Recognize the Importance of Digital Marketing

Laura McLellan Vice President, Gartner Research Gartner for Marketing Leaders

Gartner for Marketing Leaders

Laura McLellan Vice President, Gartner ResearchGartner for Marketing Leaders

Laura McLellan serves CMOs and other marketing executives, sharing how digital strategies are being integrated with traditional marketing. With an extensive background in marketing and information technology services, she helps CMOs understand how companies are using digital marketing technology and marketing services to improve business results.

Top 5 Issues That I Help Clients Address:• How should the CMO adjust the vision and strategy of marketing to embrace

digital marketing?• How much is being spent on digital marketing, by whom and on what?• How should the CIO and CMO work together in digital marketing and other

technology-related areas?• How should the marketing organization be structured to embrace traditional

and digital marketing?• How is the role of the CMO expanding?

Lead Author

Additional AnalystsJennifer S. BeckVice President, Distinguished Analyst and Gartner Fellow Gartner Research Gartner for Marketing Leaders

Richard FoutsVice President Gartner Research Gartner for Marketing Leaders

Bill GassmanDirector Gartner Research Gartner for Marketing Leaders

Yvonne Genovese Managing Vice President Gartner Research Gartner for Marketing Leaders

Adam SarnerDirector Gartner Research Gartner for Marketing Leaders

Allen WeinerVice President Gartner Research Gartner for Marketing Leaders

Julie Hopkins Director Gartner Research Gartner for Marketing Leaders

Jake SorofmanDirector Gartner Research Gartner for Marketing Leaders

Michael McGuireVice President Gartner ResearchGartner for Marketing Leaders

Andrew Frank Vice President Gartner Research Gartner for Marketing Leaders

G00238768

Recognize the Importance of Digital MarketingPublished: 22 August 2012

Analyst(s): Laura McLellan

Many CMOs are well along the path to integrating digital marketingtechniques and technologies into their organizations. Gartner providesvalidation from marketing leaders that investments in digital marketing dopay off.

AnalysisDigital marketing techniques and underlying technologies are having a profound impact inmarketing investment priorities, budgets, organizational structure, skills and processes. Digital:

■ Forces organizations to rethink their relationship with customers at every stage of the buyingprocess, from research to transactions.

■ Promotes a marketing-led cross-organizational dialogue and efforts to improve customerexperiences.

■ Drives marketers to rethink what technologies their organization requires, those it desires andhow to best acquire and manage them.

When digital technologies facilitate breakthrough enhancements to marketing processes andcustomer experiences, marketers, their organizations and customers win. Yet far too many digitalmarketing activities are one-off or stand-alone initiatives that are not part of a comprehensivestrategy and are not measured against business goals. The purpose of this research is to share abroader view of digital marketing's importance.

What Drives Digital Marketing Investments Today (and It's Not ROI)

A majority of marketers that we interviewed, 54%, invest in digital marketing because they believeit's key to their competitiveness. But they are not certain of the return on their investment. For thatsurvey, which took place in April 2012, we interviewed 98 marketing executives in companies withrevenue greater than $1 billion, and who had or were considering a digital marketing function. Weasked the executives: "Thinking about digital or interactive marketing, its potential impact, and theinvestment required to participate in the space, which statement best describes your organization'sposition?"

Figure 1 shows that another 42% of companies did see the ROI and were investing for the samereason — to gain an early advantage. Only 4% of companies did not know if there was strategicvalue, but were investing to test the impact.

Figure 1. Position on Investment and Impact of Digital Marketing

We believe that digital or interactive marketing is important, but we do not know whether there is strategic value and are putting a toe in the water to gauge its impact and ROI.

Digital or interactive

marketing is strategic to our

competitiveness, we understand the

ROI and we are investing to get

early advantage.

4%

42%The ROI of digital or interactive marketing is cloudy, but we are investing because we believe it is strategic to our competitiveness.

54%

Source: Gartner (August 2012)

What Will Drive Digital Marketing Investments Tomorrow

Figure 2 shows that 75% of respondents believe digital marketing will be very or extremelyimportant to the overall success of their organization — not just marketing, but their company —one year from now and even more believe the same to be true two years from now. We askedmarketing executives: "How important is the use of digital or interactive marketing to the overallsuccess of your organization today, 12 months from now and 24 months from now, on a scale of 1to 7, where 1 is not at all important and 7 is extremely important?"

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Figure 2. Sizing Up Digital Marketing's Importance to an Organization's Success

48%

75%89%

Today In 12 months In 24 months

Perc

enta

ge o

f Res

pond

ents

Very or Extremely important

Source: Gartner (August 2012)

What Activities Digital Marketing Helps to Succeed

Then, we asked marketing executives: "Rate how important your organization's digital or interactivemarketing strategy is to the success of each of the following, on a scale of 1 to 7, where 1 is not atall important and 7 is extremely important?"

The top answer? Brand building and differentiation, as shown in Figure 3. Next on the list: customercommunication, which is becoming a real-time activity. Understanding customer satisfaction rankedhigh, too.

