Digital Commands 25% of Marketing Budgets

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Inc. 500: Digital marketers off the charts
Inc. 500: Digital marketers off the charts

Companies will be increasing their digital marketing budgets by 9% on average in 2013, fueled by increased investments in corporate websites and digital advertising, according to a new report from Gartner. A survey of 250 marketers working in financial services, retail, technology, media, and healthcare revealed that companies devote an average of 25% of their marketing budgets to digital pursuits. Gartner predicts the percentage will continue to rise because companies find digital more cost-effective than traditional techniques. Asked what digital disciplines were most essential to their current success, marketers named company websites, social media, and digital advertising.

B2B companies spent slightly more on digital marketing, devoting 27% of their budgets to digital versus 24% for consumer-facing companies. The reason, says Laura McLellan, VP of marketing strategies at Gartner, is that digital has accelerated and streamlined the sales process for B2B companies. “You can save money if you can take customers farther along the cycle on your website without personal sales contact,” she says. “There are fewer sales gatherers and fewer sales hunters needed at B2B companies.”

Ultimately, the B2B corporate website for instance is digital operations central . “It's your face to the outside world,” McLellan says. “It's where customers get an impression of your brand. It's where they find stores, white papers, and research.”

While B2B companies ranked websites as their most important digital marketing tool, B2C businesses rated them a close second behind digital advertising. Still, websites are important for B2C companies because they house their e-commerce operations and because customers prefer them. McLellan describes a healthcare company client specializing in oncology that is tripling its digital budget, both because doctors prefer to be approached online than in their offices and because cancer patients are increasingly accessing the site.

But even digital channels that aren't strictly transactional, like social and mobile, are seeing increasing investment as they are becoming more effective at driving people to stores and websites where transactions are meant to occur.

It's also notable that huge multinationals such as Coca-Cola and Procter & Gamble currently devote as much as 40% of their budgets to digital—way more than the 25% average in Gartner's report.

“Companies are looking around at what the trend-setters are doing and saying, ‘I'm in danger. Even though I can't do a direct ROI on social media, I've got to do it to catch up,'” McLellan says.

Multichannel mindsets have begun to take over marketing departments, and digital budgets will continue to rise steeply in the years ahead as a result, McLellan maintains. “They are realizing that channels such as social media and online video have to be tied together with the website and e-commerce, and that they have to go out and with an improved digital game and experiment,” she says. “There's no digital marketing platform from SAP or Oracle that is going to do it all for you and there won't be in [our] lifetimes. So marketers have to be the change agents.”

It also bears noting that as brands invest in digital activities, the salaries for digital marketers are also seeing marked growth.

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