Read the research here!
Transcript
Hello everyone, it’s Friday, it’s Halloween and it’s 11:00 a.m. almost, which means it’s time for the Flow Tate podcast. I’m Stuart P. Turner, um, hope you’re having a wonderful day so far wherever you are, um, whether you are a Halloween fan or not, obviously it’s probably happening around you so don’t be scared. What better way to scare everybody than to talk about budgeting? Just as a bit of forewarning, um, one, obviously this will be a very spooky episode and two, it’s going to be a little bit stats heavy, so if that’s not really your thing, numbers and that, you know, feel free to check out now. If it is, um, then please stick with me as we chat through some numbers, the influence on budgets specifically for B2B marketing for next year, um, and look what we think you should be doing about them. As you probably know, if you are either in or you deal with a lot of marketers yourself, the marketing budget is under almost constant assault, assault times, various different places.
Weirdly, um, the theater marketers among us, um, you know, are constantly talking about wanting a sort of seat at the C-suite table. We want to be able in there with the big dogs, be able to, you know, sort of talk the language of business, um, but there continues to be a bit of a gap between the aspiration and the reality from my perspective, um, which is often where we come into help, you know. But it can be a source of frustration, uh, on both sides of the fence, I think when, you know, it can sometimes feel like we’re talking sort of two different languages. However, you know, in B2B, you’re often a lot closer to the commercial side, I would say, than B2C, more often than not, so we’re in a kind of better starting position, but there’s still challenges. So what I thought I’d do today is run through a bit of light research I’ve been doing. I got my old mate Perplexity to just help me get a rundown of what are people across APAC saying, and I don’t just mean like, you know, Jeff’s blog and random thoughts. I mean like reputable sources and people who’ve done some research, um, what are they saying about the situation here? We’re going beyond just, you know, what’s happening in the industry specifically. I’m just going to take a look at some of the economic and political headwinds that are impacting the region, um, some of the international challenges that we’re facing which obviously have an impact on our ability to spend or not, as well as some specifics around the digital industry, what’s pushing marketers in particular, uh, and then just a few, you know, general aides from my own experience which I’m sure you’ve come to expect.
Starting kind of in reverse order, um, there’s an interesting, uh, I guess description of a profession intention here, um, across APAC, um, when describing marketing because, um, there’s still a projected 60% of marketers are going to continue to spend on brand. However, a large proportion of marketers are also saying that they want to continue to push demand generation. If you’ve listened to this show before or if you, you know, know what you’re doing, you’ll know that basically what we’re talking about there is essentially the very top and the very bottom end of the funnel. As usual, there’s not a lot of, you know, focus on the middle, um, which is where our old friend the sales marketing gap tends to start rearing its head. That is a continued kind of error or blind spot in a lot of budget planning and thinking, um, which is driven by, to me, a strange sort of old school concept about, you know, you needing to just push the bottom of the funnel, keep pushing stuff like we’re going to push conversion. Whereas really what you want to be doing is focusing at least up into the midsection and the top end to continue to build your future pipeline and just connect it more effectively, and then you will improve conversion. There’s so much optimization that most people can do in the middle of their funnel if you want to think about it that way, um, so it surprises me that that’s still the state but also doesn’t surprise me at all. That was the main sort of, you know, the reason there’s a lot of tension: it’s either the very top at the very start of the journey or the very end. Nobody seems to know what to do in the middle. That’s an obvious and easy place to sort of start fixing problems to improve your performance next year. To remove that tension, I would say look what’s happening in the middle of your customer journey, what’s happening in that washing machine swilling around of people where you’ve gone beyond showing them an ad campaign but you haven’t quite started having a sales conversation. You must be able to track them and do something with them; it’s not super hard.
