[Research Round-Up] Salesforce Survey Examines the State of Marketing

Source:  Salesforce

(This month's Research Round-Up focuses exclusively on the latest edition of the State of Marketing survey by Salesforce. The new Salesforce survey is a large global survey of B2B and B2C marketers, so it provides a broad perspective on the priorities, challenges, and attitudes of the marketing community.)

Salesforce recently published the findings of its latest State of Marketing survey. The latest survey is the ninth edition of the Salesforce research. It was in the field February 5 - March 12, 2024.

Survey Demographics

• The survey produced 4,850 responses from marketing decision-makers
• Respondents were drawn from 30 countries across North America, Latin America, Asia-Pacific, and Europe
• Respondents worked in 18 industry verticals
• 50% of the respondents worked in B2C companies, and 50% worked in B2B or B2B2C companies
• 39% of the respondents were VP-level or above
• 50% of the respondents were with mid-market companies (101 - 3,500 employees), 30% were with small and medium-sized companies (1 - 100 employees), and 20% were with large enterprises (over 3,500 employees)

Marketing Performance Levels

Salesforce classified survey respondents based on their self-reported level of marketing performance and used these categories to report some survey findings. The three categories used in the survey report are:

• High performers - Respondents who were completely satisfied with the overall outcomes of their marketing investments.

• Moderate performers - Respondents who were highly satisfied with the overall outcomes of their marketing investments.

• Underperformers - Respondents who were moderately or less satisfied with the overall outcomes of their marketing investments.

Marketers' Top Priorities and Challenges

Salesforce asked survey participants to identify their top priorities and biggest challenges, and the following table shows how respondents answered those questions.

It shouldn't be surprising that survey respondents identified "implementing or leveraging AI" as their top priority and their biggest challenge. Artificial intelligence, particularly generative AI, has been the hottest topic in marketing since OpenAI released ChatGPT in late 2022.

It's also notable, but not surprising, that the top priorities and the biggest challenges are nearly identical. These survey respondents clearly believe that for marketing to have the greatest possible impact on the business, they must successfully address their biggest challenges.

The State of AI

The survey revealed that the implementation of AI is still in its early stages. Thirty-two percent of all respondents said they have fully implemented AI in their operations.

Salesforce did find that high performers were 2.5x more likely than underperformers to have fully implemented AI. Forty-two percent of high performers said they have fully implemented AI, compared to only 17% of underperformers.

The survey also asked participants how they were using or planned to use AI, and the top five use cases identified by respondents were:

1. Automating customer interactions
2. Generating content
3. Analyzing performance
4. Automating data integration
5. Driving best offers in real time

While marketers are excited about the potential benefits of AI, they also have concerns about embracing the technology, particularly generative AI. The top five concerns about generative AI identified by survey respondents were:

1. Data exposure or leakage
2. Lack of necessary data
3. Lack of strategy or use cases
4. Inaccurate outputs
5. Copyright or intellectual property concerns

The State of  Marketing survey also provides valuable data on several other topics, including:

• The strategies and sources marketers are using to collect customer data
• Where and how much marketers are using personalization in their marketing programs
• How marketers are measuring marketing performance

The Salesforce State of Marketing survey is one of the research studies I pay attention to every year. I wish Salesforce provided a breakdown of responses between B2B vs. B2C companies and by country (or at least region), but even without this more granular reporting, the survey still provides important insights.

[Book Review] An Essential Guide to Artificial Intelligence for Marketers

Source:  Trust Insights

The marketing world has been going gaga over ChatGPT for the past four months. 

The generative AI application from OpenAI was released to the public on November 30, 2022, and analysts have estimated that it reached 100 million monthly active users in January of this year.

The capabilities of ChatGPT have amazed many users, including me. More importantly, the buzz surrounding ChatGPT has ignited an arms race among tech companies to develop and roll out new or enhanced applications enabled by artificial intelligence. 

For example, Microsoft - which had already invested $1 billion in OpenAI - recently confirmed that it will invest an additional $10 billion in the company, and announced that it is incorporating some ChatGPT-like functionality in its Bing search engine. Google, Salesforce, Hubspot, and a host of other firms have also recently announced new or enhanced applications featuring generative AI capabilities.

The application of artificial intelligence to marketing isn't new, but the intense reaction to ChatGPT by both the public and tech companies suggests that we are on the cusp of a step change in the use of AI in marketing.

Until now, many marketers have been able to function effectively with only a superficial understanding of artificial intelligence. But, as AI becomes increasingly integral to marketing at more and more companies, it will be imperative for marketers to have a better grasp of AI principles and techniques.

Christopher S. Penn, the co-founder and Chief Data Scientist of Trust Insights, and a recognized authority on analytics, data science, and machine learning, has written a book that will help marketers begin their journey toward a better understanding of artificial intelligence.

AI For Marketers:  An Introduction and Primer (Third Edition, 2021) provides a sound introduction to basic AI techniques and illustrates how AI can be used to improve marketing performance.

What's In the Book

AI For Marketers contains 18 chapters, but the book's content falls into four broad topic categories.

In the opening two chapters, Penn discusses the importance of AI in marketing and explains why marketers often struggle with AI. He argues that one reason marketers find AI challenging is that, " . . . AI and its prerequisites are deeply entrenched in mathematics and statistics - two fields which are not strong points for most marketers." (Emphasis in original)

Penn devotes four chapters to an explanation of the basic techniques of artificial intelligence. He defines AI and explains algorithms, models, and types of machine learning. He also covers the vital importance of good data and provides a useful data quality framework.

The third major topic category in AI For Marketers is a description of several practical applications of AI in marketing. Penn places his discussion in the context of problems that AI can help marketers address. For example, he explains how attribution analysis can help marketers forecast what strategies, tactics, and tools will deliver the best results, and how dimension reduction and feature selection can help marketers identify which data points are important.

Lastly, Penn discusses how companies can successfully incorporate artificial intelligence in their marketing efforts, and how marketers can prepare their careers for AI. He lays out seven steps that describe the process of becoming an "AI-first company," and he covers the people and process governance capabilities that companies need to be successful with AI.

