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Ideas for Leaders #697

CMO Survey: Value of Company Spending on Social Media

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Key Concept

While digital age marketing channels such as social media marketing and mobile marketing has captured the public’s attention, the view from the Chief Marketing Officer’s desk is more measured, according to a new survey of marketing leaders in the U.S. Social media marketing continues to grab more and more of the marketing budget, for example, but measuring its impact on the bottom line remains elusive.

Idea Summary

Companies spend 12% of their marketing budget on social media, which is three times more than in 2009. And this trend is only going to accelerate: marketing leaders expect that in the next five years, companies will increase social media’s slice of their marketing budgets to 20% — representing an increase of more than 70%.

These figures emerge from a February 2018 survey of 362 CMOs and other marketing leaders by Duke University’s Fuqua School of Business. The CMO Survey, which covers a wide range of issues related to marketing, is co-sponsored by the American Marketing Association and has been conducted bi-annually since 2008. 

In the latest survey, respondents were asked how their companies used social media. More than 45% cited brand awareness and brand building. The second most popular reason for using social media was acquiring new customers (32.6%), followed by brand promotions, such as contests and coupons (29%), introducing new products and services (28.7%) and retaining current customers (also 28.7%). 

Of the different social media platforms, social networking platforms such as LinkedIn or Facebook had the greatest impact on a company’s performance, according to the respondents. Blogging, video-sharing and product reviews also had an impact, although networking was listed by a majority of the respondents as the first priority for their social marketing efforts.

Mobile marketing’s share of the marketing budgeting is also expected to grow significantly, according to the marketing leaders surveyed: they anticipated that in three years, mobile marketing’s share would jump from 7% today to 13.5%.

The growth in social media and mobile marketing spending reflects the continued growth in overall digital marketing spending. In the next 12 months, respondents expect spending on digital marketing to grow by more than 15%, while by comparison spending on traditional marketing will decrease by 1.7%. 

Not all is rosy, however, for digital marketing in general and social media marketing in particular. For example, respondents viewed social media marketing as making a rather modest contribution to the company’s performance. On a scale of 1 being ‘not at all’ and 7 being ‘very highly,’ the marketers rated social media’s contribution as (on average) a 3.3 — compared to 3.2 in 2016, essentially showing stagnant progress in this area. (The results for mobile marketing, 2.4 in 2016 to 2.7 in 2018, showed a similar stagnation.) 

Another area of concern is the integration of social media into the company’s overall marketing strategy, which has also failed to improve significantly. In response to the question, ‘How effectively is social media linked to your firm’s marketing strategy?’ the average score was 4.1 out of 7 — compared to a similar score of 3.8 in 2012 and an identical 4.2 in 2016. 

Finally, demonstrating the impact of social media on a company’s business continues to be difficult. Nearly 35% of the respondents said they were unable to show the impact of social media, while 42.3% said they had a ‘good qualitative sense of the impact, but not a quantitative impact.’ Only 23.3% answered that they could prove the impact quantitatively. 

Business Application

There is no denying that social media marketing and mobile marketing represent exciting new channels for marketers as the reach of different social media marketing platforms continues to explode. Companies will continue to grow their presence in the digital arena, but they must also focus on finding ways to translate that presence into a significant impact on company performance — and to learn to measure that impact.

[Editor’s note: Social media is just one of the topics covered in the Duke Fuqua bi-annual survey. For more information on other topics, please see the link to the survey in the Further Reading section.]

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Source

Idea conceived

  • February 2018

Idea posted

  • March 2018

DOI number

10.13007/697

Subject

Real Time Analytics