Are CMOs About to Spend More Than CIOs on Technology?

In a recent blog post, Gartner analyst Jake Sorofman said the prediction made by his colleague Laura McLellan back in 2012, which stated CMOs would outspend CIOs on technology by 2017, was about to come true.

He noted the prediction was both “polarizing” and “provocative” at the time, but Gartner’s upcoming CMO spend survey for 2016 indeed shows CMOs allocated 3.24 percent of revenue to technology spending, which is about even with the 3.4 percent CIOs generally spend.

Sorofman says marketing technology is leading this charge, as the capabilities of marketing platforms continue to improve and customer journeys are increasingly taking place online.

To dig deeper into what this shift really means, we sat down with Kyle Metcalf, general manager of the digital marketing practice at Rackspace, and asked him how he’s seen this change occur from the front line. 

For starters, have you come to the same conclusion as Gartner? Do you agree the shift is taking place?

I do and I believed it when the prediction was made in 2012. It was a bold statement then, and it got a lot of people’s attention, but in the Rackspace digital business, we focus on applications that marketers utilize to take their brands online, so I had a front row seat.

Everyone has had some sort of web presence, but now companies are really starting to make good money online, and given the shift in how people buy — with millennials doing most of their shopping online or buying through their phone — if you don’t have a killer website with the best technology, you’re behind the curve. It’s like having a store in a better location in any given city or mall. I knew CMOs were going to have to spend more than CIOs on technology because even back then, it was clear this marketing technology was a new investment for a company to go and build out a really solid digital presence.

So what are CMOs buying? What are they spending all this money on?    

We see a lot of interest in what’s called web content management, which is basically a framework you use to build your website but also to gather all that super important data about your customers — your digital fingerprint, which shows the websites you’ve visited or the things you’ve liked on Facebook. We focus on Adobe Experience Manager and Sitecore, which give companies the ability to create a custom experience for every user based on the information they gather from their digital fingerprint. We’ve also worked with a lot of CMOs who are interested in ecommerce platforms, such as SAP Hybris, Magento and Oracle Commerce.

Do you see this shift in spending as a positive or negative trend? Are there pros and cons?

I think it’s a positive trend but there are a ton of mistakes being made right now. Shadow IT is happening in just about every organization, which is often the result of the marketing team trying to solve a problem quickly, and bypassing the IT department for fear of getting lost in the backlog.

When marketers take matters into their own hands and build their own technology centers, they may not be thinking of everything they need to ensure what they’re building is up and running, scalable, safe and secure. Security is a huge challenge for anyone today, and with someone who is just trying to find a means to an end, they’re probably going to skip a few steps. A data breach may be right around the corner.

We always try to help with this by bringing the CIO into the conversation right away and saying, we know you have a thousand things on your to-do list, but we also understand you don’t have anyone on your staff that even knows what Sitecore is. We’ll augment your staff and be the Sitecore experts. We’ll work with you to make sure that everything is integrated as it should be and safe and secure.

We can do that very quickly and we can do it in a way that provides a safe, secure and reliable environment the CIO would give a thumbs up to, and we can spin it up in less than an hour, which the CMO would give a thumbs up to, because it’s also providing that speed to market they’re looking for.

This also touches on the CMO-CIO divide doesn’t it?

It does. The two have to be talking to one another, otherwise there is going to be some unintended consequence of not working together. That could be the shadow IT within the organization that ends up cutting corners on security and causes a data breach, or it could be something that just isn’t architected properly and isn’t prepared to scale. On Black Friday or Cyber Monday or back-to-school or whatever big event they’re planning for, the whole thing could fall down.

How do you see this trend playing out? Where do you think it goes next?

I hope the next time we’re talking about this, we’re talking about CMOs controlling or influencing more spending than the CIO, because as I mentioned, they have to be working together. A lot of people view this trend as the CMO just going out and buying stuff on their own. What would be great, and where I think it’s trending, is if it’s more of an influence, the CMO influencing more IT spend than even the IT organization and CIO themselves.