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Buying MarTech on a Budget in 2018: How Brands Navigate a Spending Crunch

5 Minute Read

With more than 5,000 businesses selling their own marketing technologies, there’s far more martech out in the world than any one company can afford. This estimated $40 billion market is eager to find enterprise customers seeking to build out their marketing technology stack, and the demand for these services is steadily increasing.

According to research from WARC, enterprise marketing technology budgets are projected to grow by an average of 10 percent next year, with technology accounting for 16 percent of overall marketing budgets. More than 56 percent of this marketing technology spending will go to outsourced solutions and services, while the remainder will be spent in-house.

Even as businesses grow the budget for this spending, marketing departments are under pressure to acquire the best combination of services while staying within their financial means. When you start to build out the ideal martech stack, it becomes evident that few, if any, businesses are prepared to spend what it takes to build a perfect stack right from the get-go.

As a result, businesses are forced to pick and choose their most essential marketing technologies, with an eye toward continued development in the future. If this describes your current situation, you aren’t alone. In spite of these constraints, there’s a way to organize your spending and make sure you’re able to afford the investments you’re making—including all the extra costs you’ll face down the road.

Understanding What Matters Most

If you’re just starting to build a marketing stack, then understanding where to put your money first is a fairly straightforward process. Businesses can’t do much with a stack unless it features a few core technologies, including a content management solution, a customer relationship management platform, and marketing automation software.

Once you have those in place, the process looks a little more like a Choose Your Own Adventure book. Additions to your stack will depend on your available marketing budget and what business goals you are hoping to achieve. If generating higher-quality leads is a top objective of your marketing team, then the solutions you choose will likely serve these interests. Compare that to companies who want to use their stack to build more effective management or internal operations, or businesses that want to develop a stronger social presence as a way of achieving specific business goals: These initiatives require different solutions to help you meet your business objectives.

It should go without saying that prioritizing marketing technology acquisitions should begin with identifying the business goals you hope to achieve. If spending doesn’t align with these goals, you’re creating extra barriers to meeting expectations, and there is greater risk that your tech acquisitions, and your marketing strategy overall, are underperforming.

Stacked rocks

Image attribution: Downeym

Accounting for Infrastructure Costs

Once you get into the nitty-gritty of investing in marketing technologies, it’s amazing how quickly additional costs can kill your budget. In many cases, the up-front acquisition cost of a solution is only a fraction of the total costs that need to be considered. Gartner’s most recent CMO Spend Survey found that enterprise marketing technology budgets are spread out across several essential categories.

Twenty-eight percent of the average marketing technology budget, for example, goes to servers and other supportive pieces, such as data storage. This spending isn’t optional: Martech needs this infrastructure to perform properly. But it can often get overlooked in budget planning.

Meanwhile, related IT costs can eat up more than 21 percent of a budget. Ultimately, the average marketing technology budget allocates less than 25 percent to actual marketing and analytics software. Everything else is supportive in nature, or spent on in-house development of technologies. When you break it down that way, even a sizable marketing budget can be eaten up quickly. If you’re only looking at the initial costs to get a solution up and running, you’re creating a situation where you’re going to blow through your budget, saddle the company with costs it can’t afford, and lose the trust of your executive leaders. A marketing stack of any size has additional costs beyond its individual parts.

Image attribution: 401(K) 201

The Added Cost of Integrating New Technologies

Over time, as you add new technologies, each will require integration with other pieces of your marketing stack, which will inevitably cause you to update older technologies so that everything works with one another. This will be costly in terms of licensing new solutions, the time required for IT to handle the integration, and/or the downtime that leads to lost productivity. This needs to be accounted for in a budget.

These costs are the result of your decision to add new technology, but the cost itself is caused by the existence of outdated solutions in your stack, so it can be easy to overlook this expense in estimates when considering a new solution. It’s not necessarily a bad thing when you’re forced to bring older solutions up to date, but it’s a cost that you need to factor in nonetheless, and an extensive need for updates could restrict the solutions you’re able to afford during the 2018 fiscal year.

Work with IT leaders and solution vendors to build a plan for anticipating and estimating these costs. Consider regular updates to martech solutions as a preventative measure that spreads out these costs over time and eases the transition when new solutions are added.

With so many solutions out in the world, marketers will never have a large enough tech budget to make them happy. Instead, they have to learn how to work within their means and prioritize spending while accounting for all the costs that come with developing a mature marketing technology stack. It will be a long process, but 2018 will offer another chance to advocate for bigger budgets, identify critical new solutions, and integrate technologies that push marketing performance higher than ever before.

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Featured image attribution: Glenn Carstens-Peters

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Jonathan Crowl specializes in digital marketing and content creation for both B2B and B2C brands, with an emphasis on startups and technology. His past and current clients include B2B brands IBM, LinkedIn, Mad Mobile, Oktopost, BrightSpot, and Waze, as well as B2C brands Porsche, Epson, and PayPal. He lives in Minneapolis.

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