December 2017, IDC #US43283717

IDC PERSPECTIVE

IDC's Tech Marketing Benchmark Survey, 2017: Executive Summary of Results

Warren Lane Kathleen Schaub

EXECUTIVE SNAPSHOT

FIGURE 1

Executive Snapshot: Gaining Insight from the 2017 Tech Marketing Benchmark

Source: IDC, 2017

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Within tech companies. marketing is gaining influence (and budget). As per IDC's 2017 Tech MarketingBenchmark Survey, the tech CMO received an average of 4.2% budget boost. Marketing is also gainingmore share of the sales-to-marketing cost envelope. While some aspects of program and people spendremain perennially true (advertising still tops the list of program spend, for example), other trends such asthe rapid rise of content marketing are surprising and compelling.

Key Takeaways

• Marketing investment patterns vary, sometimes dramatically, by product sector, business model. andgrov...Th percentage. To gain most useful insights, CMOs should look at the practices of similar

corn ponies.

- Companies are adopting modern marketing competencies — but at significantly different rates.

- As companies' dependency on marketing rises. CMOs must accept greater responsibility for beingcustomer experts. better controllers of their resources, and collaborators.

Recommended Actions

Next 6 months

• Obtain the expanded version of IDC's Tech Manrceting Benchrnark Suivey-resultsandfor a custom analysis comparing your company with closer peers.

• lnfomi your 2018 budget with benchmark data. The goal is not to copy— everycompany is unique. But be curious about where you make different decisions.

6-12 months

• initiate discussions on short-term "nudges" and longer-term transformations thatwill be needed for scale, new markets. or customer experience improvements.

• Participate in lDC's 2018 Tech Mgrketing Benchmark Surveyto receive the fullTech Marketing investment Guide for 2019 (materials available in June 2018).

©2017 IDC #US43283717 2

SITUATION OVERVIEW

About the Executive Summary

IDC publishes a 60-page version of its 2017 Tech Marketing Benchmark Survey results called IDC's Tech Marketing Investment Guide for 2018: Benchmarks, Key Performance Indicators, and CMO Priorities. This executive summary provides highlights of that more extensive document. For more

information about obtaining the comprehensive Marketing Investment Guide for 2018 or obtaining a

custom version of the document comparing your company's results to a cohort of similar companies,

contact your IDC account manager or Warren Lane at wlane@idc.com.

Tech Marketing Budgets (and Influence) Are Growing

The 15th annual Tech Marketing Benchmark Survey from International Data Corporation's (IDC's)

CMO Advisory Service finds that marketing budgets among the 79 technology companies surveyed

will increase by an average of 4.2% in 2017. Those same companies also expect an average revenue

increase of 4.2% for the same period. IDC's finding shows that 2016 and 2017 represent the best two

years in a row for marketing investment change since 2006 and 2007 (see Figure 2). The 75% of

companies in the survey that reported revenue growth increased marketing budgets by 6.3%. Healthy

marketing budgets indicate a company's confidence in its future. IDC believes that sales sell today and

marketing sells tomorrow.

FIGURE 2

Year-On-Year Company Revenue Growth Compared with Marketing Investment Change, 2011–2017

n = varies

Source: IDC's Tech Marketing Benchmark Survey, 2011–2017

2

1

0

- 6.5

12011 2012

3.73.5

1. 1.41,3

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2,5

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-0.52013 Z014 2015 2016 2017

• Average company revenue growth

• Average company marketing investment growth

©2017 IDC #US43283717 3

In 2017, the average tech company marketing budget is 2.4% of revenue. However, this percentage

varies widely by company size, sector, sales model, and growth. Software companies with greater than

50% of revenue from cloud have an average of 6.4% market budget ratio (MBR), with some

companies' budgets being even larger.

Marketing Gaining a Greater Share of the Sales-to-Marketing Cost Envelope

Within the group of tech companies participating in IDC's Tech Marketing Benchmark Survey,marketing is also gaining ground within the sales-to-marketing cost envelope. In the survey, IDC asked

participants "if your company had a dollar to spend across marketing and sales, what percentage

would be allocated where?" In 2017, the companies surveyed reported that 19% of that dollar would be

spent on marketing and 81% on sales. In 2016, companies stated within that same dollar, marketing

would be allocated 16% of the share and 84% to sales. IDC finds that the percentage of that dollar

spent on marketing is even higher among growth companies and among those companies that utilize a

customer journey model.

