Marketing technology spending has come under pressure amid skepticism that marketers’ tools will generate the ROI they’re hoping for. Meanwhile, low utilization of martech stacks’ capabilities hasn’t helped. Yet these headwinds don’t seem to be deterring CMOs around the world from expecting martech budget increases, according to a report [download page] from Tealium and LXA (formerly MarTech Alliance).
The global survey of 603 CMOs or equivalents from B2B and B2C organizations with 200+ employees found that 83% expect to increase their marketing technology spending over the next year, for an average budget increase of slightly more than 11%. Perhaps this is due to less concern with martech ROI: 7 in 10 respondents said they can accurately measure the effectiveness of their martech investments, up from 62% last year.
Armed with this growing capability and increased spending, marketing technology now accounts for a new high of 30% of respondents’ marketing budgets this year, up from 24% share last year, per the report. In so doing, martech has overtaken staff/labor costs (28% share, down from 35% last year), with media and agency/services spending trailing at 21% share each.
By comparison, recent research from Gartner finds a much more even split between these resources, with marketing technology occupying 25.4% share of the budget, compared to 25.6% share for paid media, 24.6% share for labor, and 23.3% share for agencies/services.
The Tealium and LXA analysts attribute the shift from labor to martech spending to having “more flexibility around headcount,” whereas companies “can’t always easily change multi-year martech licenses. Others have come to rely on technology to deliver long-term efficiency savings and to achieve marketing goals.”
In fact, the leading driver behind changes to organizations’ martech spending is a desire to enhance customer experience and engagement, as cited by roughly 6 in 10 respondents. This aligns with previous research that found that the top goal for marketing stacks is to improve the customer experience.
Interestingly, one of the leading barriers to martech investment cited in this latest study is marketing budget constraints, as reported by around half of respondents. The analysts suggest that this is due to inflation-driven vendor price increases as well as by marketers wanting to experiment with new tools.
The biggest barrier to martech investment, though, is differentiating between a large number of similar suppliers. A prior survey also found that having to choose between too many options is the biggest challenge when making martech investment decisions. Despite this issue, 72% of respondents prefer a best-of-breed approach to marketing stack design that leverages multiple vendor platform solutions, as opposed to just 20% who express a preference for an all-in-one single-vendor solution.
Given the multitude of tools being used, it’s not too surprising that the most oft-cited culprits for previous martech tools not delivering on expectations are teams lacking capacity to make good use of the tools and the organization lacking the skills and talent to use the tools effectively.
Indeed, almost two-thirds (64%) agreed that the market is lacking marketers with the necessary martech, data or marketing operations skills and knowledge.
Little wonder, then, that Maestros – the “operators orchestrating the technology powering [marketers’] campaigns” – have been identified as the path to a “fast-track career in marketing.”