundled offering, which IDC calls "marketing as a service." (For more information on MaaS, see Marketing as a Service (MaaS): A New Route to Market, IDC #247587, March 2014)

5 Action Items for CMOs
  1. Construct a technology road map based on business drivers to guide investment
  2. Consolidate applications into a platform with data and process level integration to improve efficiency and effectiveness
  3. Work to integrate marketing technology with the enterprise infrastructure to reveal deeper insights into customers, partners, and market opportunities
  4. Establish inter-disciplinary teams and processes to combat the silos point solutions can create
  5. Learn to leverage corporate IT to improve vendor management, due diligence, and governance practices
For more information, please contact me at gmurray(at)idc(dot)com. 

Thursday, October 9, 2014

9 New Terms Modern Marketers will want to Know

New practices need new language to describe them. When IDC's smart, experienced, forward-looking, clients and special guests got together at our recent Marketing Leadership board meeting in New York, I jotted down these terms they used as particularly useful for describing their challenges and ideas.
  1. Product selfie: A type of content where it's all about the product and nothing about the buyer/user (Guidance: Keep to a minimum – you know why.)
  2. Snackable content: Short-form, easy-to-consume, desirable, content (Guidance: As attention spans get shorter, you'll need more of this.)
  3. Brand-as-a-Service: Offering beneficial, free, and minimally-self-serving, customer service that extends your brand promise. Examples: USAA offering car-buying services, Pantene offering tips for creating celebrity hair-styles during an Academy Awards social media campaign; (Guidance: Powerful! Find yours.)
  4. Budget slush fund: Holding back 5-15% of your budget so that you can respond with agility to unexpected opportunities such as a social media fire or an idea from a regional marketer that is worth testing. (Guidance: Great strategy to you get beyond the same-old, same-old, but you'll need a seeking and vetting process to make sure this doesn't go to waste)
  5. Off-domain: Use of non-owned capabilities such as content syndication, outside point-of-view, 3rd-party voices; curated content, and community/social/partner media or events  (Guidance: This fast growing practice will require a different mind-set than the traditional "owned and ads first"  Start with some pilots now and plan to expand.)
  6. Hunting in the zoo: A derogatory term for the frustrating propensity for sales people to prospect only in well-known territory and ignore leads from new companies (Guidance: While I'm reluctant to promote language that contributes to the marketing - sales conflict, I think we have to give witness to this reality.  It's not likely to change without CEO intervention, so build reality into campaign and metrics – work with it or around it.)
  7. Multi-screening: Consumers are learning to use multiple devices in complementary ways to achieve their goals. Example: Using a mobile phone to research and buy a product seen at a tradeshow kiosk. (Guidance: One more reason to get beyond your internal org structure and think about what customers are trying to accomplish. Break down silo's within marketing. But also bring marketing closer to all company functions that touch customers.)
  8. RACI: This acronym (pronounced "racy") stands for Responsible, Accountable, Consulted, and Informed. A RACI grid is used to clarify roles in cross-functional practices. (Guidance: Accept that almost all tasks today can't be accomplished in a vacuum. RACI is an indispensible tool for helping people work across silos)
  9. Orchestrate: Arrange and mobilize multiple diverse elements to achieve a desired result. (Guidance: Think of campaign managers as orchestra conductors who lead groups of experts each playing an instrument critical to the beauty of the concert. This model is more in tune (pun intended) with agile marketing than traditional top-down management.)

Tuesday, October 7, 2014

2014 Tech Marketing Budgets Showing Strength - Led by the Shift to the 3rd Platform

IDC's CMO Advisory Service recently completed our 12th annual Tech Marketing Benchmark Survey and just last week had our client and participant webinar readout. With the results in, tech marketers should be excited; there are clear signs that marketing is gaining more respect, more responsibility, and more budget! For the first time since 2006, Tech Marketing Budgets will increase at the same rate as revenues (3.5% increases for budgets, 3.7% for revenues.) Coupled with this, the absolute number of companies increasing their marketing budgets continues to rise. Party time, right?

Well, maybe not quite.

The tech industry has hit an inflection point around the 3rd platform (cloud, social, mobile, and big data & analytics.) In fact, IDC is projecting that within the next 5+ years the 3rd platform will cannibalize revenue growth from the 2nd platform. Meaning, not only will 3rd Platform driven products account for all the revenue growth within the tech industry, but they will take market share from what was previously 2nd platform revenue.

What does this mean for marketers? 

