For blue chip, multi-national companies, the marketing game is all about being brave. It’s about spending, trying new tricks and mastering the new worlds of social media, experiential opportunities and digital wizardry.
In the Australian IT channel, a change is also sweeping through the way companies approach marketing. While the campaigns involved might not be the kind of design-led creative standouts that win at the Cannes Lion advertising festival, brave resellers could see substantially improved business prospects by taking a smarter strategy around marketing.
Marketing is not a new word in the vocabulary of the IT channel. Marketing development funds (MDF) are loved and loathed in equal measure. This funding that trickles down from vendors, sometimes via distributors, and into the hands of the channel can help create market demand for technology. However, the often onerous process of securing funds can make a reseller ask whether it is worth the effort.
An emerging trend may improve and potentially streamline the MDF process for resellers, while also adding a bit of hot sauce to the channel marketing mix. Distributors have been partnering more closely with marketing agencies.
The first moves were made by Nextgen Distribution and DNA Connect; they forged alliances with Bang Australia and PushPull Marketing, respectively. These partnerships illustrated two major changes for the Australian IT industry.
Firstly, the industry is starting to get very serious about marketing, and in a roundabout way, the use of MDF. Secondly, it signals a new business opportunity for distributors, one that was brought about due to a substantially changing environment.
“Information is so easily available today,” says Scott Caulfield, managing director of Nextgen Create, the new name for the joint venture between the distie and agency Bang Australia. “Years ago, salespeople were often engaged as they were distributors of information for customers and created prospects for sales.
"Now [buyers] don’t need to speak to sales, sometimes [they] don’t want to. That is a fundamental shift that impacts sales and sales numbers. Partners realise that sales and marketing alignment is more important now. The role of marketing is not an event, it’s a science.”
Paul Sadler, who became marketing director of DNA Connect through its acquisition of PushPull, says the channel’s approach to marketing hasn’t changed much over time. This is a problem. The rapid changing in buying behaviour has necessitated a reassessment of the industry’s marketing needs – and the change needs to happen quickly.
“Partners still want leads and vendors are still wanting to fund partner-led demand generation, but only a small number of partners are utilising the funding or support available from vendors,” he says. “There is a big gap between partners generating leads and those who should be but aren’t. This presents an opportunity for distributors and vendors and they need to step in.”
It’s all about spreading the marketing resources of the industry around to more resellers and addressing the divide between tier one resellers and the rest. MDF can be water in a drought for some, but it can also create more problems than it solves.
The catch-22 is that larger resellers find it easier to lock down MDF but it’s the smaller companies that can get the most benefit. Because internal marketing resources are scarce among smaller resellers, they should benefit the most from a bit of support via MDF; however, this lack of resources can make it harder to secure the funding. And even when these smaller companies are successful in attracting MDF, too often their marketing plans don’t show the necessary return on investment to convince vendors the spend was worthwhile.
Other times, the reseller doesn’t have the appropriate information to choose the best marketing campaign. “There are so many different marketing tactics that could be executed and it’s becoming more complex as more end customers become tech and marketing savvy,” explains Sadler.
“Over the years there has been a gradual decline in channel marketing spend and a gradual increase in end customer MDF available for partners to use. The gap is that the tier one partners present a plan on how they will use MDF and the tier two don’t. I don’t think that vendors are giving funding to tier one [companies] just because they are tier one: there just aren’t a lot of requests for funding coming from tier two,” Sadler adds.
Next: focused marketing
Focused marketing
This is where the new breed of IT channel marketing solutions can come into play, helping to create appropriate marketing plans for resellers and, in turn, making sure MDF from vendors gets sweated as hard as possible. It’s no different to the advertising industry. Large companies will have an in-house advertising department and bring in agencies where appropriate, but the rest needs to rely heavily on agency support.
Joel Montgomery, founder of digital marketing agency Affiniti, agrees that more needs to be done, especially for tier two resellers. But the end solution has to realise a number of important factors.
“It is more about the program,” says Montgomery. “Is it simple and almost hands off? Can it deliver measurable results? If so, it can work. No matter how that is done, this is what’s needed to get it to work. A lot of the template campaigns that are produced for partners to pick up and run with don’t produce much traction. You need to get involved in clicking the send button on the email for it to be successful.”
But not everyone is convinced that the new distributor offerings will necessarily reshape the way marketing is attacked in the IT channel. Rather, it is seen by some as another option that the smaller resellers will likely have a look at, but it won’t change the environment for the rest. The benefit will come for those who need additional marketing support, but as for marketing tactics, everyone, no matter how big or small, needs to put their thinking cap on.
“I don’t think this will change the environment,” says Robin Marchant, national marketing manager for Brennan IT. “Marketing needs to focus on who the customer is because every company has a different customer base. Messages can be ‘fill in the blank’ and off you go, but it doesn’t benefit everyone.
“This is where you need to be very specific. I think targeting to small numbers – 37 as opposed to 1,037 – gets a much better response and ROI. By using the agency element, some will win, such as those without marketing support. But if you do have in-house resources, you can benefit from being a bit more strategic.”
No matter what side of the fence you sit on – distributor, vendor, reseller – or what your marketing experience has been thus far, one thing is agreed upon by the majority of the IT channel in Australia: marketing, especially in this new social and digital world, needs far more thorough attention. Lessons learnt in the broader marketing industry in Australia should not be ignored. Most of the core principles of marketing are relevant no matter what industry you are in. The two share a lot more than was once thought.
“It’s not like we are working with vendors to try and recruit thousands of partners,” Caulfield says. “Particularly the type of business we have and the product we have – we help retailers deliver or generate demand. It is mainstream marketing. The challenges are exactly the same. It’s born out of infrastructure. Organisations don’t have great databases most of the time. That is really hard to do. It’s a challenge for everyone. Marketing is not beyond our industry and you have to start somewhere.”
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