Thursday, 28 June 2012

CMO's to spend more on tech than CIO's

“By 2017, the CMO will spend more on IT than the CIO,” Gartner.


This will sound amazing to people outside the digital marketing sector, but for those of us inside, it is obvious.  It is what has been pushing revenue growth in the sector for the last 5 years and likely will continue to keep those growth rates double digit for the next 5 years.


There is a great piece done by Razorfish that explains this shift in detail.  

In summary it is happening because of three powerful technology trends that will eventually transform every business: 
  1. "big data" - as customer interactions increasingly become digitised and accumulate exponentially, companies find themselves sitting on massive, potentially valuable, data mines.  the challenge is finding the gold.  much easier said than done. 
  2. "cloud computing" (aka ubiquitous computing) - Ostensibly this is about all of our devices (laptops through to TVs) being tethered to a central repository, stored in "The Cloud" (internet), of our information and files.  It is really a story about the mobile device, however.  The mobile device is radically transforming the way we interact with our customers.  the story is far from complete, but for now just think of how many times you interact with your mobile device each day.  research varies from almost 40 to over 100 times every day.  in marketing, this what is known a "touch point" and in yesteryear it was thought that three touch points lead to sale.  now it is likely more with the torrent of information that confronts us but even if it is double that, the potential to reach customers and *engage* them is significantly greater and the potential ROI significantly higher.  Certainly much more intimate than the shotgun broadcast messaging of classical advertising.  And herein lies the rub of shifting marketing budgets from classical to digital marketing.
  3. "realtime customer data" - allowing businesses to make revenue and cost decisions today, rather than the traditional quarterly strategic change or monthly operational shifts.  interactions now provide deep insights in the digitally savvy organisation.  Amazon looks at over 500 customer metrics daily.  And Amazon is not alone.
All of these trends have been building momentum for many years, but are now becoming hot topics in the mainstream.  (Incidentally, this shift budget is one of the main reasons I felt comfortable moving from the network and data centre sector to marketing.)  Technology's primary focus is no longer about risk mitigation (traditionally the chief role of a CIO), but rather about taking calculated market risks, based on insights, to improve business performance.  Marketers and CIO's who dont get this, will lose their jobs.  CEO's who dont get this will eventually lose their businesses.
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