A lot actually, tech marketers are in the fortunate (or fortuitous) position of being smack in the middle of this shift to the 3rd platform. Not only are the technologies being marketed transforming, but the day-to-day job of a marketer is being greatly affected. This is because the true impact of this shift is within next generation types of applications, industries - and ultimately - capabilities that the 3rd platform provides. Moving forward every marketer and every marketing organization must be updating skills, technologies, and processes. A lot is at stake and budgets are a clear indicator;  3rd platform marketing organizations are being funded at 6 to 8 times greater than 2nd platform organizations (see image below). The largest tech companies in the world are shifting to the 3rd platform and often (as they should be) the marketing organizations are exerting significant energy to be a large part of this company-wide shift. IDC sees moving to the 3rd platform as mandatory and marketing is no exception.


What can a marketing organization do to make sure they succeed in transforming rather than succumbing to turmoil?


  1. Understand which parts of the business are 3rd platform: These are the areas that should be supported with stronger marketing spend.  These are the areas to integrate new marketing technologies and processes in first. These areas will make or break your entire company. Use this opportunity to position marketing as a driver for the company's future success!
  2. Invest in 3rd platform staff and programs: Supporting 3rd platform products is key, but marketing also needs to shift the way it operates. This means investing in 3rd platform technologies and skills like: marketing technology, sales enablement, content marketing, and data & analytics. These areas create leverage and efficiencies for the entire marketing organization. In short, putting the right people, in the right positions, with the right tools  gives your marketing organization its greatest opportunity for success. 
  3. Have a plan, but be realistic and be patient: The larger the company the more time should be allowed for this organizational shift to the 3rd platform. Marketing leaders must definitively set the end vision for their 3rd platform marketing organization, but at the same time must have the patience to see the entire process through. The path may be non-linear and there will certainly be failures and misdirection along the way, but despite the time and effort needed, the end results will pay back the marketing organization (and company) many times over. 

If you are interested in how your company's marketing organization stacks up as this shift to the 3rd platform continues, reach out to me directly at smelnick (at) IDC (dot) com.

You can follow @SamMelnick on Twitter

Monday, September 15, 2014

Social Buying: The Importance of Trusted Networks during the B2B Purchase Process

Everyone's hot to leverage social selling and social marketing. But what about the other side of the equation? Do B2B buyers use social media for purchasing support?  An IDC study says yes! And contrary to common assumptions, it’s the senior executives who are most enthusiastic.

The most senior buyers are the most active social media users. IDC's Social Buying Study, completed in February 2014 in collaboration with LinkedIn (Slideshare version) studied the online social practices and preferences of B2B buyers. The study concluded that 75% of the B2B buyers studied and 84% of C-level/vice president executives use information from social media and interaction on social networks to make purchase decisions. I'll be talking about this study at the sold-out Sales Connect conference later this week.

Social buying improves decision confidence.  The operative benefit in social buying is the ability to access trusted networks to increase confidence in high-stakes decision making. When asked about their agreement with various statements about social media, respondents gave these top three answers:
  • They want to use vendors that have been recommended by people they know
  • They want to work with sales people who have been referred to them
  • Their social networks are critical for checking references

Social media make accessing trusted networks easier. Buyers have long trusted their offline professional networks for this purpose. Online social networks improve access to trusted existing networks and open up networks that more easily extend beyond traditional boundaries. The bigger the buying decision, the more important social networks become. The study found that social buying correlates with buying influence. The average B2B buyer who uses social networks for buying support is more senior, has a bigger budget, makes more frequent purchases, and has a greater span of buying control than a buyer who does not use social networks.

B2B buyers use different types of social resources at different stages of the decision-journey. It's important not to lump all social media into one big stew of a category. "Social" is a media attribute that enables peer-to-peer audience participation. Some media are highly social and others not at all. 

  1. Early Stage: when buyers are exploring whether to solve their problem, they favor news-type resources. Industry-specific media are #1, internet search (a socially-curated information service) is #2, and microblogs like Twitter are #3.
  2. Middle Stage: when buyers are evaluating solution options, 3rd-party experts become #1, industry-specific media are #2, and internet search is #3.
  3. Final Stage: Online professional networks (e.g., LinkedIn) are buyer's the #1 preferred information source in the final stage of the purchase process, when stakes are highest. This final stage is the riskiest stage because by this time, buyers are teetering on the brink of commitment where they will soon reap the benefits of a great decision or plunge into the abyss.  It's at this point that they most need the confidence advice provided by their professional network. Online network services like LinkedIn make this easy. Third-party recommendations are #2 and topic-specific communities become #3.
ESSENTIAL GUIDANCE
  • Relationship building, referrals, and recommendations are shifting online, so make social marketing and social selling a priority. Social marketing and social selling are not responsibilities that can be relegated to a special team low in the organization. Marketing executives should consider social aspects to be an integral attribute of all campaigns. Sales professionals and others in key customer-facing roles need to be active on social networks. At best, companies will miss an important opportunity to connect and at worst could incur real damage.
  • Respect the context of social interactions. Understand that when using the digital channels, buyers are seeking access to their trusted networks for information to increase decision-making confidence. Social channels are not simply a new avenue for spamming or cold-calling. Instead, each individual must earn his or her place within the trusted network of people that buyers will invite to participate in the purchase decision.

