2005 IT Services Marketing Budget Study Reveals New Priorities and Trends

ITSMA sees best-of-breed companies focusing on differentiation and integration; advertising spend way down

LEXINGTON, Massachusetts—June 21, 2005—The marketing priorities for IT services and solutions companies in 2005 reflect a strong focus on differentiation and a greater degree of integration across campaigns, according to ITSMA, a membership organization that specializes in helping companies market and sell services and solutions. New ITSMA research reveals that, while marketing budgets for services at leading IT and telecom firms including Cisco, IBM, Lucent, Microsoft, and Sun Microsystems, among others, are holding steady at 2004 levels, the way that these companies are allocating their marketing dollars has undergone a shift.

“One of the top marketing priorities for the year is differentiating the company from its competitors,” says Julie Schwartz, senior vice president and chief research officer, ITSMA. “To that end, we’re seeing many companies abandoning expensive mass-marketing broadcast campaigns in favor of smaller and more targeted approaches: community-building, if you will. Marketers know that one-way, mass-market pitches are no longer getting them the results they need. IT providers must prove their value in a real and credible way, and the more comprehensive and cross-channel the approach, the better.”

As companies strive to prove their unique value to customers and prospects, there has been a steep decline in funds dedicated to advertising. This year, services marketers earmarked a mere 3% of their marketing communications budgets for advertising, way down from the 17% they spent in 2003 and the 12% they spent in 2004. Some of this reflects a shift to less expensive online advertising. But mostly, marketers have begun spending more on live events, public and analyst relations, and direct marketing, where they can reach out to individual customers and industry influencers in a more personal way.

Companies are also diverting marketing resources from headquarters to the field, where they can strengthen relationships with customers one-on-one and generate revenue in a slow-growth environment. ITSMA data from the technology boom in the mid- to late 1990s showed firms dedicating less than 20% of their services marketing budgets to field marketing activities. Today, services and solutions companies are investing 43% of their budgets on the field, up 4% from 2004.

To best communicate differentiation, it is essential that employees align around key brand messages. Data from ITSMA’s 2005 Services Marketing Budgets and Benchmarks study shows that 15% of the marketing communications budget this year has been allocated to internal marketing initiatives, up from 3.4% in 2003 and 9.4% in 2004. This indicates that services marketers recognize that it is their own people who are most effective at carrying the brand messages to customers, prospects, and influencers. “What you do is more important than what you say,” says Schwartz. “If you’ve got great communications but a sub-par customer experience, you won’t remain profitable for long.”

For more information on services marketing budgets and priorities, see ITSMA’s new report, Services Marketing Budgets and Benchmarks: 2005 Metrics, Trends, and Challenges. The report provides essential data and analysis on 2005 services marketing budgets, budget allocations, and marketing priorities from a range of companies across the technology and consulting industries. To learn more, visit http://www.itsma.com/research/abstracts/b015.htm.

About ITSMA
ITSMA specializes in helping companies market and sell services and solutions more effectively. As a membership organization, we work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA members include business leaders such as Accenture, BT, Cisco, Hewlett-Packard, IBM, Microsoft, SAP, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing ^SM, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.