Zooming out of that to go right up to the, you know, economic and geopolitical, um, sort of macro trends that are affecting us down here, as you probably know, there’s still a fair bit of trade policy uncertainty, uh, and a number of global tariffs that are not impacting us as much as some other regions globally but they are having an impact. Obviously, our friends in the US and, uh, you know, current tariff regime is not great. I don’t think even for the US itself at the moment, but look, let’s not get into the political side of it. We’re not getting hit as hard as some of the regions. However, you know, tariffs and political uncertainty obviously washes into the economy; it creates economic uncertainty, people pull back on spend, they don’t make big bets. Everyone’s sort of sitting on the fence a bit to see what happens. So, whatever you think of the current tariff strategy and situation, the uncertainty it causes generally starts to create a bit of slowdown and, um, you know, everyone playing the waiting game until we know exactly what the fallout is and what’s going to happen.
The obvious sort of, you know, discussion that everyone has around this is like, look, the US broadly is trying to pull back and, you know, protect its own industry and economy, which is fine; that’s not a bad way to think about, you know, creating policy. But that obviously gets everyone else thinking that way. The challenge we have in the digital industry is that obviously a large part of the digital industry comes out of America. A large part of the digital industry is actually global behind the scenes. The cloud is not all just in Silicon Valley; it’s everywhere. So, on the one hand, saying, look, we want to bring more investment back at a national level—that’s great, let’s push our own economies and play to our strengths, wonderful. But, you can’t unwind like 30 or 40 years of globalization across industries that are by their very nature decentralized. So I don’t see huge risk there; I just think we’re going to have to wait it out and see what happens, which is what everyone else is doing. How this impacts you and how it impacts your business to a large degree will depend on the industry you’re working in and where your specialisms are. For Flow State Marketing, they do a lot of work with data and enterprise technology businesses, and healthcare technology businesses. A lot of that is driven by Europe and the US, so this is very top of mind when navigating these challenges. The speaker doesn’t think there’s anything terrible or “business killing” that’s going to happen if you’re being sensible there.
Bringing it back to APAC though, geopolitical risk is pretty high here. There was a survey for, I think it was Invested Daily or Peaked PC, that said that 75% of respondents to the survey here stated that geopolitical tensions were in their top three investment risks. Uncertainty—people don’t like it, investors don’t like it, the money guys don’t like it because they don’t know what’s going to happen to their money. Everyone’s been pulling back to the “old faithfuls,” like the massive run in gold over the last few years. This uncertainty factor slows things down, which makes things challenging from a marketing perspective. If businesses don’t know that they necessarily want to grow and continue to push growth, investment in marketing potentially will be pulled back. The volatility in currency is sort of working in our favor at the moment, however, if the dollar goes up for example, there are some debt servicing implications and things could change. These are all things that will have a wash-on effect on business budgets and marketing budgets, and you just have to kind of ride it out.
Finally in this region, a few of the Southeast Asian markets have had their forecast downgraded. As a survivor of both the Y2K millennium disaster (narrowly averted) and the GFC, the speaker doesn’t think this is a massive issue because every problem is an opportunity. If there’s an economic slowdown and you’re in a digitally driven industry, the speaker would see that as a potential growth opportunity personally. The slowdown broadly speaking at this top level doesn’t mean every single industry slows down; it just means there are some big growth drivers too. The advice is to look for the silver lining.
Broadly speaking, the economic issues are what they are globally, and there’s not much we can do about them. A lot of the companies Flow State works with are based out of the US or Europe. If those companies are looking at the APAC market, particularly Australia and New Zealand (ANZ), the speaker recommends treating it as a great test bed for things you can then roll back out globally. The nature of the market here is super interesting, and you can pick one or two countries or industries and test stuff super quickly, and then be pretty confident they’re going to work at bigger scale. The recommendation is to increase attention on the APAC region and for marketing people here to pitch things that are different, innovative, and interesting that could then be taken back globally.
Some other things that jumped out from the research were digital industry trends, starting with privacy and compliance. Privacy and compliance, which the speaker has discussed extensively in relation to AI implications, is increasing. More and more country-level privacy laws are being rolled out across Southeast Asia. Australia tends to follow standards like GDPR. This means it will become more and more complicated to manage compliance from a marketing perspective across all these different regions. This is an area where AI can step in and help, as it is good at standardized process-based analysis. For example, there’s been a recent new roll out of personal data protection in India, one is coming out in China, and some are across Vietnam. Building a complex compliance framework is now actually way easier, and you don’t need the previous level of national expertise.
