TL;DR
Partner ecosystems have grown more complex. MDF visibility hasn’t always kept pace.
In 2026, the biggest risk isn’t just unused funds – it’s unknown MDF. The data makes that clear: 24% of organizations don’t know where their MDF was spent, and 1 in 4 don’t know what went unused.
When MDF can’t be clearly seen, tracked, and explained, it becomes difficult to defend – especially when you’re expected to prove impact under finance and executive scrutiny.
Bottom Line: You can’t defend what you can’t clearly see.
Introduction
Market Development Funds (MDF) remain one of the most powerful levers in channel marketing. When they work well, MDF fuels partner demand, accelerates growth, and strengthens long-term relationships. When they don’t, friction builds – inefficiency increases, partners disengage, and revenue opportunities slip.
In January 2026, Channelscaler brought together senior channel leaders to explore what frictionless MDF looks like today. The insights were candid. Combined with live polling, the picture is clear: MDF budgets exist, partners are willing, but execution is breaking down.
AI and automation are quickly becoming essential to making MDF scalable, measurable, and partner-friendly – not by adding complexity, but by removing manual friction and surfacing insight in real time.
The goal is simple:
Move MDF from good intention to measurable partner and revenue impact – with the visibility and intelligence required to defend it.
Meet the Panel
The Evolution of MDF:
From Necessary Spend to Strategic Signal
Historically, MDF was relatively simple.
A budget. A set of approved activities. A reimbursement process.
But simplicity came at a cost. As partner ecosystems scaled, MDF programs became increasingly manual, inconsistent, and difficult to measure. What once supported growth started to create friction for partners and internal teams.
Today’s channel environment looks very different:
- Partners influence the entire customer lifecycle
- Ecosystems include vastly different partner types and business models
- Channel teams are under pressure to prove ROI, not just spend budget
MDF is no longer just a funding mechanism; it’s a signal of how easy (or hard) you are to do business with.
“MDF used to be about controlling spend. Today, it’s about enabling partners to move faster, without creating risk internally.”
Laura Evans
Head of Global MDF Program, Strategy and Incentives
Zoom
MDF Adoption: Still Essential but Expectations are Higher
MDF remains firmly embedded in partner strategies. Most organizations either operate MDF programs today or are actively evaluating the implementation of them. What has changed is how success is defined.
Recent webinar polling shows:
- MDF remains integral to partner strategy for most vendors
- Organizations without MDF are actively evaluating it
- Ease of use and partner experience now matter as much as budget size
MDF isn’t optional, but clunky MDF programs are increasingly a liability.
The Real Adoption Problem: Unused MDF
Despite strong intent, many organizations still end the year with a significant portion of MDF unclaimed. Industry benchmarks show that nearly half of organizations either leave MDF unused or lack visibility into what was claimed versus lost entirely.
Recent findings from our 2026 webinar show:
41%
of MDF goes unused or under-utilized
54%
of partners claim less than 10% – or nothing at all
16%
more organizations saw over 40% of MDF unused year-over-year
Unused MDF isn’t a budgeting issue. It’s a friction issue.
Complex submission processes. Unclear rules. Slow approvals. Painful reimbursements.
Partners won’t continue to invest time or budget if they can’t rely on timely, predictable reimbursement.
“Unused MDF is usually a signal that something in the process is broken, not that partners don’t want to invest.”
Karlene Alameda
Senior Manager of Channel
Field Marketing
Barracuda
The Awareness Gap No One Likes to Admit
Even more concerning than unused MDF is unknown MDF:
of organizations don't know where MDF is spent
don't know what MDF went unclaimed or unused
If MDF can’t be clearly seen, tracked, and explained, it becomes impossible to defend, especially to finance and executive leadership.
Where Friction Shows Up: On Both Sides
The persistence of MDF friction isn’t surprising when you look at how most programs are still managed.
Audience polls from our recent webinar show that MDF operations remain highly manual across the majority of organizations.
This limits visibility, consistency, and scale from the outset. That operational reality quickly becomes visible to partners.
Partners work with multiple vendors, and MDF is often where they feel the difference most acutely.
Friction shows up differently for both partners and vendors:
Partner Friction
- Guessing what information is required
- Re‑submitting claims multiple times
- Waiting weeks or months for updates
Vendor Friction
- Manual reviews
- Inconsistent data
- Limited visibility into budget usage & ROI
Ease of Doing Business is the Differentiator
“When partners understand why an activity matters, MDF stops feeling like admin and starts feeling like collaboration.”
Laura Evans
Head of Global MDF Program, Strategy and Incentives
Zoom
“Partners compare vendors constantly and MDF is one of the fastest ways they decide who’s easiest to work with.”
Louise Grant
Founder & Director
Loucerna
Measuring MDF ROI: Progress, but still a Challenge
Many organizations can track MDF activity, but struggle to connect it into a complete picture of impact.
The challenge isn’t measuring individual campaigns. It’s aggregating results across:
- Multiple partners
- Multiple campaigns
- Long sales cycles
The panel emphasized a mindset shift:
- Think in quarters, not weeks
- Focus on attribution over time
- Accept that ROI maturity improves as data quality improves
You can’t optimize what you can’t see.
“If you want to understand MDF ROI, you have to stop looking at isolated activities and start designing measurement across partners, quarters, and long sales cycles. That’s where most programs break down.”
