Research Corner: Gartner study finds B2B marketers investing more in digital, innovation than B2C counterparts

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B2B marketers are embracing digital marketing by boosting budgets and investing in innovation and technology to attract and retain customers, according to a recent report from research firm Gartner.

Gartner's "Digital Marketing Spending Survey" polled 285 marketers across eight industries (financial services and insurance, high-tech, communications, manufacturing, media, retail, government and healthcare) from July through September 2013.

The report found, following a double-digit increase in 2013, digital marketing budgets are set to rise another 10 percent overall this year. It represented an average of 28.5 percent of the total marketing budget in 2013, as compared with 25.5 percent in 2012.

B2B marketers, even more so than their B2C counterparts, are investing in the digital channel. For them, digital marketing comprised 29.2 percent of the total marketing budget, while for B2C it took up 24.5 percent.

"B2B companies have woken up," said Laura McLellan, VP of marketing strategies at Gartner. "Some of that is catch-up spending, because they're just now seeing the need for this, but they are definitely spending more."

"A lot of B2B marketers are still finding their way, and this is going to be a journey for them," she added.

B2B marketers are gearing up for the long-haul. McLellan shared statistics from a yet-to-be-published survey that indicated that B2B CEOs rate digital marketing as the No. 1 technology-enabled investment area over the next five years. And according to this recently released report, other than the media and advertising sector, manufacturing is the segment that Gartner expects will pump the most dollars into digital advertising.

For McLellan, however, the most intriguing finding from this study is that B2B marketers are investing in innovation more than B2C marketers. While 81 percent of B2C companies have a marketing innovation budget compared to 79 percent for B2B companies, B2B marketers allocate a larger portion of their budgets to innovation (9.8 percent versus 8.2 percent).

Laura McLellan

"Fail early, fail often, try new things, because that is going to be the hallmark of what's going to set B2B companies apart from other companies like them," she said. "It won't be the product, for the most part, and it may not be the brand as much as it's going to be the experience they create. And in order to do that in a way that makes customers delighted will require a continual two-way dialogue with them, that brings them into new product development and decisions and that brings in A/B testing of their next campaign. And all of that is going to involve software and data, all of which needs to be innovated."

Highlighting the growing importance of customer-centric marketing, the report also found that 77 percent of respondents have a chief customer officer at their companies. Unlike their B2C brethren, 60 percent of those B2B executives report to the CEO rather than the CMO (33 percent). For B2C organizations, chief customer officers report primarily to the CMO (56 percent) rather than the CEO (39 percent).

"There are advantages to the role reporting to the CMO," the report said. "Digital marketers already make customer engagements and experiences top priorities. Marketers have responsibility for customer acquisition and retention. And marketing is measured primarily on revenue, profitability and retention, according to our research." But according to McLellan, there is a reason the chief customer officer reports to the CEO rather than the CMO at a higher rate at B2B companies.

"B2B companies, particularly technology ones, started out with a culture where you had sales, and you had marketing and you had customer service, but nobody talked to one another," she said. "And now you're talking about a customer experience that needs to be consistent across every touch point, and that means across all of those functions. In the B2C space, they've had an easier time of reconciling those. On the B2B side, it takes the CEO level to be able to mandate some of these changes in behavior across three functions that may have been siloed."

At any rate, B2B companies committed to investing in digital, innovation and prioritizing roles such as chief customer officers will reap the benefits in an environment in which the customer has so much control.

"For many B2B companies, there is the mindset that 'we must be doing this [investing in digital innovation] or else we'll fall behind.' And we [at Gartner] do believe there  is a good percentage—we're still arguing what the percentage is—of companies that will just be out of business in the next five years because they're just not keeping up. You saw it happen in media and publishing, and you're going see it happen in other industries."

For more:
-See this Gartner report