What you need to know

• After a pandemic-fuelled binge on digital commerce (coming on top of a decade of digital transformation) CFOs are starting to ask CMOs some awkward questions, like "where's my ROI?" 
• Spending on martech boomed over the last decade and at one point CMOs were spending almost as much as their Chief Information Officer (CIO) peers were on total traditional IT, according to Chiefmartec's Scott Brinker, citing Gartner data.
• Martech now typically accounts for about a quarter of total marketing department spending, and equal to or exceeding total media spend.
• A new Gartner study finds two thirds of CFOs believe the surge in digital transformation, CX and martech spending has not met company expectations.
• Tech stacks are growing but their utilisation is falling, according to Gartner data - martech systems have slumped from a 58 per cent utililisation rate in 2020 to 42 per cent last year. 
• Spending is driven in part by the need to use data for customer experience, but marketers admit the more data they collect the less benefit they derive.
• Experienced execs say the business benefits of rationalisation can be hard to measure, and might not actually be there at all in some cases.
• But get it right and there are big savings - Asthma Australia for instance expects to save almost a quarter of a million dollars from rationalising six data repositories. And that's in a small organisation with only about 50 people. 

Martech fails finance

Most CFOs believed marketing technology has failed to meet enterprise expectations and even as martech bloat increases, utilisation of the software that's already been implemented is actually falling. Those figures, from research by technology industry analysts Gartner. presage a likely set of difficult conversations for marketers, who are now under pressure to rein in their runaway stacks.

As Mi3 reported earlier this year, 44 per cent of software as a service (SaaS) licences go unused according to analysis of the data held inside global software licence auditing programs. That offers a rich vein of costs for finance departments to target.

And those that do are finding some healthy savings. Asthma Australia, for instance, is in the midst of a rationalisation - although in this case the driver was organisational change that saw six state federations merged into a single organisation.

The not-for-profit's director of Customer and Marketing, Kathy Packenas, told Mi3: "We haven't done the full solution implementation yet but by rationalising six key data repositories for an online shop, for a health program, for our fundraising program and for our marketing program we anticipate savings over a three year period of about $220,000."

Penny pinchers bite

The need to assert control over burgeoning martech is a key pressure point on CMOs according to Gartner, which held its Gartner Marketing Symposium in the US in late May.

The last decade has seen a global surge in spending on marketing technology. By 2016, technology spending by CMOs almost overtook the budgets of chief information officers on traditional enterprise technology. While it never quite overtook the server-room crowd (thank you, cybersecurity), martech spending itself has continued to boom. Martech now typically accounts for about a quarter of total marketing department spending, and equal to or exceeding total media spend. The sums are significant. In Fortune 1000 companies, for instance, marketing budgets range from four to 11 per cent of revenue, according to Constellation Research principal analyst Liz Miller. 

But now, it seems, the corporate penny pinchers have taken notice. 

Gartner's Vice President Analyst Lizzy Foo Kune told CMOs at the international event: "You're likely seeing your tech stack mushroom into something that feels unmanageable. Consider this - brands have steadily increased their tech deployments over the last few years, with Gartner tracked brands increasing tech deployments from about 58 per brand in 2019 to 68 in 2022."

But she said organisations report they struggle to make use of all of this technology.

Buy more, do less

"Overall marketing technology utilisation dropped from 58 per cent in 2020 to 42 per cent in 2022. The cross functional accountability and the operational complexity involved in running a modern tech stack sucks up our time. It leads to unproductive collaboration on digital initiatives."

One of the big drivers of investment is the need to build better customer experiences and more effective marketing through better use of data. But even here Gartner revealed marketers are doubling down on technology spending even though this is creating more complexity and delivering the opposite of what marketing teams want.

According to Gartner VP Analyst Carlos Guerrero, co-presenter at the conference with Foo Kune: "Most marketers that we talk to are still pursuing a 360 degree unified view of the customer. In a recent survey they told us that they've invested so much in customer data integration that they have to see the effort through to completion. But get this - 72 per cent of marketing leaders who believe they need to unify all their customer data also believe that the more data they collect, the less benefit they see."

Profitable growth is very different to growth at all costs, he warned, saying the research suggested that about 4 in 10 companies have shifted their focus from revenue growth to profit margin improvement."

"A few years ago some companies could get away with big investments in growth areas like digital commerce, for example, where we sort of knew we needed to invest in. But what we didn't pay too much attention to was the margins," said Guerrero.