Marketing Staff Is Gaining Share

Marketing, and especially data-related marketing, jobs are growing faster than sales jobs. Data from

the U.S. Bureau of Labor Statistics for the years 2014–2024 (see Figure 3) forecasts tech-related sales

jobs to grow at the same rate of overall job growth (approximately 7% over the period). Sales as a job

category remains much larger than marketing (i.e., there are many more salespeople in the workforce

than marketing staff). However, marketing's higher-than-average job growth rate means that marketing

is "taking share" in the labor force. IDC believes that this change is happening because, as customers

increasingly spend more of their buying time in digital channels, companies find that marketing skills at

communicating via media and audience persuasion are essential to gaining revenue today.

These shifts of investment from sales into marketing are further evidence that the marketing and

selling process is a mirror reflection of the buying process.

FIGURE 3

U.S. Marketing and Sales Job Growth Rate, 2014–2024

Source: U.S. Bureau of Labor Statistics, 2017

Sales jobsAverage U.S.

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©2017 IDC #US43283717 4

Marketing Program Investment Highlights

For technology companies, advertising and events remain the largest marketing program categories

that vendors invest in. Out of the 14 categories on IDC's 2017 marketing investment taxonomy,

advertising and events count for an estimated 47% of the program spend. In 2017, for the first time,

content marketing has become the third-most invested program, switching places with direct marketing

(see Figure 4). IDC views this change as positive because content marketing is a critical modern

marketing competency — but notes that if this rise represents more "random acts of content" and too

many marketers simply jumping on the bandwagon without much planning, marketers won't see

benefit. The best content is research driven, contributes to better storytelling, and is aligned to the

needs of customers at different stages of their decision journey. Best practice companies are adopting

what IDC calls a collaborative "supply chain" model for content development rather than having siloed

marketing teams developing content independently. For more information, see The Content Marketing Supply Chain: Meeting the Demand for Content Marketing at Scale (IDC #US41626216, August 2016).

FIGURE 4

Marketing Program Investment Mix in 2017

n = 79

Source: IDC's Tech Marketing Benchmark Survey, 2017

Marketing People Investment Highlights

Each year since the benchmark survey has been conducted, product and solutions marketing have

been the largest staff category. This year, the same is true, with vendors investing an average of 18%

on product and solutions staff. The second-largest staff category is field marketing with companies

investing an average of 15% (see Figure 5). Though content marketing is the third-largest program

investment category, it is the fifth largest in staff investment. IDC recommends that companies audit

their people-to-program ratio in content marketing to ensure the appropriate balance. IDC also notes

the emerging job role of the loyalty and advocacy marketing staff. Though the average participant

Advertising

Events

Content marketing

Direct marketing

Sales and partner enablement

MDF and co-op fundsWe bsite

Public relationsIntelligence

Marketing technologyBranding

Social rnarketing

Analyst relations

Other

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©2017 IDC #US43283717 5

invests only 1% in the loyalty and advocacy role, a recent IDC study showed 90% of IT vendors did not

have loyalty marketing or advocacy marketing programs or staff in place (see What Is Marketing's Role in Customer Loyalty and Advocacy? — Examining the Role of Post-Purchase Marketing, IDC

#US42216117, March 2017). IDC finds that customer loyalty and advocacy are crucial to increasing

company revenue, especially with new buying habits predicated by digital transformation, online

behavior, and a subscription-based economy.

FIGURE 5

Marketing Staff Allocations in 2017

n = 79

* Influencer marketing includes all analyst relations, public relations, and social marketing staff.

** Intelligence and analytics include business intelligence and analytics, competitive intelligence, market intelligence, and social

intelligence staff.

Source: IDC's Tech Marketing Benchmark Survey, 2017

Product and solutions marketing

Field marketing

lnfuencer marketing*

Direct marketing

Marketing operations

Content marketing

Events

Partner marketing

Campaign management

Intelligence and analytics**

Website

Creative services and brand identity

Industry and audience marketing

Sales enablement

Marketing technology

Advertising

Loyalty and advocacy marketing

Executive and other

117.9

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©2017 IDC #US43283717 6

Additional Marketing Investment and Organizational Data Available

The full benchmark document, IDC's Tech Marketing Investment Guide for 2018: Benchmarks, Key Performance Indicators, and CMO Priorities, contains detailed data by product sector for each of the

aforementioned categories. Many of the categories also have detailed subcategories of data. IDC also

provides 15+ key performance indicators (KPIs), including:

Marketing budget ratio (marketing budget/total revenue)

Marketing investment change (year-over-year change in total marketing budget)

Program-to-people ratio (program spend versus people spend)

Marketing staff ratio (total marketing staff/total company staff)

Awareness-to-demand ratio (percentage of marketing resources allocated to awareness

building versus demand generation)

Sales-to-marketing cost envelope ratio (percentage of company resources allocated to sales

versus marketing)

Digital ratio (percentage of marketing program resources allocated to digital marketing versus

nondigital marketing)

Custom Benchmark Reports

IDC's CMO Advisory Service can produce custom benchmark reports comparing client marketing

organizations with a smaller group of peers. Using the data from the companies that have participated

in this year's benchmark survey, IDC and clients work together to create a "target group" of roughly

four to seven companies to analyze their marketing data and provide KPIs and spending breakdowns.