My Take

Writing a book about the use of artificial intelligence in marketing is a daunting task because the field is evolving so rapidly that a book can easily become outdated soon after it's published.

Writing a book about AI for marketers is even more challenging because most marketers have little, if any, education or training in statistics or computer science, both of which are essential components of artificial intelligence.

Christopher Penn does an admirable job of addressing both of these challenges in AI For Marketers. He focuses on the core fundamentals of artificial intelligence and on the basic applications of AI in marketing. He also explains AI concepts and techniques in an informal, easy-to-understand way, making the subject accessible to marketers who haven't been trained in statistics and computer science.

In the book, Penn argues that marketers don't need to become practitioners of AI in the sense of learning statistics, data science, and machine learning. He uses the analogy of "chefs and farmers" to illustrate his argument. He wrote:

"Talented chefs take great ingredients and, using the right tools and skills, transform those ingredients into delicious food . . . However, what's the likelihood that the chef is also a farmer . . . Almost none . . . [Chefs] may have some sense of what's gone into an ingredient, but they're not the ones to focus on the details of the ingredient's creation . . .

The typical outcome of an artificial intelligence platform is a model that creates insights or makes decisions. The software . . . plugs into our marketing infrastructure and spits out highly refined products from the raw ingredients - data, algorithms, and analyses. The machines are the farmers, and we are the chefs." (Emphasis in original)

I would contend that Penn's argument goes a little too far. I believe that many marketers - particularly those in more senior roles - will need to delve a little deeper into artificial intelligence than Penn suggests.

Penn wrote that marketers ". . . should know what great data, algorithms, models, or decisions look like . . ." It's difficult - probably impossible - to determine whether an algorithm is "great" and fit for purpose if you don't know how the algorithm works and what its strengths and limitations are. While AI For Marketers is a solid introduction to the topic, it doesn't go quite deep enough to provide this level of information.

Even with this one caveat, I strongly recommend Chris Penn's book. AI For Marketers is a great resource for marketers who are beginning their journey toward a greater understanding of artificial intelligence and its expanding role in marketing.

One final point. The third edition of AI For Marketers was published in 2021 and therefore doesn't capture the tsunami of developments in AI that have occurred over the past few months. I subscribe to Chris Penn's Almost Timely Newsletter, and he has already provided numerous valuable insights regarding the recent developments in AI.

I have no inside information, but I suspect that a fourth edition of AI For Marketers is already in the works. In other circumstances, I might recommend that you wait a bit for the new edition of the book. But artificial intelligence is poised to become so important for marketers that I think you should read the third edition now and be prepared to read the fourth edition when it appears. 

[Book Review] A Valuable Introduction To the Complex World of Marketing Technology

 "MarTech is marketing."

Source:  Kogan Page

That's the tagline adopted by Third Door Media a few years ago for its MarTech conferences and martech.org website. And while some have argued that the tagline goes a little too far, few marketing thought leaders or practitioners would dispute the idea that marketing and technology have become nearly inseparable.

Scott Brinker, the MarTech conference chair and editor of the Chiefmartec Blog, captured the interconnectedness of marketing strategy and marketing technology when he wrote, "Strategy alone isn't enough. You've got to be able to execute on it. And martech has become integral to marketing execution. That's what 'martech is marketing' really gets at." 

Marketing technology has been discussed in hundreds, if not thousands, of ebooks, white papers, blog posts, webinars, and conference presentations over the past two decades. But there are surprisingly few full-length books that specifically address this vitally important topic.

So, a new book by Darrell Alfonso is a welcome addition to our body of knowledge regarding marketing technology. The Martech Handbook:  Build a Technology Stack to Attract and Retain Customers (Kogan Page, 2022) provides a valuable introduction to the complex and dynamic world of marketing technologies. 

Darrell Alfonso is well-suited to write about this topic. He is currently the Director of Marketing Strategy and Operations at Indeed.com, and he was previously Global Marketing Operations Leader at Amazon Web Services. 

What's In the Book

The author used an expansive approach in writing The Martech Handbook. The book addresses - or at least touches on - all of the aspects of marketing technology that you would expect to find in an introductory treatment of the subject.

In the first chapter, Mr. Alfonso describes the phenomenal growth of martech, reviews the history of martech, and provides an overview of the martech industry. In Chapter 2, he lays out the business need for marketing technology and discusses the key business goals that martech can help companies achieve.

The next five chapters of The Martech Handbook cover several of the "nuts and bolts" aspects of marketing technology, including:

• The key categories of marketing technology (Chapter 3)
• The basic attributes of a "martech stack" (Chapter 4)
• How to design an effective martech stack (Chapter 5)
• How to identify and select "core" marketing technology platforms and applications (Chapter 6}
• How to identify and select the right "ancillary" martech applications (Chapter 7}

Mr. Alfonso then turns to several issues relating to the management of marketing technology. In Chapter 8, he reviews some of the basic principles of managing a martech stack, and in Chapter 9 he discusses martech measurement, governance, and enablement.

In Chapter 10, he discusses the vital importance of getting buy-in for marketing technology. This includes buy-in from company leaders for martech investments and buy-in from the people who will use the technology platforms and applications.

Mr. Alfonso concludes The Martech Handbook with a chapter devoted to how marketing leaders can drive continuous improvement in the performance of their marketing technology systems.

My Take

The Martech Handbook is a welcome addition to our "library" of resources regarding marketing technology. The book is well-written, and Darrell Alfonso does an excellent job of making what can be a complex and technical topic easy to understand. The author also has extensive hands-on experience with several types of marketing technologies, and this enables him to bring a real-world perspective to the book.

The most important thing for potential readers to understand is that The Martech Handbook is mostly written at a very basic level. As I noted earlier, this book provides a sound introduction to many important aspects of marketing technology, and the key word here is introduction.

The Martech Handbook will be particularly useful and valuable for any marketer who is not already familiar with marketing technology tools and systems. This might include:

• Recent graduates who have just started their first marketing job
• Marketing students who want to learn more about the marketing technology landscape
• Marketers who have had limited experience with most types of martech (e.g. a marketer at a small company who has only worked with e-mail marketing software)
• A marketer who has recently been given responsibility for evaluating new types of marketing technology

This book would also be an excellent resource for a person working in another business function (e.g. sales, customer service, finance, etc.) who needs to better understand the capabilities and the potential benefits and pitfalls of marketing technology solutions.