However, managing compliance across your technology stack will become a lot harder. The first reason for this difficulty is the huge skill shortage in this region around digital technology and the lack of talent in that area. It’s necessary to ask: Can you enforce a compliance document automatically across all your platforms? If you are using third-party AI tools, where are they getting their data, and how is your own data governance and due diligence? Marketers should be aware of these related issues. While strictly speaking, dealing with all of this isn’t solely a marketer’s responsibility (they should engage compliance teams), for any technology being run, there is a level of due diligence required around the data pulled in, partner due diligence, and opt-in/permission to market. This is all getting more and more complicated to manage. Marketers should lean heavily on partners and vendors to ensure due diligence, but ultimately, if you’re activating data, it is your job to ensure you have the relevant permissions.
The speaker then mentions two things they frequently discuss: AI-powered personalization and automation in relation to Account-Based Marketing (ABM), or “Account-Based Execution” (as the speaker’s business partner, Eve, calls it). There is a huge opportunity to do ABM way better. The ability to deploy really effective strategy is dramatically increased because of the rapid fire availability of information. To do this correctly, effectively, and efficiently, you need to be thinking about moving away from potentially clunky legacy systems. These systems are often based around advertising data, obfuscated or scraped information, that don’t directly tie accounts to intent. The advice is to interrogate your own tech stack and not be afraid to rip guts out and rebuild a new one because rebuilding them is super easy now.
It is not hard now to decouple yourself from a platform that might have been very “thermally embedded” years ago. A classic example is Salesforce or Microsoft. If your company has been running on Salesforce for a long time, sitting on huge pools of data, it is actually much easier now to chuck Salesforce, keep the data, and build your own AI type tools to analyze it. You could be back in action in a few months, whereas decoupling might have taken years before. The speaker is not suggesting throwing Salesforce away tomorrow but highlighting that it is easier to interrogate the information you have and build IP that is only relevant for your business, rather than relying on technology vendors who have a vested interest in you continuing to spend money.
Regarding advertising versus organic digital strategy, activating your own data is one of the most powerful ways to get your brand out there and build direct relationships. Inbound and targeting determined demand is one of the best ways to direct activity to build routes to your brand. The speaker is pleased to see an equalization of the advertising industry. Global inflation has been driving digital advertising costs up pretty significantly. Digital advertising is no longer the cheap and cheerful alternative to running on TV. In tandem, the costs of old school advertising have been coming down. People are realizing that traditional media is valuable and are reappraising the value of tactics like massive signs by the highway, cinema ads, radio, and podcasting. Digital media is no longer cheap and easy results.
If planning budgets for next year, the speaker strongly suggests doing two things:
- Pulling a ton of money out of your advertising budget.
- Pushing it towards more long-term, powerful, organically oriented brand building or demand generation tactics.
This means reinvesting in media in the old-school fashion. Marketers should think about where people are spending the most time (engaged time), not where they can generate the most impressions or clicks. This requires sitting down and thinking about the audience and digging up interesting intelligence about them. This exercise is a key step in aligning sales and marketing. Anecdotal feedback from years of working heavily on LinkedIn shows there are many “stalkers” who read posts or articles without interacting or connecting, yet they are engaged. This intangible side of growth is what sales people typically understand, but marketing people are often afraid of because it can’t be measured. This is an interesting point of collaboration that is overlooked.
Regarding training, skills, and development, investment in training is going down, skills and knowledge are going down, and the availability of talent in the region is very poor. This is not ideal because digital skills need to be on the rise. 34% of organizations struggle with training and team experience, which is up from 27% in 2024. B2B marketers in the region say that creativity, efficiency, and innovation are their top three most required skills (not traditional marketing skills). This lack of skills, coupled with the spread of responsibility for AI across two or three different teams, will cause challenges. 42% of organizations are planning to increase IT spend to support AI but are not confident it will deliver ROI without proper alignment across all departments.
