Marketing Budget

Why B2B Marketers Must Work So Hard

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According to IDC, B2B marketers are being forced to do more with fewer people than ever before. The “program-to-people” ratio, which compares the ratio of program expense to staff expense in the marketing budget, is becoming more leveraged every year (meaning fewer people running more programs). In 2006, the ratio hit a high value of 65:35.

At the same time, “marketing staff throughput”, defined as program execution dollars per employee, reached a high of $301,400 in 2006. This is 10 percent higher than the previous year. (Putting the two numbers together implies an average expense per marketing employee of $162,292. Presumably this includes salary, bonus, benefits, allocations, and expenses.)

Compare this dramatic growth in Marketing productivity to the overall average for US labor productivity, which grew by only 1.4 percent in 2006 (the lowest in more than a decade). This implies that Marketing productivity grew more than 7 times as fast as overall productivity! It also explains why so many marketers feel like they are being forced to “do more with less”.

What It Means

  • Marketing automation drives productivity. The main driver of global productivity growth has been investment in technology. According to the Conference Board, the lower US productivity numbers might mean the current crop of business applications (such as SFA, ERP, etc.) have maxed out their ability to drive incremental productivity gains. On the other hand, the huge growth in Marketing productivity suggests that investment in and value from marketing automation technology may actually be accelerating.
  • Limits to gains from agency outsourcing. The trend of outsourcing key marketing functions to agencies raises the program-to-people ratio, since it transfers people dollars to program dollars. Of course, there is a limit to how much can be outsourced without requiring oversight from in-house staff. Also, I question the long-term value of outsourcing strategic marketing functions (such as pay per click management), since it makes marketers reliant on outsiders who will never be able to react as quickly as in-house staff.
  • Start building the case that marketing is an asset now. Marketing productivity growth cannot grow faster than overall productivity over the long-term. There will eventually be a time when extraordinary productivity gains can no longer be squeezed out of marketing, when marketers will no longer be able to do more with less. Marketers who work at companies that still think of marketing as a cost center will be pressured to continue to cut to the bone, and eventually performance will begin to suffer. On the other hand, marketers who can demonstrate impact on the bottom line will be well positioned to make the business case for ongoing investment.