If you have significant experience working with a variety of marketing technology applications, The Martech Handbook may not benefit you greatly. But, if you aren't familiar with the landscape of marketing technology, or if you have colleagues who fit this description, The Martech Handbook will be a great learning resource.

[Research Round-Up] The State of Artificial Intelligence in Marketing

(The marketing world has been captivated by ChatGPT for the past several weeks. The generative AI-powered chatbot developed by OpenAI has been widely hailed by some members of the marketing community, and widely criticized by others. While the jury is still out on the actual impact of ChatGPT on marketing, the use of artificial intelligence has been one of the hottest topics in marketing for the past few years. So, it seems appropriate that this month's Research Round-Up features two recent surveys that explore the state of AI in marketing.)

2022 State of Marketing and Sales AI Report by the Marketing AI Institute and Drift

Source:  Marketing AI Institute and Drift

• A survey of more than 600 marketers representing a wide range of industries and company sizes
• 49% of the respondents were director level or above
• 65% of the respondents were based in the United States, the UK, India, Canada, and Germany
• 38% of the respondents work exclusively in B2B - 41% work in both B2B and B2C
• Survey open from June 1, 2021 to June 1, 2022

The objective of this survey was to gain insight into how marketers are using artificial intelligence to support their activities and programs. Overall, the survey findings indicate that the use of AI in marketing is still in the early stages.

Two-thirds of the respondents (67%) said they were still learning how AI works and exploring use cases and technologies. Just 15% of the respondents reported that they had achieved wide-scale implementation of AI.

When asked how they would classify their understanding of AI terminology and capabilities, 45% of the respondents rated their level of understanding as beginner, 43% said intermediate, and only 12% said advanced. In addition, only 29% of the respondents said they are highly confident or very highly confident in their ability to evaluate AI-powered marketing technologies.

The research found that marketers recognize the importance of AI and expect its use to grow significantly in the near future. Fifty-one percent of the survey respondents said AI is very important or critically important to their marketing success over the next 12 months. And another 33% said it is somewhat important.

Over three-quarters of the survey respondents (77%) said they are currently automating 25% or less of their marketing tasks using AI, but a similar proportion of respondents (74%) said they expect more than 25% of their tasks will be automated using AI over the next five years.

The final part of the survey report provides interesting data on 50 marketing AI use cases across five categories of marketing activities - planning, production, promotion, personalization, and performance. This portion of the research should be particularly useful for any marketer who is evaluating potential AI use cases.

The state of AI in 2022 - and a half decade in review (McKinsey & Company)

Source:  McKinsey & Company

• This article discusses the major findings from the 2022 McKinsey Global Survey on AI
• Survey produced 1,498 responses
• Survey respondents represented "the full range of regions, industries, company sizes, functional specialties, and tenures."
• Survey was in the field from May 3 to May 22, 2022 and from August 15 to August 17, 2022

Note:  McKinsey's Global Survey on AI focuses on the use of artificial intelligence by business organizations, not exclusively on the use of AI in marketing. However, some of the survey findings are specifically about the use of AI by the marketing and sales function.

McKinsey has been conducting surveys to track the use of AI in business for the past five years, and the research shows that AI adoption has more than doubled during that period. In the 2022 edition of the survey, 50% of the survey respondents said they had adopted AI in at least one business function, up from 20% in the 2017 edition of the survey.

However, the survey also showed that the proportion of survey participants using AI has plateaued between about 50% and about 60% for the past four years.

The research found that the average number of AI capabilities that organizations use has doubled over the past four years, rising from 1.9 in the 2018 survey to 3.8 in the 2022 survey.

The investment in AI has increased significantly over the past five years. In the 2017 edition of McKinsey's survey, 40% of the survey respondents at organizations using AI said that more than 5% of their digital budgets went to AI; in the 2022 edition of the survey, more than half of the respondents reported that level of investment. In addition, 63% of the respondents in the 2022 survey said they expect their organization's investment in AI to increase over the next three years.

Of the ten most commonly adopted AI use cases identified by respondents in the 2022 survey, three were marketing and sales use cases - customer service analytics, customer segmentation, and customer acquisition and lead generation.

Lastly, 70% of the survey respondents at organizations using AI for marketing said their marketing and sales function realized revenue increases in 2021 from the adoption of AI.

 

Why a Cautious Approach to Marketing Analytics Makes Sense

Fueled by the exponential growth of online communications and commerce, marketers now have access to an immense amount of data regarding customers and potential buyers. Marketers have recognized that this vast sea of data can be a rich source of insights they can use to improve marketing performance and drive business growth.

The use of data in marketing has a long history, but it's been one of the hottest topics in marketing circles for the past several years. The benefits of "data-driven marketing" have been touted so frequently by so many industry analysts, consultants and technology providers that leveraging data is now viewed as essential for effective marketing. As a result, many marketers have made substantial investments in data collection and analytics capabilities.

The Real-World Use of Marketing Analytics

Despite the abundance of data and the increasing power and sophistication of data-related technologies, the actual use of data analytics in marketing isn't as pervasive as all the hype would suggest. In the September 2022 edition of The CMO Survey, respondents reported that marketing analytics is used in 48.9% of projects 

A survey of marketing analytics users conducted by Gartner earlier this year produced similar findings. In that research, respondents said marketing analytics influences just over half (53%) of marketing decisions.

When Gartner asked survey participants why analytics isn't used to support more marketing decisions, the two most frequently cited reasons related to data quality and management - "data are inconsistent across sources" and "data are difficult to access."

However, Gartner's survey also found that the practices of business decision makers are impacting the use of marketing analytics. For example, a third of the respondents said decision makers tend to use the output of analytics when it supports the action they've already decided to take and to ignore such output when it points to a contrary action. Hello, confirmation bias!