This comparison gives vendors insights into their spending on programs and staff investments.

ADVICE FOR THE TECHNOLOGY MARKETER

The more change that occurs in the way that customers buy, the more relevant marketing's skills and

expertise become to their company's success. It's marketing's time to make its way to the forefront.

The digital disruption offers CMOs an unprecedented opportunity to become revenue drivers and

architects of the customer experience. But this advancement is not without its price.

In the words of Winston Churchill, "The price of greatness is responsibility." IDC has identified three

essential areas where CMOs and their teams must increase marketing performance and productivity to

be worthy of this new power. These three areas are:

Become the customer experts: Within their companies, marketers must become the team that knows more about the customer than anyone else. Strategies include accumulating and sharing tribal knowledge about customers through studies, market intelligence, and social

marketing, channeling the voice of the customer and becoming the customer-metric czar.

Become better controllers: As CMOs garner more people and program resources, they must

also become more accountable. Improving stewardship of these resources and the resulting performance means investing in the necessary technology, data, teams, and organizational

structures.

Become collaborators: Use your digital and customer expertise to help sales, IT — and senior executives — get to the next level of customer centricity. But don't become too internally

focused. Marketing does not have internal customers, only partners. There is only one

customer — and that is the actual customer.

©2017 IDC #US43283717 7

IDC's 15th annual Tech Marketing Benchmark Survey has shown a progressive increase in marketing,

becoming the go-to organization for working with today's empowered, digitally savvy customer.

We invite tech and digital services companies, as well as digital divisions in other companies, to

participate in next year's survey. We encourage you to reach out to IDC's CMO Advisory Service to

help you get started and see how your company is doing among industry leaders. This will help you

understand your marketing allocations in your company and show if you are strategically in line with

industry trends.

LEARN MORE

Related Research

IDC FutureScape: Worldwide CMO 2018 Predictions (IDC #US43148817, October 2017)

Hierarchy of Marketing Metrics: Measuring Marketing Success Like a CFO (IDC

#WC20170907, September 2017)

IDC's Worldwide Marketing and Intelligence Taxonomy, 2017 (IDC #US41235117, May 2017)

Building the Modern Marketing Workforce: An Interview with 10 CMOs (IDC #US24489317,

April 2017)

What Is Marketing's Role in Loyalty and Advocacy? - Examining the Role of Post-Purchase Marketing (IDC #US42216117, March 2017)

Which Marketing Staff Roles Are Most Centralized? (IDC #US42209617, January 2017)

Organizational Silo Busting: Collaboration Tips for Improving Customer Experience (IDC

#US42056516, December 2016)

The Transformation of Regional Marketing (IDC #US41980716, December 2016)

Synopsis

This IDC Perspective offers CMOs and their management teams and C-suite colleagues a window into

the results of IDC's 2017 Tech Marketing Benchmark Survey. A 60-page extended study with details

on this survey (now in its 15th year) is available for purchase. Interested clients can contact their IDC

account manager. IDC's Tech Marketing Benchmark Survey provides evidence-based quantitative

insight for marketing planning, performance and productivity management, and transformation into a

modern marketing powerhouse.

"High-performing CMOs want to infuse data into all aspects of their decision making. IDC's research

shows that tech companies' growth and revenue have become increasingly reliant on capabilities that

only marketing can provide. Considering this critical dependency, marketing plans and budgets cannot

be built simply on gut feelings and last year's budget," says Kathleen Schaub, vice president of the

CMO Advisory and Customer Experience practices. "The marketing function evolves quickly. CMOs

gain confidence when they see data on how fast and how far their peers adopt new trends."

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory

services, and events for the information technology, telecommunications and consumer technology

markets. IDC helps IT professionals, business executives, and the investment community make fact-

based decisions on technology purchases and business strategy. More than 1,100 IDC analysts

provide global, regional, and local expertise on technology and industry opportunities and trends in

over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients

achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology

media, research, and events company.

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