Marketing leaders are giving a larger slice of their budget to social media. But the results aren’t always filling, according to the August 2014 edition of The CMO Survey.
Currently, The CMO Survey respondents are dedicating 9.4% of their marketing budgets to social and are expecting that to increase to 13% next year and 21.4% in the next five years. But only 15% of the more than 350 senior marketing executives responding to the survey say that their organization can quantitatively demonstrate the impact of that social media marketing. Forty percent of respondents say that they “have a good sense of the qualitative impact, but not the qualitative.” And 45% haven’t been able to show any impact from social yet. These percentages aren’t too surprising considering that, according to the study, companies spend only 2.3% of their marketing budgets on measuring the ROI of their overall marketing efforts.
Marketers responding to the survey plan to increase their investments in analytics, but for a different purpose that measuring ROI: understanding customer behavior. Respondents expect to increase their current spending on analytics (7% of budget) to more than 12% in the next three years. They’ll need to as they increase collection and use of online customer data. In fact, currently 41% of respondents indicate that their company uses online data about customer behavior to better target their customers, and 82% plan to increase the use of that data. No respondents plan to decrease its use. This may be due not only to the opportunities presented by gaining a better understanding of their customers, but also to a lack of concern that customers will raise privacy issues as long as companies are clear about the value exchange for the collection and use of that data. In other words, 33% of respondents aren’t worried at all that using online customer data will raise questions about the privacy of that data, and less than 9% are worried about it.
Fortunately, the growth in spending on social and analytics may not be at the sole expense of other marketing investments. Respondents expect their marketing budgets to increase more than 5% during the next year. Some of those gains will be parlayed into digital marketing investments, which respondents expect to increase 10.8% in the next year. One area experiencing a decline is traditional advertising budgets, which respondents predict will decrease to 3.6% in that same timeframe.
Marketers plan to support this expected growth by adding 4% more marketers to the their teams over the next year. But not all of that staff will focus on the ever-increasing area of social media. Responds cite an average of only three in-house social media employees, as well as an average of two people from outside the company supporting social media initiatives.
The challenges of shifting budgets and tracking ROI aside, marketing leaders are more optimistic about the economy now than they’ve been anytime in the past five years. Perhaps that’s because the measuring respondents are able to accomplish shows that marketing spending generates more than 8% of their company’s revenue, which helps to offset the 11% or so of their company’s budget that marketing expenditures comprise.