Sunday, August 17, 2014

Organizational Tips for Leading the Marketing Transformation

Do you ever feel overwhelmed by the marketing transformation? You aren't alone.  An IDC analysis of tech marketing staff changes since 2009 reveals that CMOs have had to squeeze traditional staff functions to accommodate five new roles: analytics/business intelligence, marketing technology, social marketing, sales enablement, and campaign management. In 2013, these new five roles collectively made up 14% of the total marketing staff.

IDC invited organizational change expert, Dr. Rick Mirable, to advise our clients on insights for leading more successful organizational change initiatives. Here are some of the tips that Dr. Mirable, who has more than 20 years of diverse business consulting and academic experience, offered:
  • What we believe about change determines how we will respond to change. People hold beliefs about the capability of both company culture and individual people's ability to change. Good change initiatives raise awareness of these biases.
  • Successful change initiatives require that leaders be included. It's not only individuals deep in the organization that need transformation, but leaders must also be role models for the change they want to see.
  • People resist change for many reasons. Change can threaten our sense of security (What will happen to me?) and our sense of competence (Can I learn new skills?). People may worry they will fail. They may not understand why change is needed. Companies may inadvertently reward people who resist change by penalizing people who try new things and fail.
  • Some resistance to change comes from unspoken resentment. Companies must allow for expression of the relevant "inner conversations" that people have with themselves about the change — views that are not explicit to others. Resentment is like dirty laundry — if you don't get rid of it eventually it starts to smell!
  • Some change initiatives fail simply because the organization isn't ready. Assess your readiness and then bring those areas found lacking up to speed before embarking.
  • The communication portions of most change efforts are weak and not consistent over the long haul. The communication must be open and bidirectional. Messages and goals need to be regularly repeated and reinforced.
  • Company culture is essential to sustaining success over time. One cultural attribute proven to accelerate change is the empowerment of individuals to make decisions that further the change goals. It is a best practice to ask people what they want to do (and ask for management permission to do it) rather than telling them what to do. This practice encourages innovation and accountability and drives change deeper in the organization.
  • Don't confuse "movement" with progress. When you get off the freeway during a traffic jam, you may be able to move faster; however, that movement doesn't guarantee that you are actually moving toward your destination or will get to it any more quickly. IDC notes that marketing teams that measure activity rather than outcomes are making this error.
  • Create circumstances for people to motivate themselves. Motivation can include extrinsic rewards such as money. Proven to be even more effective are intrinsic rewards — challenge, learning, responsibility, contribution, and career path advancement. Intrinsic rewards tap into the power of people's passions. Companies are advised to structure people's work so as to allow passion to surface.
  • Reduce resistance by creating a "burning platform." Clarify the risks and benefits of the change and involve the collective wisdom of the group. Give people a role in the change. Involve a person's "head" and "heart" as well as the "feet" of required actions.

Sunday, June 29, 2014

B2B Audience Segmentation Strategies that Work

As companies develop buyer-centric communication, one of most important questions is - how do we effectively group buyers into segments? We perceive that somewhere between the one-size-fits-all dinosaur and the unicorn-like "market of one" exist segmentation strategies that work better than others. But which ones? The secret is discovering self-identifying groups.
 
Great segments are built around groups that have naturally formed and are already connected.
 
For B2B marketers, the most effective audience segmentation strategies are vertical industry (e.g. hospitals, banks, retail), job function (e.g. CFO, head of HR, VP of Analytics), and geography (e.g. location, language, culture). In some cases, communities of interest can also be valuable. Communities of interest evolve around passions and may exist only online.  Examples of communities of interest relevant to B2B marketers may include those interested in security or privacy or a tech company's installed base. These attributes are ones that buyers will not only easily recognize about themselves but tend to be the stimulus for group formation.
 
Using self-identified groups as a primary segmentation strategy has two huge benefits.
  • Content will be more relevant and can be leveraged and streamlined. Self-identifying groups such as the ones described above respond to the same value propositions. They tend to have similar opportunities and/or problems. They will have similar compelling reasons to buy and are served by similar solutions. They tend to have similar business models, organizational structures, and environmental conditions. They share a common vocabulary. They ponder the same questions. They read the same editorial. They understand the same stories; respond to the same examples and analogies. They react to the same warnings. You can create highly relevant, effective, content and sales messages for these groups and that content will work hard.