In addition, about a fourth of the survey respondents said decision makers don't review the information provided by marketing analytics, reject the recommendations provided by marketing analytics, or decide to rely on gut instincts to make their decisions.

Satisfaction With Marketing Analytics is Mixed

Research has also found that satisfaction with the impact of marketing analytics is mixed. For example, the September edition of The CMO Survey asked participants to rate the contribution of marketing analytics to company performance using a 7-point scale, where 1 = "Not at all" and 7 = "Very highly." 

Fifty-eight percent of the survey respondents rated the contribution of marketing analytics at 5 or above, indicating a relatively high level of satisfaction with the impact of analytics.

But in earlier research by Gartner, 54% of the surveyed senior marketing leaders - CMOs and VPs of marketing - said marketing analytics had not produced the impact on their organization they had expected.

Some industry analysts have suggested that underutilization and the perceived lack of business impact may cause some company leaders to reduce their investment in analytics capabilities. 

Commenting on the findings of Gartner's 2022 survey, Joseph Enever, a Senior Research Director in the Gartner marketing practice, said, "By 2023, Gartner expects 60% of CMOs will slash the size of their marketing analytics department in half because of failed promised improvements."

A Cautious Approach to Analytics May Be Wise

But is it altogether bad for marketing leaders to approach the use of marketing analytics with a healthy amount of caution? I don't think so, and here's why.

Marketing analytics can fail to deliver the expected benefits for several reasons. First, the hype surrounding the use of data and analytics in marketing has raised the expectations marketers and other business leaders to inflated levels. And second, marketers are still learning how to generate insights from data and analytics that will make meaningful contributions to business performance.

It's also becoming clear that the data most marketers are relying on, and how they are using that data, can produce "blind spots" that lead to less-than-expected results. An October 2020 article in the Journal of Marketing identified four of these potential blind spots.

1. "First, marketing data may result in prioritizing short-term growth ahead of long-term growth."
2. "Second, marketers may overly rely on historical, internal data at the expense of forward-looking, external growth opportunities."
3. "Third, marketing data may create a preference for more easily measured digital touchpoints at the expense of offline channels."
4. "Finally, marketers may rely on available data in lieu of representative or predictive data."

(Emphasis in original)

The fourth blind spot cited in the Journal of Marketing article alludes to a broader issue relating to the use of marketing analytics and also points to an important limitation of data-driven marketing.

As I noted earlier, marketers now have access to a huge amount of data regarding their customers and potential buyers. But the data most marketers are using to fuel analytics, while vast, is not comprehensive. It doesn't provide a complete picture of the wants, needs or mindset of a potential buyer. Therefore, the recommendations produced by analytics are not always as accurate as we often assume, and this partially explains why analytics doesn't always deliver the expected results.

Given this limitation, business leaders (including marketing leaders) should view the outputs of marketing analytics with a critical eye and not become overconfident in the accuracy of those outputs or the business impact they will produce.

Like all humans, we marketers have a strong tendency to base our decisions on the evidence that's readily available, and we tend to ignore the issue of what evidence may be missing. Daniel Kahneman, winner of the 2002 Nobel Prize in Economic Sciences, has a great way to describe this powerful human tendency. He uses the acronym WYSIATI, which stands for what you see is all there is. 

The vast amount of data at our fingertips and the seductive capabilities of marketing analytics technologies can easily lead us to believe that the data we collect and analyze is the only thing that matters, and that simply isn't true.

I'm not arguing that marketers should not use data, analytics and data-driven marketing. These tools and techniques can be immensely powerful. The key is to use them wisely and to remember they're neither complete nor perfect.

Image courtesy of Rick B via Flickr (Public Domain).

The Inevitable Convergence of ABM and Classic Demand Gen Marketing

For the past few years, Forrester Research has been arguing that account-based marketing and "classic" demand generation marketing are converging. In 2019, several Forrester analysts went so far as to predict that the term "ABM" would disappear by 2024.

Forrester's recent ABM research confirms that the convergence of account-based marketing and lead-based demand generation is beginning to occur. In the 2022 State of ABM Survey, Forrester asked survey participants about the current state of the relationship between their ABM and demand generation efforts and about how they wanted the relationship to change in the future.

Eighty-two percent of the survey respondents said their "desired future state" is to have ABM and demand generation efforts that are broadly aligned (sharing people, processes and tools) or fully aligned (combined in a single function). That was up from 54% of respondents in the 2020 edition of the survey.

The evolution of account-based marketing has actually foreshadowed its convergence with classic B2B demand generation. When ITSMA (the Information Technology Services Marketing Association) introduced the concept of account-based marketing in 2003, it defined ABM as, "treating individual accounts as markets in their own right."

As originally conceived, therefore, account-based marketing was not intended to replace a company's demand generation strategy or tactics for most customers or prospects. Instead, ABM was designed to be a "special" approach to marketing that would be used with a small number of the company's most strategic, high-value customers or prospects.

Within a few years, however, many companies began expanding their ABM programs to encompass a broader range of customers and prospects. In its 2016 Account-Based Marketing Benchmarking Survey, ITSMA identified three types or "flavors" of ABM.

• One-to-One ABM - "Marketer works with key account teams to develop and implement highly customized sales and marketing programs for individual accounts; typically with 5-50 strategic accounts."
• One-to-Few ABM - "Marketer works with specific sales teams to create customized campaigns for small groups or clusters of accounts with similar business attributes or imperatives . . . usually 5-15 accounts per cluster."
• One-to-Many ABM - "Marketers work with sales to target priority accounts at scale, using technology to support issue-based campaigns with personalization; typically hundreds or more named accounts."

Collectively, these three types of ABM can cover a wide swath of the target market at most B2B companies, and the reality is, there is little difference between one-to-many ABM and modern, well-designed demand generation programs. They use similar marketing tactics and channels (digital advertising, email marketing, webinars, etc.), and they typically employ similar levels of targeting and personalization.

In the 2021 ABM Benchmark Study by ITSMA and the ABM Leadership Alliance, about half (48%) of the survey respondents said they are using one-to-many ABM. Given this level of usage and the commonalities mentioned above, it shouldn't be surprising that ABM and demand generation are converging.

