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Tech Industry

IDC: Marketers must measure up

The research firm says marketing departments at tech companies must come up with concrete proof of their worth in today's lean times.

Tech marketers often work to create intangibles like brand identity and "buzz"--but research firm IDC says marketing departments must come up with concrete proof of their worth in today's lean times.

In a presentation Tuesday, IDC said a recent survey of tech companies found that CEOs and chief financial officers are giving marketing departments a "measurement mandate" to assess their return on investment.

It's rare for companies to measure their marketing efforts using both quantitative and qualitative methods, said IDC analyst Rich Vancil. "There are very few companies that have done a good job," he said. "It's the exception rather than the rule."

IDC's survey, which focused on business-to-business marketing, also showed that marketing budgets are stabilizing. According to Vancil, 70 percent of companies said they are spending the same amount or more on marketing programs this year compared with last year.

Marketing budgets on average represent about 4 percent of revenue for companies in the survey.

After the dot-com bust, Internet marketing budgets dried up and questions were raised about Web advertising's effectiveness. But CMR/TNS Media Intelligence, a market research company owned by Taylor Nelson Sofres, has forecast that Web advertising sales will grow by 7.4 percent this year. IDC's February survey of 90 hardware, software and information technology services companies seemed to bolster that prediction. IDC found marketing budgets shifting away from advertising and events and toward Web and direct marketing efforts.

IDC didn't define the "advertising" or "Web" categories in its survey. But advertising typically refers to print and broadcast ads, while Web marketing generally would include Web ads and Web-based seminars, Vancil suggested.

Vancil questioned whether companies are being wise with marketing investments. He said 75 percent of companies plan to launch new products or services this year, while 25 percent of companies seem to be cutting all or some of their budgets for "awareness building" such as advertising and events.

He suggested companies should assess marketing efforts using both "internal" and "external" measures. Internal methods include measuring the budget as a percentage of revenue as well as setting a target for the number of new customers to be generated from an investment--and checking to see if the goal was met. An example of an external approach, according to IDC, is getting data on customer preference patterns.

The bottom line, Vancil said, is that the often-creative folks of marketing departments are facing an era of scientific-like scrutiny from top managers. "It is a different world for marketers," he said. "In good times, there wasn't a lot of pressure to measure."