The time is now for the PR profession to seize the moment and embrace its role as adviser and integrator of marketing technology, which is set to surpass advertising as the biggest expense in a CMO’s budget this year, analysts and communications pros say.
Marketing technology will account for 33% of marketing budgets this year, ahead of external marketing services, which includes paid search and advertising at 32%, according to Gartner’s CMO Spend Survey 2015-2016. It would mark the first time marketing tech has eclipsed external marketing services.
"The result definitely surprised all of us," says Jennifer Polk, research director at Gartner. "But we have certainly seen marketing leaders investing more in technology, and marketing tech becoming a bigger portion of the marketing budget over the last few years."
The number one marketing cost is set to remain the same: labor, at 35%.
PRWeek reached out to a number of CMOs on the topic. Many told PRWeek they have increased spending on marketing technology, although not necessarily at the expense of external marketing services.
Patrick Fitzgerald, SVP of integrated marketing and communications at FedEx, notes that many tools allow marketers to develop customized content, then measure and learn from it.
"Technology has allowed us to learn and consequently shift some of our spend into new social media and other channels," he says. "It has also evolved some of our work with external partners. Our agency partners are working with us in different ways, and we rely on them to work closely with us as technology evolves and adds new elements to our marketing mix."
Breaking down the category of marketing tech, the survey also asked respondents for their organization’s top five investment areas in 2016. Social marketing technology was the top answer, up from number two last year. Polk says that subcategory includes technology helping marketers leverage social media channels such as Facebook and Instagram, be it for managing workflows and approvals or supporting content marketing initiatives. It could also include social listening and analytics tools.
In terms of how the marketing tech budget breaks down, 24% goes towards the purchase of marketing and analytics software and 28% to infrastructure to run the software. However, Polk notes a significant percentage - 25% - also being earmarked for external services to help clients develop, implement, and integrate the technology.
"When marketers talk about creating customer experiences in a digital world, many times it means making corporate functions work together and systems talk to one another that weren’t necessarily designed or implemented with that intention," Polk explains. "In some cases, they are trying to learn internally, but for the most part, I think they are leaning very, very heavily on external services providers such as agencies to figure it out."
In other words, explaining integration has become another way for agencies to demonstrate their value to clients.
"PR agencies and those that used to make their money on big creative campaigns are finding value to clients as system integrators," Polk adds. "They are helping clients better understand how to use the tech they are investing in."
Gartner’s survey elicited responses from 339 marketers with annual revenue of more than $500 million. Headquartered in either the U.S., Canada, or the U.K., the companies represent industries from high tech (26%) and financial services (25%) to retail (18%) and consumer goods (9%).
In recent years, PR pros have made no secret of their goal of owning the social media space and helping clients integrate social tools into their marketing functions.
Henry Hwong, principal at Cunningham Collective, says, "While some areas of tech like social are a little more mature, or [referring to] something that has been around for a long time such as marketing automation software, people are still struggling to figure out how to effectively use it."
"The space isn’t mature yet, and so that’s why so many companies are testing and trying tools to see what works best for them," explains Hwong, pointing out there are literally thousands of marketing tech tools available. "They are also trying to figure out whether these tools belong to IT or the PR team."
He also notes that as the PR industry adds communicators who are technology- and IT-savvy, its opportunity to influence the use of marketing technology grows.
However, some experts contend that although marketers are spending heavily on marketing tech, that doesn’t mean they’re doing it effectively. Jeremy Barnish, who consults with dozens of companies in Silicon Valley on marketing execution through his company Barnish Consulting Group and was previously field communications director for Sun Microsystems, says "marketing tech isn’t working for companies."
"And it isn’t working for a multitude of reasons," explains Barnish. "The different tools individually do a good job, but if you purchase say [automation software] Eloqua and Marketo, they don’t work very well, for instance, with a retargeting tool. The tools don’t integrate well together. Companies also have problems with the quality of their data, and the content of a lot of companies is awful."
He contends PR firms must spend heavily on talent to put themselves in a position to be technology-integration experts.
"I don’t see PR agencies as having the expertise to integrate the tools themselves without making investments in talent, but I think they can and will continue to help with the content side, which is the lower-cost problem but one that can bring a lot of value," says Barnish.