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The Gist
- Budget drain. Companies could waste up to $4M with martech stack underutilization.
- Credibility hit. Low utilization undermines the marketing department’s standing.
- Silver lining. Using more than half of the martech stack reduces risk of budget cuts.
A recent Gartner study reveals a troubling trend. Despite increasing investments in martech stacks, organizations are using only 33% of their available capabilities, marking a second year of decline. This underutilization not only wastes money but also poses a reputational quandary for CMOs, who must now juggle immediate utilization concerns with long-term strategic decisions about investing in emergent technologies like generative AI.
As 78% of firms move customer data functions to IT, and as interest in emergent technologies like generative grows, CMOs face a complex, shifting landscape.
The High Cost of Martech Stack Underutilization
While martech stack usage doesn’t solely define a company’s success, it does significantly impact the perceived value and influence of a CMO. A generous martech budget can empower both the CMO and their marketing team; however, if mismanaged, it could lead to slashed budgets and a tarnished professional reputation.
Financial implications. According to benchmarks from Gartner, a company generating $250 million in revenue could potentially squander nearly $4 million if they allocate 9% of their revenue to marketing and then spend a quarter of that marketing budget on underutilized technology.
The credibility crisis. More than two-thirds of the respondents noted a negative relationship between martech stack utilization and both budgetary and credibility outcomes. Specifically, 69% reported that low martech stack utilization adversely affected their 2023 budgets, and 67% said it undermined the marketing department’s organizational credibility.
Interestingly, the data suggests a silver lining — organizations that use more than half of their martech stack are significantly less likely to face budget cuts.
Katrina Wong, VP of marketing at Twilio Segment, said in the current economic environment, it’s critical for brands to maximize the impact of their martech stack to drive efficiency and revenue.
“Many brands have built their martech stacks piecemeal over time. As a result, the various systems and applications for engaging customers are disparate and siloed,” Wong said. “And when brands can’t fully leverage and activate on customer data stored across these different systems, they’re leaving money on the table.”
Related Article: Trends Shaping Martech Strategy in 2023
Why Martech Fails: Beyond Tool Acquisition
Experts caution that simply buying a marketing tool won’t solve your problems. Jessica Kao, senior director of marketing operations and martech at Cloudflare, emphasizes that effective martech use requires a comprehensive strategy. “A tool is just a tool, a hammer isn’t going to build the house for you, it’s how you use it,” Kao said.
She advises treating martech like a product, managed by a dedicated product manager who oversees its integration, training and application within the broader business strategy. Kao notes that a common pitfall is the lack of knowledge about how to make an ecosystem of tools work cohesively.
“Many fail to grasp which tools should be connected and why, leading to underutilization,” Kao said. “It’s not just about the technology, it’s also about equipping marketers with the know-how to use it effectively.”
Marketing Under Strain: Concerns Over Skill Gaps and Talent Retention
A recent Salesforce report found that ineffective use of tools and technologies is the No. 1 challenge for marketers. Further, 71% of marketing leaders have more trouble retaining talent this year compared with the previous year — and that talent gaps remain a top challenge for one in three marketers.
As SVP of marketing for Salesforce Marketing Cloud, Bobby Jania said marketers are under pressure to deliver more with less, despite tighter budgets and lower headcount. Specifically, he said marketing leaders are focused on improving skills in content marketing, campaign strategy and data analytics as crucial to success in the next two years.
“Today’s marketers have more tools, technology and data than ever before,” Jania said. “However, this surge has led to a lot of silos for marketers trying to make sense of it all.”
Related Article: Should Marketing Leave Martech Management to IT?
Will Generative AI Fix or Frustrate Martech?
In order to address these challenges, Jania said his clients are leaning into AI, automation and real-time data to optimize the impact of each customer interaction. Salesforce recently launched its AI Cloud suite, an array of generative AI capabilities focused on CRM.
Ben Bloom, VP analyst at Gartner, believes generative AI has the potential to “upend the martech ecosystem.”
But given the talent and skill shortage — with 53% of survey respondents admitting they are too overwhelmed by existing technologies and projects to explore emerging technology and 59% indicating their struggle with existing tech gives them little appetite to add emerging tech — Bloom believes marketers risk making the same mistakes with generative AI as with their existing martech stacks.
He advises that companies recommit to maximizing the use of existing technologies and be cautious about investing in the rapidly changing martech landscape, particularly with emerging generative AI technologies on the horizon. Further, he said, it’s prudent to reassess and strengthen the partnership between marketing and IT departments, aiming for shared accountability and cost-efficiency in martech investments.
“Look to IT and the possibility of accomplishing marketing use cases in IT-owned enterprise solutions,” Bloom said. “Defend investments in consent management, digital asset management or first party data, as each of these will be foundational to the coming wave of generative AI solutions.”
Why More Isn’t Merrier When It Comes to Martech Stacks
Scott Brinker, the editor of Chiefmartec blog, who also created the widely cited Martech Supergraphic, argues that the solution to the growing martech stack underutilization issue isn’t more technology, it’s better mastery of existing tools.
Amidst the staggering rise of martech stack solutions from 150 in 2011 to 11,038 in 2023, Brinker emphasizes optimizing current resources to bridge the widening gap between technological advancement and organizational efficiency.
His mantra for effectiveness?
“The cures to this ailment are focusing on doing fewer things well and investing more in the enablement of your teams to really develop mastery with your key tools,” Brinker said. “Be choosy about your highest priority opportunities.”