Kenneth Fox
CTO & Founder
Channelscaler
Automation Helped. AI Changes the Game
Automation across key MDF processes has increased significantly over the last two years, but automation alone hasn’t removed friction from execution.
Traditional MDF platforms still rely heavily on:
- Manual claim review
- Human validation of documents
- Reactive reporting
This is where AI starts to matter. AI is uniquely suited to MDF because MDF is both process‑heavy and data‑rich.
Key areas where AI delivers immediate value:
“MDF is very process-heavy. There are bottlenecks in traditional MDF programs, and that’s a really great use of AI, to take some of that heavy lifting off people’s plates.”
Kenneth Fox
CTO & Founder
Channelscaler
“Automation helped us scale. Now, AI is helping us remove judgment calls and bottlenecks.”
Karlene Alameda
Senior Manager of Channel
Field Marketing
Barracuda
What Frictionless MDF Actually Looks Like
High‑performing MDF programs share one defining trait: low friction.
Frictionless MDF delivers:
- Clear alignment to company strategy
- Defined but flexible supported activities
- Fast approvals and fast payments
- Built‑in visibility for partners and vendors
When friction is removed:
- Partners engage earlier
- Funds are claimed faster
- ROI becomes defensible
- Confidence grows on boths sides
“A successful MDF program doesn’t stop when the activity is completed. You need to finish the process and make sure the entire experience has been frictionless and quick.”
Louise Grant
Founder & Director
Loucerna
What Happens When AI Powers MDF
MDF continues to play a critical role in channel growth, but the expectations placed on it have changed. Channel leaders are no longer just asking whether MDF exists; they’re asking whether it actually scales, delivers visibility, and builds partner confidence.
The webinar made one thing clear: the biggest constraint on MDF performance today isn’t budget. It’s operational friction.
Manual reviews, inconsistent documentation, and slow feedback loops turn MDF into a process-heavy exercise for internal teams and an uncertain experience for partners. Over time, that friction reduces participation and limits impact.
“AI changes MDF from something you react to into something you can actively optimize.”
Kenneth Fox
CTO & Founder, Channelscaler
“A successful MDF program doesn’t stop when the activity is completed. You need to finish the process and make sure the entire experience has been frictionless and quick.”
Louise Grant
Founder & Director
Loucerna
Where AI Makes a Meaningful Difference
76%
of poll respondents said they have not yet implemented AI in their programs.
When AI is embedded directly into MDF workflows, it supports decisions as they happen, rather than reporting on them after the fact.
In particular, it helps standardize and streamline high-friction steps like claim validation and eligibility checks.
This reduces back-and-forth, shortens approval cycles, and creates a more predictable experience for partners, without removing governance or control.
From Operational Drag to Program Momentum
As friction is reduced, the impact compounds:
Over time, MDF becomes easier to scale across regions and programs, while leaders gain clearer visibility into which activities are driving results.
This isn’t about adding more rules or oversight. It’s about enabling:
- Clear alignment to strategy
- Faster, more transparent execution
- Intelligent automation that supports both partners and internal teams
When applied thoughtfully, AI is an enabler. It helps MDF operate with the speed, consistency, and clarity modern partner ecosystems expect.
Frictionless MDF isn’t about spending more.
It’s about making MDF work the way it was always meant to.
“AI gives channel teams the ability to scale MDF with confidence – reducing manual effort while increasing visibility, consistency, and trust.”
Kenneth Fox
CTO & Founder, Channelscaler
Key Takeaways
01.
MDF remains essential, but expectations have changed
MDF is no longer just a budget line item. It’s a signal of how easy (or difficult) you are to do business with as a partner.
02.
Unused MDF is a friction problem, not a funding problem
Budgets exist and partners are willing, but complex processes, unclear rules, and slow approvals continue to block participation and impact.
03.
Lack of visibility is as risky as lack of utilization
When organizations can’t clearly see where MDF was spent or what went unclaimed, MDF becomes harder to defend, optimize, or scale.
04.
Ease of doing business is now the real differentiator
Partners compare vendors constantly, and MDF experience is one of the fastest ways trust is built or lost.
05.
Automation helped. AI changes the equation
AI moves MDF from reactive reporting to real-time decision support, reducing judgment calls, bottlenecks, and operational drag.
06.
Frictionless MDF creates a compounding benefit
Faster partner feedback, reclaimed internal time, clearer data, and scalable execution without sacrificing governance or control.
Final Words of Advice
“MDF works best when it’s part of an ongoing planning conversation with partners, not a one-off transaction. When alignment happens early, everything downstream gets easier for partners and for internal teams.”
Laura Evans
Head of Global MDF Program, Strategy and Incentives
Zoom
“At scale, MDF only works when the entire flow is clear, from request, to approval, to proof of performance. When partners and internal teams can see the same data, alignment and utilization improve dramatically.”
Karlene Alameda
Senior Manager of Channel Field Marketing
Barracuda
“A successful MDF program doesn’t stop when the activity ends. How quickly and clearly you close the loop, especially on claims and payment, is what partners remember.”
Louise Grant
Founder & Director
Loucerna
“When AI is embedded directly into MDF workflows, we see claims processed faster, fewer exceptions, and far better visibility across the program. That shift, from manual review to intelligent automation, is what turns MDF into a scalable growth engine.”
Kenneth Fox
CTO & Founder
Channelscaler