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Figure 3. Where Digital Marketing Helps You Succeed

Mean

Not at all important

Extremely important

5.9

5.5

5.5

5.0

5.0

4.9

4.8

4.4

1 2 3 4 5 6 7

Brand building and differentiation

Consumer communication

Understanding customer satisfaction with your product

Shop-ability: Improving the ability for the shopper to find and select your product

Gathering product or services innovation insights

B2C sales relationships (brand to consumer)

Services associated with your product to drive differentiation

B2B sales relationships

Source: Gartner (August 2012)

Digital Technologies and Services That Contribute to Success

In May 2012, Gartner conducted additional research — this time, it was a Web-based survey with251 marketing executives who support marketing in U.S. and European companies, and werebuyers or influenced the purchase of digital marketing applications technology and services.

We posed the question, "Which of your organization's 2012 marketing strategies are most importantto its success?" to only the marketing executives.

Figure 4 shows the top five responses, which include: strengthening the brand across all channels(29% of respondents) and improving the customer experience (25%). The next two responses are amix of techniques and results — better using marketing technology and services, and acceleratingspeed through real-time analytics and rapid response. For more information about the requirementfor marketing to act in real-time, see the Recommended Reading section.

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Figure 4. 2012 Marketing Strategies Most Important to Success

Result

3%

11%

11%

25%

29%

9%

13%

15%

16%

18%

18%

10%

12%

14%

11%

Embrace social media

Accelerate speed (real-time analysis & rapid response)

Better utilize marketing technology/services

Improve the customer experience

Strengthen brand across all channels

Most important 2nd most 3rd most

57%

55%

38%

34%

30%

Technique

Source: Gartner (August 2012)

The results from our two surveys show how brand building and improving customer experiences arehighly important to two different groups of marketers, underscoring the impact that digital marketinghas on these marketing objectives.

Where Increased Investment in Digital Marketing Technologies Are Planned

For our May 2012 survey, we asked the 251 marketing executives plus another 261 IT managerswho support marketing: "What are your company plans for investing in the following digitalmarketing areas over the next 12 months?"

Mobile and tablet applications ranked highest for first-time investments as Figure 5 shows.

In addition, the majority of those participating in the May 2012 survey said they will increase theirinvestments in social media, mobile applications, CRM and customer analytics over the coming 12months.

For the most part, companies anticipate making only small cuts in marketing technologyinvestments. Spending on email marketing and dashboards are two areas that are more likely thanothers.

Some significant differences exist between U.S. and Europe, by company revenue size, and bymarketing versus IT respondent. Look for upcoming research with more details from this Gartner

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survey of 512 marketing and IT managers (80% B2B and B2C end-user companies and 20% high-tech providers).

Figure 5. Planned Digital Marketing Investments, Next 12 Months

% CurrentlyInvesting

93%

92%

96%

95%

89%

95%

92%

89%

92%

92%

92%

86%

89%

85%

RANKED BY PLAN TO INCREASE

8%

10%

11%

9%

9%

8%

11%

10%

7%

18%

6%

7%

15%

11%

32%

33%

36%

40%

42%

42%

43%

45%

47%

48%

51%

54%

58%

61%

41%

40%

36%

35%

36%

38%

32%

35%

38%

20%

35%

32%

17%

18%

4%

6%

3%

8%

4%

4%

3

2

2

3

3

3

2

3

15%

11%

14%

8%

8%

8%

11%

8%

5%

11%

5%

4%

8%

7%

Reputation management

Score cards or dashboards

Single view of customer

Email marketing

Search engine optimization

Campaign management

Predictive analytics

Collaboration tools

Content management

Tablet applications

Customer analytics

CRM

Mobile applications

Social media

1st time investment Increase No change Decrease No plans to invest

Source: Gartner (August 2012)

Conclusion

CMOs and digital marketing leaders who want to learn how their efforts compare with those of theirpeers can look to upcoming research from Gartner for Marketing Leaders. We'll track digitalmarketing spending and impact. Extracts such as the one contained in this note will be offered on aregular basis; longer analysis with findings and recommendations will also be shared. If you wouldlike to learn about the differences in responses by respondent demographics on all research results,we invite you to contact to the author.

What to Do Next

■ Allocate a percentage of your budget for emerging digital marketing technologies andtechniques — and don't be afraid of failure — within limits.

■ Build in processes to test and measure digital marketing results — from pilots and ongoingoperations — so that you'll have supporting data if you need to kill a project or justify additionalfunding.

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■ Communicate the importance and success of digital marketing in four ways:

■ One that mirrors your CEO and board of directors' top priorities, such as business growth,customer attraction and retention, and increased competitiveness.

■ One that crosses functional boundaries and addresses sales, marketing and customerservice at minimum, possibly lines of business and other functions such as productdevelopment and HR.

■ One that maps to key elements of your marketing investment strategy, such as brandstrength, sales campaigns and customer experience.

■ One that focuses on marketing tactics.

Recommended Reading"Three Ways to Adapt to a World That Rewards Speed"

"Using Digital Marketing to Differentiate Yourself from Competitors"

"Ensure Emerging Trends and Technologies Advance Your Marketing Strategy"

Evidence

This note is based on two Gartner primary research projects. In April, 2012, we conducted phoneinterviews with 98 marketing executives in U.S.-based companies with revenue greater than $1billion, who had or were considering a digital marketing function. In May 2012, we conducted aWeb-based survey of 512 executives (divided between marketing and IT managers), in the U.S. andEuropean companies who were buyers or influenced the purchase of digital marketing applicationstechnology and services.

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