Technology Convergence Is Well Underway

The convergence is already well underway in the marketing technology space. Several providers of B2B marketing automation software have added features to make their solutions more capable of supporting account-based marketing programs, while some of the leading providers of ABM software have added capabilities (such as native email) that support classic demand generation programs.

These developments are likely to accelerate the convergence of ABM and demand generation by making it possible for marketers to manage the combined function within a single technology platform.

What Convergence Doesn't Change

The convergence of account-based marketing and classic demand generation marketing will have a significant impact on how B2B companies organize and manage their demand generation operations. But it's also important to recognize that this convergence will not change the basic recipe for effective demand generation.

Account-based marketing is a powerful approach to demand generation because it is based on two fundamental principles of B2B commerce. First, many B2B buying decisions are made by buying groups, not by individuals, and ABM recognizes this fact.

Second, not all customers or potential customers are equally valuable, and the three varieties of ABM enable B2B companies to align their marketing and sales efforts - and the related investments - with the estimated value of each customer or prospect. Marketing and sales professionals can use highly effective, but resource-intensive, one-to-one ABM programs with a small number of their most valuable customers and prospects, while using lower-cost one-to-many ABM tactics for those customers and prospects that are desirable, but have lower potential value.

Image courtesy of XoMEoX via Flickr (CC).

[Book Review] "The Right Way To Select Technology"

Source:  Rosenfeld Media, LLC

It's been crystal clear now for several years that marketing and technology have become deeply entwined, and that the number of marketing-related technologies has been growing at an exponential rate. The inaugural (2011) version of Scott Brinker's marketing technology landscape graphic contained about 150 solution providers. The 2022 version of the graphic includes nearly 10,000 technology solutions. So, the marketing technology landscape has grown by an astounding 6,521% since 2011. 

Because of the growing reliance on technology, marketing leaders are acquiring new technology tools on a fairly regular basis. In a 2021 survey of marketers by MarTech, two-thirds (67%) of the survey respondents said their organization had replaced at least one marketing technology application in the previous 12 months.

There are an abundance of resources that provide advice on how to select new technology. For example, many technology vendors produce buying guides for the types of technologies they offer, and several analyst/consulting firms regularly publish "rankings" of various types of technology applications.

One of the best resources for marketers is The Right Way To Select Technology by Tony Byrne and Jarrod Gingras (Rosenfeld Media, LLC, 2017). Tony Byrne is the founder and Jarrod Gingras is the Managing Director of Real Story Group, a buy-side technology research and advisory firm. It works exclusively with enterprise customers, and the firm emphasizes that its advice is vendor agnostic.

The Right Way To Select Technology provides a detailed road map for making sound technology buying decisions, and it contains a wealth of practical suggestions and tips. The book focuses primarily on information technologies that an enterprise acquires to improve customer or employee digital experiences. However, the authors note that the methodology described in the book can be used for selecting any information technology.

What's In the Book

The Right Way To Select Technology contains six major parts.

Part I (Chapters 1-3) - In Part I, the authors discuss the "business foundations" that are essential for making smart technology buying decisions. They argue that a realistic business case is needed for prospective technology acquisitions, they describe the importance of choosing an appropriate selection team, and they explain why the selection team needs to determine how decisions will be made before the selection process begins.

Part II (Chapters 4-6) - Part II of the book focuses on how companies identify the business needs and articulate the "requirements" associated with a proposed technology purchase. In Chapters 4 and 5, the authors introduce the idea of using principles of user-centered design in the technology selection process, and they argue that user stories should be a core component of the process. Chapter 6 outlines the kinds of questions that the selection team should be asking prospective vendors.

Part III (Chapters 7-9) - In this part, Byrne and Gingras describe how technology selection teams can ensure they identify the right vendors to consider, and they explain how companies can decide which solicitation vehicle (request for information vs. request for proposal vs. request for quote) will work best for their situation.

Part IV (Chapters 10-12) - Chapters 10 and 11 discuss how selection teams can interact effectively with prospective vendors, including how to create RFI's/RFP's/RFQ's that actually work and how to respond to vendor questions. Chapter 12 explains how selection teams should review vendor submissions and how they should approach the task of reducing the number of vendors under consideration.

Part V (Chapters 13-14) - In this part, Byrne and Gingras cover two of the most important steps in the technology selection process. In Chapter 13, the authors describe how to structure and conduct demo sessions that will provide the selection team relevant and useful information. Byrne and Gingras strongly argue that selection teams should include a competitive proof of concept - a "bake-off" - in their selection process. A bake-off would typically involve two vendor finalists. Chapter 14 explains how to design and conduct an effective bake-off.

Part VI (Chapters 15-17) - The book concludes with chapters that explain now to effectively negotiate with vendors, how to make the final selection, and how to adapt the process described in the book when selecting a services firm such as a consulting firm or a systems integrator.

My Take

The Right Way To Select Technology is a must-read for anyone who is responsible for acquiring information technology solutions for their organization. The book is well organized and clearly written, and it covers the technology selection process in a comprehensive and practical way.

The central theme of the book is that the most important goal of business leaders and managers in any technology selection process is to identify the vendor and solution that will be the "best fit" for their organization.

The emphasis on choosing best-fit technologies is present in virtually all of the steps of the selection process described in the book, but it plays the starring role in how the authors approach expressing the requirements for a new technology tool.

Byrne and Gingras recommend capturing requirements primarily through user stories. A user story is a short, real-world narrative that describes a company's available data, work processes, business needs and desired business outcomes.

A user story speaks from the perspective of a specific user persona, which can be defined as an archetype of a type or group of users. Users will always include certain company employees, but for some types of technologies, users could also include customers, suppliers and/or channel partners.

User stories enable the technology selection team to capture how real people will interact with a technology application and what they need to accomplish.

Selecting the right technology tools is now one of the most important responsibilities of business leaders, including marketing leaders. That's what makes The Right Way To Select Technology a valuable resource and a must-read.

New Insights on the State of Marketing Technology

A recent survey by WARC and BDO (with interviews by the University of Bristol) provides more evidence that the role of technology in marketing is continuing to grow. Martech:  2020 and Beyond is based on a survey of more than 750 brands and agencies located in North America, the U.K., Europe, and APAC. The survey was fielded in June and July 2019.

