Marketers Report Big Increases in Social Media Spending With Little to Show in Return

Zach Brooke
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Key Takeaways

What? The CMO Survey reports the percentage of marketing budgets allocated to social media will double in the next five years.

So what? Those increases come even as many marketers report lackluster or non-existent impact from social media marketing campaigns.

Now what? Marketers are advised to engage in more experimentation with social media to better ascertain its value, particularly as it relates to overall financial performance of organizations.​

​February 19, 2016


Latest CMO Survey shows social media marketing spending up big even as impact fail to materialize.

Marketers will spend more on social media promotion over the next five years than ever before, even though they report bottom-line impact from social media efforts to be lackluster at best, according to the latest version of The CMO Survey.

Social media spending is projected to comprise over 20% of marketing budgets in the next five years. These numbers reflect a fourfold increase in social media spending since 2009. Current levels of social media spending account for roughly 10% of marketing budget dollars. Survey respondents project that number will grow to 13.2% over the next 12 months, and will increase to 20.9% by the start of 2021.

Broken down by category, marketers report bigger increases in spending for B-to-C compared to B-to-B, and for services versus products. These numbers remain consistent throughout future estimates. B-to-B products are the only area of social media spending not projected to break 20% in five years’ time.

Interestingly, the projected increases come even as nearly half of respondents (47.9%) report that they have not been able to show the impact of social media on their business. Another 40% of respondents report they cannot show a quantitative impact of social media, though they sense its qualitative impact on business. Only 11.5% of respondents indicate they are able to prove the impact of social media in quantitative terms. 

The Contribution of Social Media to Company Performance​

 
 

Source: The CMO Survey

When asked to evaluate how effectively social media was linked to overall marketing strategy on a scale of 1 to 7 (with 1 being not all linked and 7 being very effectively linked), the average response rating was 4.2. In a blog post accompanying the survey results, The CMO Survey director Christine Moorman wrote, “This number is still too low to get the best returns on social media investments.”   

Similarly, firms are falling short on integrating customer social media information other customer data, missing out on critical avenues to enhance customer acquisition and retention. Using the same 1 to 7 scale, the average customer integration rating is 3.4. Respondents also reported that 20% of their social media activities are handled by third-party agencies rather than in-house. 

Finally, when asked to rate how social media contributes to company performance, only 3.4% of respondents rated it “very highly” (7 on a 7-point scale). Nearly two-thirds of respondents (63.4%) rated social media contributions as either 1, 2 or 3.

Moorman advises marketers to engage in more experimentation with social media to better ascertain its value, particularly as it relates to overall financial performance of organizations. 

“Results from prior surveys indicate that companies are using more intermediate performance indicators such as buzz. This is a good choice to show social media’s initial contribution. However, lifts must ultimately be understood in terms of customer outcomes, such as acquisition or retention rates. Doing so may require companies to perform more thorough experiments with their use of social media,” she writes.

The CMO Survey is a semi-annual survey that tracks the opinions, strategies and perceptions of leading marketing executives in the U.S. Now in its 16th iteration, the most recent survey was conducted via e-mail between Jan. 12 and Feb. 4. The survey began in 2008, and is a collaborative effort between the American Marketing Association, Deloitte LLP and Duke University’s Fuqua School of Business. It included responses from 289 marketers, with roughly 95% of respondents holding titles at the VP-level or above. 

Other highlights include:

  • Marketer optimism about the state of the economy declined 5 percentage points to 64.4, after hitting 69–an all-time high—in consecutive surveys in 2015. Over one-third of respondents report less optimism about the U.S. economy than they did the previous quarter, up from 12.9% in the last survey. Marketers continue to be more optimistic about the prospect of their own companies, however, but those percentages dipped as well, falling from 72.2 to 54.9.

  • The total number of company sales through the Internet increased a single percentage point to 11.3%, although that number is still down off a high of 12.4% reported in February 2015.  

  • Digital spending is projected to increase 13.2% over the next year, while offline media advertising will decline by 3.2%.

  • Marketing budgets as a percentage of overall firm budgets are at an all-time high, accounting for 12.1% of corporate budgeting. However, marketing spending only accounted for 8.4% of company revenues, a few percentage points of the all-time high of 11% recorded in August 2012. 


Author Bio:

 
Zach Brooke
Zach Brooke is a staff writer at the American Marketing Association. He can be reached at zbrooke@ama.org.
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