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Editorial: Game is not over

Editorial: Game is not over

The slight recovery in corporate spending may go through a further and much needed renaissance — fuelled by the improved performance of the Aussie dollar. As the PlayStation-inspired ‘the game is over’ ultimatum to Saddam is about to expire, and John Howard delays the delivery of my (definitely more eagerly awaited) thesis candidature extension with his mailout of the “Let’s Look Out for Australia” pack, it’s easy to let the significance of this improvement get buried at the bottom of SMH’s financial pages. But, for anyone who’s had to deal with last year’s effective spending obsession, the upward movement in the value of the dollar must translate into a degree of optimism (yes, I have been watching Channel 7’s daily Optimism campaign too!).

Historically, the talk of war is reflected in the weaker market performance preceding the military engagement and a quick recovery in its aftermath. But the lacklustre investment in technology has little to do with George W’s war shenanigans and its impact on investment, and everything to do with weak profits, tight financial conditions and the resulting focus on return on investment and maximum-impact spending.

IT vendor spending on marketing is a good reflection on the state of play in the industry. According to BRW, last year five vendors — IBM, HP, Dell, Intel and Microsoft — accounted for 59 per cent of advertising spending by the IT industry. In the US, the list is a bit more extensive with a total of 10 vendors responsible for 55 per cent of all IT advertising. In Australia, more than 20 local IT titles went to the wall due to the redirection of industry marketing dollars to high-impact sales generating advertising.

Likewise, marketing dollars committed by vendors to distributors’ co-op funds have shrunk, leaving a huge hole in budgets generally reserved for effective communication with the reseller community.

Even in ARN, which is seen in the industry as a trusted communication platform read almost as religiously for marketing messages delivered to the channel as for its editorial content, the drop off in the number of advertising pages has significantly impacted the flow and quality of communication to the channel.

In a way, reduced marketing spend reflects the vendors’ continued efforts to rationalise their channels and derive maximum value from a fewer number of partners and intermediaries, with some bypassing the channel and strengthening their direct efforts along the way. But for every OKI or IBM reducing its commitment to the channel and related marketing activities there is an HP, Intel and Microsoft whose marketing efforts get thwarted more by the increased demand for spending accountability and recentralisation of spending decision making, than by the loosening of their channel ties. The slight easing of strings on corporate money bags that we witnessed towards the end of 2002 has once again been reversed with the talk of war. But as we enter the last year of the three-year IT refreshment cycle and the stronger dollar frees up corporate budgets creating some room for spending, we have a reason — however slight — to expect improvement. Whether this improvement will spill back into the channel, both in the form of business opportunities and reseller-targeted sales and marketing efforts, remains to be seen. One thing is undeniable — they go hand in hand.


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