What you need to know

• CIOs are expected to assert more control over martech in the coming years. The trend is being driven by sprawling cross functional IT systems and a growing set of AI use cases.
• We're a long way from 2016, when Gartner predicted that CMOs would spend more on technology than the CIO (It actually happened, very briefly).
• This is occurring at a time when CMOs have trimmed martech to its lowest share of the total marketing budget in a decade because they want to preserve media spending at a time of budget constraints.
• It is also possible that some martech spending will shift to agencies, at least where the agency relationship is strategic rather than tactical.

Welcome back, Dr No.

Is the CIO coming for a big slab of your budget? It's possible, maybe even likely according to a key research analyst.

CMOs are spending less on martech as a percentage of the marketing budget, as Ewan McIntyre, the Gartner analyst behind the recent Gartner CMO Spend Survey told Mi3  last week. 

But that might not tell the whole story when it comes to IT spending on marketing.

That’s because CIOs have been dealt back into the equation as companies confront the problems caused by sprawling IT systems, tech debt, and as they also chase the new opportunities of generative AI, says McIntyre.

Gartner's survey - which did not specifically test the relativities of marketing v IT department tech spending - found that martech’s share of marketing spending had fallen to its lowest level in 10 years, following a surge during the last decade as the first generation of big martech clouds emerged, and then another with the onset of the pandemic.

Now it's down to 23.8 per cent of the marketing budget, dropping from a high of 29.2 per cent in 2018.

McIntrye told Mi3, “You could argue that fairly significant elements of the martech stack are cross-functional anyway. With the development of CRM, for example, there's always been some debate about who owns the CRM in the organisation, and I think marketing has got a really strong case for ownership. But so do sales and customer support.

“With these messy, cross-functional areas of ownership, it makes a lot of sense for IT to step in, and to be the arbiter of effective use of that [system] In this kind of messy, collaborative intersection there is an easy use case for IT.”

There is another element to this, he says, and that is the emerging focus on AI especially generative AI, which comes from the top of the enterprise.

According to McIntrye, there is a sense that IT is best placed to mop up the use cases from across functions and to be the CEO's trusted gatekeeper for AI investments.

He acknowledges both the positive and negative aspects of this from a marketer’s perspective.

On the upside: “Many of the kind of obvious use cases in 2023 and 2024 are marketing oriented.”

However, McIntyre says, since company leaders are very interested in this, these projects are also  getting mopped by IT as part of this broader enterprise AI roadmap.”

With IT mopping up the cross-functional systems and asserting control over AI and especially generative AI marketers are left with what he calls “The messy middle.”

“CMOs need to think carefully about what is strategically important for them to keep hold of.

In a budget-constrained environment CMOs need to work out they need to invest their budget and valuable resources into

Per McIntyre: “I think on the AI side of things, that's even more interesting. That’s because if IT is taking up a lot of the accountability, for collating use cases and finding the right solutions, there is a risk that they make decisions that are not aligned with the customer. and this has always been the risk with when IT.”

The bottom line is that the CMO’s impact on marketing technology decisions is being challenged especially given the poor ROI many CFOs feel many martech investments have yielded.

As Mi3 reported last year on a separate piece of Gartner research, “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 falling. Those figures are 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.”

In that context, McIntyre’s latest research feels like the next chapter along a natural story arc. “The legacy systems issue is damaging because it erodes marketing's influence on cross-functional, collaborative programs. The emerging [focus on AI] is incredibly important because that's going to be the stuff that drives the customer interaction today and tomorrow.”

Agency opportunities

While AI is attracting headlines (and a lot of leadership attention) it’s also important to keep it in perspective says Mikaela Crimmins, CTO at Orchard.

“It’s important that applications of AI are also measured against accuracy and quality of engagements,” she told MI3.

She acknowledged that oftentimes the latest and greatest technology or digital channel can drive instant results, but she stressed that that edge is only short-lived as everyone eventually catches up and it becomes table stakes.

“Equally, I’m also not one to bury my head in the sand. AI is certainly something that needs to be entertained by every marketer, or indeed any profession.  But finding the right use case for AI is important and ensuring that you start with KPIs that look beyond ONLY efficiency measures is critical.”

According to Crimmins, “This is where humans and creativity are crucial. Finding those use cases that get marketing teams out of the weeds to focus on the work that drives impact but requires a more specialist skillset.”

She told Mi3, “At Orchard, we’re looking at how AI can help internal marketing teams manage their assets quicker and easier, we’re also looking at how AI can enrich customer care engagements - making the experience better for both customer and brand. And as a technology agency with a creative DNA – we’re looking at ways to use AI to improve the creative process, rather than replicate it.”

McIntyre meanwhile seems to punctuate the point about the role of agencies.

“There's definitely not a sense that the marketing technology industry is declining. But there are some interesting shifts in how agencies are deploying technology on behalf of their clients.”

He said, “If you look at the earnings calls of some of the larger agency groups, they're not necessarily in a bad place right now. If you have an agency who is a strategic partner  helping CMOS get the most out of AI investments then that feels like it has a tighter hold on the relationship, than an agency with a transactional relationship with the CMO.”

According to McIntyre, “If I was to make an educated guess about who is keeping hold of the business versus who's losing the strategic partnerships, and those that are really at the heart of how we get the most value out of AI investments those will be pretty safe in 24.”