The explosive proliferation of marketing technologies has been widely discussed and well documented. The inaugural (2011) edition of Scott Brinker's marketing technology landscape graphic included about 150 companies. The 2019 version of the graphic includes 7,040 technology solutions.

Market Size and Growth

WARC and BDO estimate that total spending on marketing technology in North America and the U.K. will reach $65.9 billion this year, up from $52.4 billion in 2018. This equates to a year-over-year growth rate of 25.8%. WARC and BDO had previously estimated that 2017 spending in these two markets was $34.3 billion. So, in North America and the U.K., the market for marketing technology has nearly doubled over the past two years.

The WARC/BDO study found that marketers' commitment to technology is still growing. On average companies in North America and the U.K. will spend 26% of their total marketing budget in 2019 on technology tools and services, compared to 23% of the budget in 2018. While spending on technology seems to have leveled off in the U.K., it's still growing robustly in North America, as the following table shows:

A slight majority (53%) of the global survey respondents expect their spending on marketing technology to remain stable over the 12 months following the survey. However, of those respondents who believe their technology spending will increase, 51% expect the growth to be more than 10%. Growth expectations among North American respondents were more temperate. Only 35% of those respondents expect spending increases of more than 10%.

Need and Utilization

Fifty-five percent of the global survey respondents said they have all the marketing technology tools they need, but the findings regarding technology utilization were decidedly mixed, as the following table shows:

As the table indicates, only 24% of the respondents reported that they have all the tools they need and fully utilize them, while 41% acknowledged that they aren't fully utilizing the technology tools they have.

Among respondents from North American companies:

• Only 15% said they have all the technology tools they need and are fully utilizing them.
• 57% said they don't have all the technology tools they need.
• 45% said they aren't fully utilizing the technology tools they have.

Current Uses

In terms of how companies are using marketing technologies, more than half of the survey respondents reported using a technology tool to support each of the following marketing disciplines or activities:

• Email (79% of respondents)
• Social media (77%)
• Content marketing and management (68%)
• Customer relationship management (65%)
• Analytics, measurement and insights (65%)
• Mobile (60%)
• Data management (60%)
• Advertising technology (58%)
• Commerce, lead generation and sales (53%)

Key Takeaways

The WARC/BDO survey provides two important takeaways for marketers. First, the marketing technology space is extremely dynamic. The number of technology solutions available to marketers is still increasing, although the pace of development may be slowing slightly. And second, it's likely that most marketers will always be challenged to keep up with the rapid pace of technological innovation.

Top image source:  WARC/BDO

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Three Key Takeaways from Gartner's New CMO Spend Survey

Gartner has just published the results of its 2019-2020 CMO Spend Survey. The research report is based on survey responses from 342 marketing executives in North America and the U.K. at companies with $500 million to $5 billion or more in annual revenue.

The Gartner study produced several valuable data points, but I want to focus on three takeaways that I found particularly interesting.

Marketing Budget Growth

Gartner's survey indicates that marketing budgets will come in at 10.5% of company revenue in 2019, down from 11.2% in 2018. This agrees closely with the August 2019 edition of The CMO Survey, which found that current marketing budgets represent 9.8% of firm revenues.

However, most of the Gartner survey respondents were optimistic that their marketing budgets will increase in 2020, as the following table shows:

Gartner observed that this CMO optimism exists despite widespread concerns about a global economic slowdown among many economists and financial industry pundits. In fact, when survey participants were asked how the overall economic environment would likely affect their company's performance over the next 18-24 months, 86% of respondents indicated they believe the future impacts will be positive.

The above table also shows that marketing executives with B2B manufacturing companies are significantly less optimistic about future budget growth than other marketing leaders. In my view, this is likely due to the economic slowdown in manufacturing that is already occurring, and to the uncertainty surrounding Brexit in the U.K.

Martech Spending Falls

Gartner's study found that spending on marketing technology represents 26% of the total marketing budget in 2019, down from 29% in 2018. However, Gartner does not believe that this year-over-year decline indicates that marketing leaders are reducing their long-term commitment to technology.

In the research report, Gartner observed that spending on marketing technology has varied considerably over the years and that part of this variability is due to normal investment cycles. The report also referred to other Gartner research, which had found that some marketers are struggling to implement and fully utilize new technology tools.

I generally agree with Gartner's thinking on this issue. The explosive proliferation of marketing technologies is well documented. And with most technology tools, it takes time to assimilate a new technology and begin to fully utilize it. So, it's not surprising that technology spending is volatile, and we shouldn't read too much into a one-year decline.

The Rise of Marketing Operations

The third interesting takeaway from the Gartner CMO Spend Survey relates to the growing importance of marketing operations. The Gartner survey asked participants what capabilities they consider most vital for the execution of their marketing strategy over the next 18 months. The following table shows the percentage of respondents who included each capability in their top three choices:

As the table shows, 30% of survey respondents included marketing operations as a top three capability. Survey respondents also estimated they they are currently spending 12.6% of their marketing budget on marketing operations. Other research by Gartner (the 2019 Marketing Organization Survey) found that two-thirds of marketing organizations now have a discrete marketing operations function.

Gartner argues that the growing complexity of marketing and a shift toward a more decentralized marketing organizational structure are driving the need for a marketing operations function that is focused on creating excellence in planning and execution across the entire marketing organization. Gartner also observed that the scope of the marketing operations function is growing, and now includes diverse responsibilities such as technology management, talent management, budgeting, and supplier management.

Top image source:  Gartner, Inc.

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Where Marketers are Missing the Mark with Customers

The New York chapter of the American Marketing Association has just published a research report that should be required reading for marketers. The Techlash is Here report addresses several aspects of marketing in the world's two largest economies - the United States and China. While the findings about China are interesting, this post will focus on the U.S. results.

The U.S. part of the research consisted of two quantitative surveys and several interviews with marketing leaders. One survey included 502 marketing executives - about 200 from agencies and approximately 300 from brand owners. The second survey polled 508 U.S. consumers. The consumer sample was matched to population data through weighting.

