By Linda Forrest
Francis kicked off the launch of this blog by listing to some of the more common objections made by technology companies about why they’re not investing in marketing. One of these straw man arguments, an all-too-common refrain, is a lack of budget. From that first post:
“Lack of budget is the next most common excuse for not engaging in marketing. This one has more legitimacy but it also betrays a failure by marketers. If we can’t get the funds we need to do the job we believe needs to be done, it’s because we have failed to adequately plot the line between cause and effect, between marketing outflow and revenue income. What rational person would decline to invest a second and third dollar into a marketing program that has proven that the first dollar actually produced the revenue we said it would?”
We’ve long said that marketing is an investment, rather than a cost centre, and that’s absolutely the case. A business that views marketing merely as an expenditure rather than a tool to increase market share and revenue is doomed to failure. Marketing requires investment of money, time and resources to be successful. To borrow a line from a Canadian bank’s advertising campaign, “you’re richer than you think” when it comes to having “budget” for marketing. And here’s why.
The financial investment in your marketing is just one part of the puzzle; the resources you can devote to marketing may not represent a huge bump in your costs but may, ultimately, have substantial impact on your bottom line. Below, I’ll examine some of the trends shown in published reports about how B2B companies are spending their money, and how they’re investing their time and energy in the hopes of boosting revenues.
Let’s first look at finances.
Are marketing budgets constrained? Yes, they are. So, how marketing budgets are allocated is more important than ever. According to published research by MarketingSherpa about expected investment in 2011:
“The majority of B2B organizations are increasing marketing budgets for inbound marketing tactics, including social media, virtual events and webinars, SEO and PPC. When considering outbound marketing tactics such as telemarketing, direct mail and print advertising, the majority of B2B organizations are either not changing or decreasing budgets.
“The growing trend of utilizing inbound marketing tactics is a result of the cost effective reputations of these marketing channels, and when applied with established sales funnel processes that include a lead nurturing stage for non-sales-ready leads and lead scoring methodologies to determine when a lead is ready to be contacted by a salesperson, organizations are able to effectively generate a high volume of qualified leads for sales teams.”
Now, let’s examine the investments made in terms of time and human resources.
Not every company has significant marketing bones, either internally or externally, to implement marketing. And not every company needs to have an extensive marketing team in order to be effective. In the case of start-ups, the executive team, often by necessity, acts as proverbial chief, cook and bottle-washer, with marketing falling to the same person or people responsible for, among other things, product development, sales and even janitorial duties.
The great news for the modern entrepreneur is that we’re operating in a digital age where oftentimes you’ve got a direct line to your customer on digital channels. Make no mistake, these efforts take considerable time but they can be incorporated into the duties of executives at even the smallest of companies. The bad news is that social media is less effective as a means of brand building and demand generation than other marketing elements, according to research by MarketingSherpa.
Further research supports those findings. Forrester Research, a respected technology analyst firm, shared the following as its precis on its B2B Marketers 2010 Budget Trends report. It indicates that marketers last year were investing in areas that are effective. But, because of constrained budgets, they moved slowly to adapt to the new digital communications paradigm:
“Business-to-business (B2B) marketers place Web seminars, search marketing, the company Web site, and social networking sites like Facebook and LinkedIn high on their list of spending plans for 2010 campaigns. Yet sales support demands, fixed headcount, and traditional spending patterns keep B2B program budgets looking pretty much the same from year to year. To make B2B budget planning less habitual, Forrester admonishes business marketers to step up the digital transformation pace and shift budget dollars from designing outbound campaigns to fostering community interactions.”
In blogging about last year’s reports, the chief analyst who worked with MarketingProfs to survey B2B marketers to determine marketing mix and budget trends, noted that in 2009:
“B2B marketers clung to unimaginative spending habits. Instead of taking the digital plunge, most respondents hedged their bets in 2009 and simply cut spending across all the tactics they used. Marketing budget allocations for 2009 looked identical to 2008, with marketers spending less on trade shows, for example, by attending fewer of them. Yet physical events continued to gobble up an average of 20% of program spending. Sticking with old patterns, B2B marketers spent an average of between 10% and 13% of campaign budgets on traditional tactics like print ads, executive events, direct mail, and PR, while fully admitting these tactics did not help increase awareness or generate demand as much as they would have liked.
“What does all of this mean? That now is the time to rethink the marketing mix and take some bigger risks when allocating marketing dollars online. While digital and social media will not eclipse conventional outbound communications anytime soon, marketers can no longer ignore the fundamental change that customers’ working online has had on marketing strategy and campaign spending. To keep pace with the digital transformation, B2B marketers must shift from designing outbound campaigns to fostering community interactions.”
The good news is that the MarketingSherpa data from one year later indicated that B2B marketers were doing exactly that.
In summary, when it comes to modern B2B marketing, companies need to assess the return on investment not only for their marketing dollars, but their time and resources as well. Develop a cohesive and well-examined strategy and select tactics that are proven to drive revenue generation. Then, measure the effectiveness of those tactics. Continue those that are generating leads and consider those that are increasing awareness and building your brand. Eliminate those that have proven ineffective. After all, it’s more than just dollars invested in these activities, it’s time and resources as well.
Images: Marketing Tech Blog