Marketing Technology Stack Underutilization Impacts Budgets and Credibility

Marketing Technology Stack Underutilization Impacts Budgets and Credibility

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.

A blue bicycle with morning glory vines growing on it is parked unused in front of a wooden fence symbolizing the underuse of martech stacks.
Use it or lose it: The underuse of martech stack can have negative consequences on marketing departments. cbdusty on Adobe Stock Photos

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.”

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