Despite surviving the first round of COVID-19 related budget cuts, nearly 60% of marketing technology leaders now say they expect moderate to severe cuts to their martech budgets, according to Gartner, Inc. These highly protected martech investments are now under the microscope, with 35% of marketing technology leaders initiating a process to overhaul their martech stack.
In the Gartner Marketing Technology Survey 2020, Gartner surveyed 387 marketing technology leaders from July through September 2020 to understand current, and future, martech spending trends.
These looming budget cuts come at a time when martech stack utilization remains a struggle for many marketing organizations. The Gartner survey revealed that marketing organizations still utilize only 58% of their martech stack’s full breadth of capabilities – a level that has remained flat since 2019. As marketers invest in tools and add-on capabilities that ultimately go unused, marketing leaders put their credibility on the line. Interestingly, 66% of respondents facing a pandemic-related cut to their martech budget have delayed a purchase of at least one previously approved marketing technology solution.
“Low levels of utilization present a real risk for marketing organizations, particularly in light of looming budget cuts or ones that have already hit,” said Ben Bloom, senior director analyst in Gartner’s Marketing practice. “Three quarters of marketing organizations that are facing budget cuts also struggle with utilization. That’s a real gut punch – one that demands attention to streamlining technology acquisition and improving usage.”
Gartner research shows that when it comes to utilization, success hinges less on the actual technologies selected and more on the people and processes involved. The leading impediments to increased martech utilization include lack of cross-functional collaboration, solutions with unused features, disorganized and siloed customer data and the overall complexity of the current martech ecosystem.
Despite the current turbulence, marketers are surprisingly confident of their business impact, with 81% of respondents believing their current martech stack is effective at meeting their organization’s business objectives. Nevertheless, 20% of respondents who say their stack is effective also agree that they struggle to utilize the full capabilities of their stack, which translates into capabilities that lie fallow and therefore cannot generate business value.
“What we are seeing is a false sense of security for many marketing organizations,” added Mr. Bloom. “When times are good and the organization is growing, under-performing investments may be able to evade scrutiny. Overconfidence is a major risk that could impede critical business evolutions, and marketers will be hard pressed to deflect blame to unfulfilled vendor promises.”
The Gartner Marketing Technology Survey 2020 also revealed a sharp reversal from a “best-of-breed” approach, with 59% of marketing leaders preferring to select their technologies using an “integrated suite” approach instead. Respondents with a best-of breed approach report using slightly more of their martech stacks than those with an integrated suite. However, those with a preference for integrated suites are significantly more likely to say their martech stack is meeting their organizations' business objectives (84%) compared to those following a best-of-breed approach (74%).
“The prevalence of key impediments for teams following either approach suggests that neither organizing principle has resulted in clear and sustained gains,” said Mr. Bloom.
To make better use of martech investments and resources, and mitigate risks for future budgetary cuts, marketing leaders should consider the following:
- Implement Regular Audits of the Martech Stack: Marketing leaders should assess the team’s utilization of the martech stack by conducting regular audits of deployment and usage. Look for opportunities to eliminate fringe tools or accelerate adoption of new solutions.
- Determine Your Best Vendor Approach: Marketing leaders must strive to maintain balance between the hyped simplicity of integrated suites and the potential integration challenges of a best-of-breed approach. Do this by requiring even the largest of martech vendors to compete for the business on a best-of-breed basis.
- Collaborate to Overcome Integration and Utilization Challenges: Overcome talent and training challenges by tapping into available internal resources, such as IT, and recruit the help of external agency partners or martech integrators to help ramp up new technologies and use cases.
- Adopt an Agile Approach: Deliver value more quickly and minimize waste in the face of fast-changing business demands by adopting agile methodologies. Activities such as “sprints” and proofs of concept (POCs) enable greater martech agility.
Additional details on improving martech stack effectiveness is available to Gartner for Marketers clients in the report “2020 Marketing Technology Survey: Cost Pressures Force Martech Optimization and Innovation.”
About the Gartner Marketing Symposium/Xpo
Gartner analysts will provide additional insights during Gartner Marketing Symposium/Xpo, which takes place virtually, December 1-3, 2020. The conference provides marketing leaders actionable advice about the trends, tools and emerging technologies they need to deliver business results. Gartner analysts address the biggest opportunities, challenges and priorities marketers face today, including data and analytics, customer experience, content marketing, customer insight, marketing technology (martech) and multichannel marketing. Follow news and updates for the event on Twitter at #GartnerMKTG.
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