Underutilisation of martech tools: Marketers under pressure to cut down on tech spends?
Organisations are likely to optimise costs as they realise that marketers are harnessing just one-third of the technology's capabilities despite it consuming a quarter of their budget, say experts
In 2023, CMOs invested over a quarter of their marketing budgets on technology, says a Gartner report. But even though 25.4% of budgets were allocated to tech tools, utilisation of their organisation's overall martech stack’s capability dropped to just 33% on average this year, marking a third consecutive year of decline (42% in 2022 and 58% in 2020). Underutilisation of the martech stack is taking a toll on organisations’ overall ROI, and marketers now are under pressure to cut technology spends. According to the Gartner survey, the percentage of marketers facing this pressure is as high as 75%.
Fair to say that marketers today are in a fix. They are operating in a space that is ruled by technology- the kind of technology that evolves faster than fashion trends and food habits. There are over 11,000 martech tools as of today, and with so many tools at their disposal, the marketing budgets have been through a topsy-turvy situation.
More tech is not always better
“Like gamblers looking to write-off their losses with the next bet, CMOs are attracted to the allure of newer technologies, no doubt amplified by the chatter around generative AI,” says Ewan McIntyre, Chief of Research and VP Analyst in the Gartner Marketing practice.
It is almost like jumping onto the latest trends without being sure of what’s in store. However, while it is good to be excited about buzzwords, marketers tend to forget the very basic aspect of ‘quality over quantity’. McIntyre points out that while this hunger to invest is understandable, it illustrates the sunk-cost fallacy that more tech is always better.
Underutilisation invariably occurs when the eventual users either do not see adequate benefits vis a vis the effort or are not appropriately supported during the change from the old to the new, believes Saurabh Varma, Founder & CEO, Wondrlab Network.
“To prevent unnecessary spending on martech tools they may not be fully utilised, marketers should adopt a strategic approach that involves a thorough needs assessment, careful tool evaluation, executing POC before full deployment, extensive training through the adoption and usage phase, and continuous performance monitoring,” he added.
The highest reported investment increase across all major marketing resources by CMOs this year goes toward marketing technology, while the largest decrease to labour.
Defining the use case
Vishal Jacob, Chief Digital & Transformation Officer, Wavemaker India explains that marketers actually go wrong at the design stage when the use cases are being articulated. “Every tech investment has to solve for a marketing problem. Mistakes generally happen when the use cases are not quite well articulated or if the use cases are well defined then the tech architecture to address the uses case is not clearly defined, and as a result of this, they tend to overinvest in the tools,” Jacob said.
As this trend continues, organisations are likely to face increasing pressure to optimise costs, particularly when they realise that marketers are harnessing just one-third of the technology's capabilities despite it consuming a quarter of their total budget.
Benjamin Bloom, VP Analyst in the Gartner Marketing practice, says in the report that CMOs should press martech teams to find opportunities to simplify so the rest of the function can flourish. “Cutting underused technology within the current stack can also preserve some ‘dry powder’ for transformative applications that aren’t yet generally available,” Bloom says.
Lack of integration - skill sets & tools
Jacob further pointed out that overinvestment & underutilisation is also a result of the lack of appropriate skill sets. “There are two types of skill sets in this case. The tech people who might not know the marketing side, and the marketing people who might be unaware of the tech aspect. When the coherence between the marketing and technology teams don’t come together, then there might be a bit of a problem,” he said.
Speaking about what can solve the lack of integration between the two teams, Jacob says that the conversations between them need to be structured quite well and there should be a very clear call out and articulation in terms of what the marketing team wants to solve for. “Along with that, the tech team should be able to clearly articulate what is possible, what is not possible and what is possible at a certain cost,” he added.
While teams integrating and working is one aspect, there also is the integration of the martech tools that is equally important.
Experts feel that with a clear technology strategy and a phased roadmap that aligns with business goals, CMOs can ensure seamless integration across their martech stack. Varma advises that CMOs should prioritise tools that offer robust APIs and support interoperability. “Regularly review the stack to eliminate redundant or incompatible tools and invest in a centralised data lake,” he added.
Often marketers also grapple with the dilemma of whether to invest more on the existing stack for better performance or just replace the stack altogether. Varma says, “An updated technology & product roadmap, a clear awareness of the total cost of ownership of the current stack vis a vis the cost benefit of investing in new tools remain the fundamental data points that can help CMOs to work towards the balance between using the existing or investing in the new.”
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