  • The social network will market and sell for you. People with the attributes described above (vertical industry, job function, geography, communities of interest) are connected in social networks.  They go the same trade shows and recruit each others' executives. They respect the same experts and analysts and use the same suppliers. Social media has revealed to the world what we all know from our own buying experience - people rarely make big decisions by themselves. We seek help and advice from those we trust. We look for stories about how "people like me who have had this problem" have succeeded or failed. We collaborate with like-minded adventurers to try something new.  Imagine your message as a small marble. Throw your marble onto a Kansas wheat field.  Throw another. What are the chances that those two marbles will hit each other? Now imagine throwing your marbles into a shoe box. They bounce into one another with the slightest jolt.  Already connected groups create an echo chamber that can dramatically extend your own outreach effort
 
Consider company size, buying role, and risk profile as secondary audience segmentation strategies.
 
  • Buying role and risk profiles are very useful but used alone are insufficient. Within the overarching audience segmentation strategy, you may want to create sub-segments such as different kinds of buyers and influencers (e.g. financial buyer, technical buyer, decision-maker, researcher, or advisor) or risk profiles (e.g. early adopter, majority, conservative).  Content will be less relevant and you will get virtually no support from the social network. Both of these segmentation strategies are helpful. Buying role helps identify the different objectives and questions that must be answered by content. Risk profile is useful for content tone.  For Early adopters tend to respond well to opportunity-oriented messages ("look how great you can be!") whereas conservative companies tend to respond well to risk-avoidance messages ("look how much pain you won't feel!"). However, unless you are a very large company with brand dominance and a horizontal solution, these strategies are less effective by themselves for winning new business than those described above.

  • Company-size segments help sales but not marketing. Dividing buyers into tiers defined by company size such as enterprise accounts or small and medium sized business (SMB) may be a useful strategy for some business decisions. It informs sales management tasks such as territory definition, quota setting, and sales methodology selection. Company size is also useful for pricing strategies. However, Wal-Mart and GE have little in common other than size and complexity. However, company size provides almost no support for audience messaging.
 
For B2B audience segmentation strategies, your ideal group is the triple crown of vertical, functional role, and geography, or in some cases, communities of interest.  Your particular situation may have some unique requirements.  However, whatever segmentation approach you consider, make sure it passes the litmus test – self-identify as a group that experience similar problems and shares a social network.

Tuesday, June 17, 2014

Marketing to the Data Driven Customer


Customers with digital DNA expect data driven value
The digital native generation is bringing new expectations to brand relationships. They are mobile first, crowd sourced, and data savvy. Their first and most frequent interaction with your brand will be digital and mobile. They find out what's cool, what's trending, and what's most likely to work best for them from their social networks. They don't have emotional attachments to brands because the product is compelling or the advertising is cool. Their emotional engagement comes from unexpected insights that make them more successful. This is the new basis of customer loyalty, advocacy, and lifetime value.

Of course you still need a compelling product and cool ads (or messaging.) But once the prospect is a customer, continual engagement depends on over the top data driven insights. It's no longer enough to just sell the hammers and saws and let the buyer go build their house. You need to monitor how they are using the hammer and saw. You need to deliver success by guiding their use of your product based on the behavior of your most successful customers. You need to leverage your position as the center of your customer universe to share best practices quickly and efficiently. The only way to do that at scale is through data.

Data Ownership vs Data Stewardship
In between the lines, you should be hearing a new philosophy with respect to customer data. Even though legally you "own" it, the data driven customer expects you to act as a data steward. You must treat their data as an asset to be used for their benefit, not just as the basis for driving revenue. Everything you provide to your customers should be designed to bring data back. Your customers should learn that the more data they provide, the more value they get in return - without negative side effects like having their data sold to an irrelevant ad network. Give to get and maintain the trust.

This has tremendous implications. Not only for marketers. Data marketing requires coordination with product development, IT, finance, fulfillment, point of sale, customer support, consulting services, sales. All these groups interact with customers and capture data on different aspects of their behavior - product usage, purchasing, problem resolution, planning, advocacy, etc. They all need to be understood to identify the most successful customers and the traits that drive their success. You can create tiers of services based on the level at which customer provide data. You can create cohorts of customers that exclude direct competitors. You can support exchanges within your customer ecosystem that enable strategic accounts to benefit from preferred peers. You can be extremely creative about how you structure your data marketing services.

The message is that in a world of shrinking product cycles, cheap knockoffs, and copycat services, data marketing is the new source of differentiation. No one else has the data you (should) have on how customers can be most successful with your products. Use it to attract and retain the best and leave the rest to your competitors.


To continue the conversation on data marketing and the data driven customer, contact me: gmurray (at) idc (dot) com.