This research revealed two significant disconnects between U.S. consumers and U.S. marketers, one pertaining to social media, and one relating to the appetite for, and concerns about, new marketing technologies and practices.

The Social Media Marketing Bubble

According to Investopedia, a bubble is "created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior." The AMA New York surveys suggest that a different kind of bubble may exist in the social media marketing space.

In the consumer survey, respondents said they expect their use of social media to decline over the next three years. The net change (the proportion of respondents expecting to spend more time on social media minus the proportion who expect to spend less time) was -6%. The survey also found that Facebook use is likely to show no net growth over the next three years, while the use of Twitter, Snapchat, and LinkedIn will decline over that period.

U.S. marketers, on the other hand, plan to substantially increase spending on social media advertising over the next three years. In the marketer survey, social media generated the strongest indication of increased spending (net 68%), followed by web display ads (net 51%) and email (net 47%).

Other research has found a similar exuberance for social media among marketers. In the August 2019 edition of The CMO Survey, respondents said they expect spending on social media to increase from 11.9% of their current marketing budget to 22.5% of the budget in five years.

The Techlash is Here report describes the emerging social media marketing bubble (my term, not theirs) as follows:

"American marketers are overindexing on many social media now and plan to increase spending even as consumer use flatlines or falls off. Currently, the share of ad spend devoted to social media in America . . . is 150% of the proportion of consumer media time they receive."

The Technology Disconnect

The AMA New York surveys also investigated the attitudes of U.S. marketers and consumers about nine specific marketing/advertising technologies and techniques. In this research, between two-fifths and three-fifths of U.S. marketers said they plan to increase their use of every one of those nine innovations, as the following table shows:

A striking disconnect between marketers and consumers becomes apparent when we look at the results of the consumer survey. As the table below shows, none of the nine technologies or techniques is viewed favorably by a majority of U.S. consumers. Four of the nine did receive a favorable plurality by survey respondents, but five of the nine technologies and techniques are viewed unfavorably by a plurality of U.S. consumers.

Once again, the survey report describes the current situation in compelling terms:

"American marketers overrate the perceived positives of marketing innovations:  most expect that U.S. consumers will consistently welcome them . . . On average, nearly four out of five (78%) expect American consumers will agree with each benefit claim we tested. The proportion of marketers who say consumers will agree substantially exceeds that of consumers who do on every one of them - by an average of 27 points."

The Takeaway

The AMA New York research should serve as a wake-up call for marketers. It highlights the risks inherent in getting caught up in the hype that inevitably surrounds new marketing channels, techniques, and technologies. While this research dealt with important disconnects between marketers and consumers, many of the study findings will apply to B2B marketers and business buyers.

Marketers' exuberance for new technologies and techniques is often attributed to the fear-of-missing-out or the shiny object syndrome. This view is overly harsh, but it does contain some truth. FOMO can actually be a positive thing when it motivates us to experiment and test new tactics and tools. But if it isn't tightly controlled, FOMO can also result in bad - or at least ineffective - marketing investments.

The findings of the AMA New York research regarding personalization are particularly noteworthy. As I have previously written, marketers are facing a true conundrum regarding when and how much personalization should be used. In fact, I would argue that the personalization-privacy paradox will be an "elephant-in-the-room" issue for marketers in 2020. I'll have more to say about that in a future post.

Top image courtesy of Artura Pardavila III via Flickr CC.

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Despite Challenges, Marketers Remain Committed to CX Technologies

In my last post, I discussed some of the findings from a recent study by The Harris Poll and RedPoint Global. Addressing The Gaps In Customer Experience was based on the results of two surveys. One involved 454 senior marketing and customer experience executives, and the second involved 3,002 adult consumers. The participants in both surveys resided in the United States, Canada, or the United Kingdom.

As the title of the research report suggests, the primary objective of this study was to identify where and how the perceptions of marketers and consumers about the quality of customer experiences differ. I discussed some of those findings in my earlier post.

This research also provides several interesting insights about how marketers view the technologies they use to deliver customer experiences. Somewhat surprisingly, the marketers in this study view technology as essential for providing great customer experiences and as a source of major challenges.

The Strategy-Execution Gap

First, it's important to put the findings about technology in the right context. Most of the marketers in this study were satisfied with their customer experience strategy, but not with its execution. More than half (57%) of the surveyed marketers said their company has the right customer experience strategy, but isn't able to execute it effectively. An even higher percentage (63%) said their company doesn't execute its customer experience strategy "very well."

When the survey participants were asked about the challenges associated with closing the strategy-execution gap, the top three challenges identified were:

• The complexity of technology solutions (39% of respondents)
• Lack of cross-functional commitment to strategy (35%)
• The inability to integrate new capabilities with existing processes or technology (33%)

Satisfaction With Technology

On average, the marketers in the study said their company is currently using 10 customer engagement technology systems. About one in five of the survey respondents said their company is using more than 20 customer engagement systems.

The sheer number of technology systems is creating a challenge for marketers. Nearly two-thirds (65%) of the marketers in this study said the number of customer engagement systems they are using makes it harder for them to provide a seamless customer experience.

Only about a third (more or less) of the surveyed marketers were very satisfied with their ability to leverage technology to achieve several key customer experience objectives, as the following table shows:

Despite the challenges associated with CX-related technologies, marketing leaders are committed to a technology-enabled future. More than nine in ten (91%) of the marketers in this study said that investing in marketing and CX technologies is a key initiative for their company.

Twenty-one percent of the surveyed marketers said they expect the number of customer engagement systems used by their company will increase over the next year, and even more (39%) think the number will increase over the next five years.

The Takeaway

These findings make the point that marketers and other CX professionals have more work to do to capture the full benefits of marketing and other customer engagement technologies. But these technologies are evolving rapidly, so it shouldn't be surprising that marketers and other CX professionals are still learning how to maximize their value. In my view, this is to be expected, and it's not a business-threatening problem unless the "proficiency gap" becomes too great.

Top image courtesy of Rabin Pamela via Flickr CC.