"And what might be more concerning news, and certainly adds a little urgency to all of this, is that 67 per cent of CFOs believe that the last three years of digital spending has not met enterprise expectations. So simply placing bets on things like personalisation or ecommerce in hopes that they will pay off someday is no longer a viable strategy. We need to prove the profitability of these investments now," he said.

It its most recent CMO Spend and Strategy survey, three quarters of CMOs said their organisation faces pressure to do more with less in order to deliver growth in 2023.

Strategy first

Tech stack rationalisation can deliver significant savings but it can't simply be about slash and burn, say marketers. You still need staff to actually use those new and improved slimmed down stacks.

According to Asthma Foundation's Packenas "we were not implementing systems without strategy. Before we tackle any customer group we are segmenting broadly who our customers are. Before we put people in a technology, we're making sure the strategies are there. We have also invested in developing a holistic IT strategy. That will help us make sure we've got all the governance around it, and data really, really covered off."

She told Mi3: "The other part of this is the training. We've done a good job of mapping out training needs and developing a training program. We are only 50 people so it can be quite a personalised training program."

Henry Hernandez Reveron, a martech architecture specialist who has worked both vendor and agency side, including time at WPP's AKQA running the martech practice, is sceptical about some of the rationalisation projects he has encountered.

"I've come across a a few of these projects; 'rationalisation of tech', 'do more with less', 'value-realisation from vendors' and things like that.. Actually, I've never come across anyone who can actually measure these in meaningful ways. People say you have to do more with less, not that I believe that is mathematically possible."

He says it doesn't mean dumpstack projects are without merit but they're often harder to measure outcomes than people imagine. Hernandez Revon details a project he worked on for a superannuation firm that rationalised a lot of functions and capabilities into an Adobe stack implementation. "The implementation of the full suite was pretty successful for the brand and for their customers or members. But because it was superannuation we couldn't measure [whether it] actually was making more money."

Hernandez Reveron declined to name the superannuation firm but Mi3 has independently determined it was Hesta, which Adobe has confirmed is one if its Australian reference sites.

Sometimes, a company's intent to rationalise can generate a lot of work but go nowhere. "Another project I worked on was with a big bank, off the back of a cost rationalisation exercise looking at Salesforce and Adobe licences," Hernandez says. "This came directly from the CFO: how can we make sure that if we need to invest in these two platforms we're getting the most out of them? Should we keep with one or the other?"

After a three month assessment, per Hernandez Reveron: "I don't think anything actually materialised."

Martech hack begins

With Gartner's prediction that finance will start putting spotlight on the performance of martech investments, marketers will need to learn to adjust to the harsh logic of spreadsheets, according to Rahul Bakaya, a marketer who has worked across a range of brands such as James Hardie Australia, ShoreTek and Gerard Lighting, as well as for several technology startup and scales ups.

"Finance has a very black and white outlook. The number one thing is differentiating between good-to-have things versus must-have things. They don't have either time or, I would say, patience to understand the nuances of what each marketing tech tool can provide.

"They will always ask the question like, 'Is it must to have - if we don't have this tomorrow, would we not survive?' Or is it good-to-have?"

He cited a project where he had to justify a wide set of tech tools including Asana, Hubspot, ZoomInfo, Zoho and even LinkedIn Navigator.

"It's a decent stack, but it's not a massive stack. They said, 'Okay, do we really need to track the projects that are happening to an absolute micro level or can the team managers be responsible and have regular meetings and have an Excel sheet?' Can we do it? Yes. Is it an ideal practice? No. Can we do it? Yes. 'Okay. Get rid of Asana'."

It was a similar conversation with ZoomInfo, which the company used for Account Based Marketing [ABM] by B2B marketers, and which Bakaya acknowledges is an expensive tool.

"So Finance is asking: 'Do we absolutely need this, can you use LinkedIn Sales Navigator to get access to people who are the right personas'? Of course, Does it give you phone numbers? No, it won't. 'But can you contact them?' Yes, yes, you can. 'So [we would] rather you improved the way you write emails to get more responses?' Yes, of course, we can get rid of ZoomInfo."

Bakaya told Mi3 that finance cares about revenues and churn rates. "If the tech is not essential to those outcomes then they obviously will go for cost cutting.

"And cost cutting usually, unfortunately, always starts with marketing."