The best way to understand the challenges and priorities of chief marketing officers is to just ask them. It’s why Joanne Chen spends much of her time meeting with CMOs. One thing, she said, has become readily apparent.
The expectations on marketers are growing.
“The most fundamental way to prove the impact of marketing is to show that it actually drives revenue.”
“There’s a lot more pressure on the CMO to prove that he or she deserves as much importance as the sales director in the eyes of the CEO,” Chen said. “Well, the most fundamental way to prove the impact of marketing is to show that it actually drives revenue.”
Marketing, she added, now is shifting from a cost center to a revenue generator.
A partner at Foundation Capital, Chen is focused on software solutions that MarTech companies sell to CMOs. The role, working with General Partner Ashu Garg, gives her a front-row view of the rapid advances in technologies that provide marketers with greater insights throughout the buying lifecycle. Foundation Capital’s extensive investment portfolio in MarTech companies includes Adroll, InsideView, Localytics and TubeMogul.
And they continue to be “very bullish” on the sector, she said, for a simple reason.
“There is a pain point in marketing today,” Chen said. “We see a real need in B2B tying marketing to sales from a content perspective and from an attribution perspective. I believe companies that can own the buyer’s journey – starting with marketing getting more valuable leads and helping sales close the deal – are going to win. We hear from CMOs all the time who are voicing these concerns.”
Earlier this year, Garg published a white paper where he explored what he sees as the re-invention of marketing through the use and understanding of data. Forward-thinking marketers, he wrote in “MarTech and Decade of the CMO,” are striving to do things either previously thought impossible or too expensive and labor-intensive.
“Marketing executives want to understand the ROI (return on investment) of every dollar spent,” Garg added. “They want to cultivate a unique relationship with each individual customer. They want to go beyond bringing in sales leads – they want to close the deal. . . . More than anything else, I believe technology will make each of these aspirations more and more achievable.”
It’s why he expects spending on tech tools to become an estimated 10 percent of total marketing budgets over the next decade – rising to $120 billion worldwide annually by 2025.
Recent surveys also have indicated that businesses will continue to devote more of their budgets to technology solutions in the coming years. That helps explain why Scott Brinker’s well-known Marketing Technology Landscape Supergraphic already contained 1,876 vendors this year. That growth goes hand-in-hand with what Chen describes as the evolving nature of the modern marketer.
Traditionally in B2B, sales was in the focal point, she said. But with studies showing that potential buyers now are doing a majority of their research long before ever engaging with a sales representative, that dynamic is changing.
“Marketing is taking a bigger and bigger role in driving sales,” she said. “At the board level, we’re demanding that marketing show its impact. The company that’s thinking about that solution is ahead of the game.”
Chen started her career as an engineer, co-founded a mobile education gaming startup and worked on Wall Street. An advisor to entrepreneurs and investors, she joined Foundation Capital last year in the midst of a remarkable time in Silicon Valley.
An unprecedented amount of investment has flowed into tech businesses. It has created a new class of privately held companies known as the unicorns valued at $1 billion or more. But that also has fueled a debate on whether the market has become overheated. If there is a correction, the question will be if companies can continue to spend freely on sales and marketing without quantifying the return.
Citing Brinker’s chart, Chen said the MarTech industry space probably is heading for some consolidation. She sees fewer players and clear winners in the future. But Chen also believes if there were a market downturn, it would create opportunities for data-driven businesses focused on helping marketers.
That’s because CMOs would be under even more scrutiny to prove their worth during more challenging economic times.
“I don’t think that trend is going to diminish,” Chen said. “If liquidity becomes scarce, I think it’s going to be amplified. With limited resources and constraints, companies will be focusing everything on driving its livelihood – revenue. That should increase marketing’s appetite for software. It will be critically important that CMOs are informed. They will have to do an even better job.”
What’s less clear to her is the best approach to fully measure marketing’s impact with confidence.
“That’s what we’re all still trying to figure out,” she added. “We’re monitoring that very closely and hope to help companies succeed in achieving that.”
It’s why she is optimistic that innovative businesses will continue to get closer to solving those age-old marketing pains.
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