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How Marketers Are Addressing the Technology Tsunami

Earlier this year, Scott Brinker unveiled the latest version of his now famous marketing technology landscape supergraphic. To no one's surprise, the new graphic showed that the number of marketing technology solutions has continued to grow at a rapid pace.

The 2018 landscape includes 6,829 technology solutions, up 27% from the number in the 2017 version of the graphic. That's a healthy year-over-year growth rate, but the expansion of the marketing technology space is even more dramatic when you consider the growth that's occurred over the past few years. As Scott recently wrote, ". . . the size of the 2018 landscape is equivalent to all of the marketing tech landscapes we assembled from 2011 through 2016 added together."

So how are marketers dealing with this explosion of technologies? The State of Marketing Technology 2018 study by Walker Sands Communications (in partnership with Scott Brinker) provides several interesting insights about this issue. This study consisted of a survey of 300 marketing professionals that was fielded in the first quarter of this year. While this research didn't focus exclusively on B2B, many of the study findings will reflect the views and behaviors of B2B marketers.

Here are some of the important findings from the 2018 survey:

• Seventy-five percent of the survey respondents said they add new tools to their marketing technology stack at least once a year, and almost half (48%) said they add new tools at least every six months.
• Seventy-six percent of the respondents said they perform a holistic assessment of their marketing technology stack at least once a year, and over half (52%) said they assess their technology stack at least every six months.
• Thirty-seven percent of the respondents said their company's use of marketing technology has grown steadily over the past three years, and another 20% said it has evolved rapidly.
• Sixty-one percent of the respondents described their company's ability to add new solutions to their marketing technology stack as somewhat (46%) or very (15%) agile.

Walker Sands has conducted this study annually for three years, and some of the questions have appeared in all three surveys. So it's possible to see how the attitudes of survey participants have evolved. 

For example, all three surveys asked participants whether their company was investing the right amount in marketing technology, and whether the technology tools in place at their company were up to date and sufficient to help them do their job effectively. The following table shows the responses for 2016, 2017, and 2018:

As the table shows, there was a big uptick in the positive attitudes on these two points in 2017, followed by modest declines in 2018. These declines likely occurred because more marketers have become deeply aware of the critical role that technology plays in marketing. Therefore, they are more sensitive to any perceived shortcomings in their company's technology toolset.

The Walker Sands survey report argues that many companies are failing to keep pace with the evolution of marketing technologies. That's probably true, but I don't believe that a short lag in adoption is necessarily a major problem for most companies.

As I have previously written, marketers need to use a "systems" mindset when evaluating new marketing technologies. They need to determine if a new tool will complement and enhance the overall performance of their existing technology stack. This type of assessment takes a little time, so some lag in adoption is almost inevitable. Marketers just need to be sure they aren't falling too far behind the curve.

Top image courtesy of Grempz via Flickr CC.

Have We Really Improved Marketing Productivity?

The recent pace of change in B2B marketing has been nothing short of breathtaking. Over the past 10-15 years, new marketing technologies, channels, and techniques have appeared in rapid succession, and many of these innovations are now in widespread use. B2B marketing automation, content marketing, inbound marketing, and social media marketing are just of few of the technologies and techniques that have changed B2B marketing over the past decade or so.

By all indications, the pace of change is not slowing. During the past couple of years, many B2B companies have adopted account-based marketing, and many have begun using predictive marketing analytics technologies to support ABM and other marketing efforts. And just within the past few months, we've started to hear that machine learning and artificial intelligence will have a major impact on B2B marketing in the near future.

All of these innovations have promised to improve marketing effectiveness and efficiency, and numerous research studies purport to show that they are delivering a wide range of benefits. But have these innovations really improved the bottom-line productivity of B2B marketing? Can we show - in a credible and convincing way - that B2B marketing is more financially productive today than it was 10 or 15 years ago?

Obviously, these questions must be answered on a company-by-company basis. Some B2B marketers may be able to show that their marketing efforts have become significantly more productive over the past several years. But there is evidence suggesting that some aspects of B2B marketing performance haven't improved as much as we might have anticipated.

One indicator of B2B marketing and sales productivity is the efficiency of the demand generation process. Efficiency is usually measured by the percentage of potential buyers or leads who are "converting" from one lead stage to the next.

Many B2B companies use the Demand Waterfall model developed by SiriusDecisions to describe the stages of the lead-to-revenue process, and from time to time, SiriusDecisions publishes "average" and "best-in-class" conversion rates that link to the Demand Waterfall. The following table shows the conversion rates reported by SiriusDecisions for 2008 and 2014:

What is most striking about this data is that it indicates there was essentially no improvement in conversion rates - particularly the overall lead-to-revenue conversion rate - between 2008 and 2014.

The 2008 conversion rates largely reflect marketing productivity before many of the marketing innovations mentioned above had become widely adopted. But research has shown that by 2014, a significant number of companies were using these technologies and techniques.

• 60% of large companies (more than $500 million in annual revenue) had acquired a marketing automation solution. (Raab Associates)
• 93% of B2B marketers were using content marketing in some form. (Content Marketing Institute/MarketingProfs)
• 86% of companies were running inbound marketing programs. (Hubspot)

Of course, lead conversion rates aren't the only relevant measure of marketing productivity, and there may be a reasonable explanation for the lack of improvement shown in the SiriusDecisions data. For example, the 2014 conversion rates would not have captured the impact of the shift to account-based marketing that's occurred over the past couple of years. Nevertheless, this data should be a wake-up call for B2B marketers.

Senior company leaders are increasingly expecting marketers to demonstrate that their activities and programs are creating economic value for the enterprise and improving enterprise financial performance. Many senior leaders are no longer satisfied with the tactical performance indicators (campaign response rates, content downloads, etc.) that marketers have traditionally used to describe marketing performance. What senior business leaders really want to see is proof that marketing is delivering financial results and that the dollars they are investing in marketing are being spent as efficiently as possible.

The important point here is that the value of any marketing technology or method must ultimately be judged by whether its use improves marketing productivity. So that's what marketers must be prepared to demonstrate.

Top image courtesy of Kelly Teague via Flickr CC.