If you bring in AI solutions but lack people who can think critically about using those tools, train others on them, or afford to hire trainers, issues will arise. Service providers and partners should be leveraged to help train teams on these tools. Training can be very hands-on and practical, rather than traditional, boring days of training. Marketers should look to their agencies or consultants for help in bolstering areas where they see gaps. The speaker recommends leaning on service partners to help build role profiles for jobs, rather than posting “horrible idiot unicorn jobs” that demand unrealistic skills for low salaries.
Skills, development, and training are identified as one of the biggest issues, coupled with the fact that the higher education system is “woefully failing” to educate people effectively about what is happening in the market. While higher education has value, the speaker suggests that if the only reason for a degree is to get a job, and the job doesn’t require high skills, don’t bother going to university. For proper learning, like marketing, a practical course (e.g., Mark Ritson’s Mini MBA) is suggested. For university, the focus should be on classic arts, humanities, and STEM subjects because these teach critical thinking about how to deal with situations you haven’t been trained for.
The speaker suggests that businesses should consider bringing on more junior people and training them in-house. Options include hiring grads or starting an intern program (but paying them for their work). This approach allows businesses to educate people in the way they want them to work and make them part of the team. This is highly valuable because then the business is not at the mercy of the market, especially since there is no talent out there. Marketers should chat with those who run the Learning & Development (L&D) budgets to get funds to run marketing or growth training programs.
Rounding off the discussion, digital technology is expensive, fragmented, and often not effectively supported across marketing and sales teams. There is a huge skills gap, and most marketers don’t effectively use the technology they pay for. A specific example given is LinkedIn Sales Navigator, which is very expensive ($100 minimum per seat per month). Clients often pay for hundreds or thousands of seats, but nobody uses it. The speaker suggests that these underutilized technology subscriptions are “eating away” the budget.
At a basic level, an easy place to start saving money is conducting due diligence around who is logging in and using the tools. Most decent plans have an admin console to view usage stats. Kick out anyone who is not active or using the tool to recover money.
What the speaker found encouraging was that 25% of planned AI spend is apparently going to be delayed till 2027. The speaker advises against rushing to spend tons of money on AI without building a proper strategy. The initial hype that AI would magically replace sales teams or instantly do stuff has proven to be inaccurate commercially, partly because people hate being automated at (receiving spammy, automated messages).
The speaker highlights the “CFO crackdown,” where Chief Financial Officers are becoming increasingly involved in AI-related decisions. This is because AI businesses have huge operational costs, which they are starting to pass on to end-users. If businesses embed AI into their operations, they risk costs increasing by a factor of 10 or 20 over which they have no control. The hype is dying down, and everyone has arrived at a more sensible place.
61% of organizations across APAC are stating that the overall cost of MarTech is one of their top challenges. This is due to the “sign up and forget” mentality driven by the digital industry, leading to companies spending thousands a month on technology they don’t monitor or support due to the skills gap.
32% of organizations report not using the full capabilities of their current tech stack, which is up from 28% in 2024. If you want to save money, the first place to look is technology subscriptions: what can you get rid of, reinvest, or upskill people on?
Organizations are increasing IT spending, but they are also trying to bring back “serenity compliance infrastructure,” which means controlling the technology they use. Flow State, for example, tries to build its own tools and hub because it is often cheaper now to invest in building custom solutions than to subscribe to three or four external tools that achieve similar goals. This mentality—reinvesting subscription money into development to build stuff that does exactly what you want—is crucial for increasing operational efficiency. Due to the scaling of AI, this is much more achievable, potentially needing only a fraction of the development team size previously required.
The speaker concludes by mentioning that they will publish an article with this episode, including a downloadable version with all the sources, such as an interesting study by Green Hat done in conjunction with Six Sense. The study surveyed about 160–170 people from APAC and others from the US.