Social media spending has more than tripled since 2009 as a share of marketing budgets, but still falls short of levels predicted five years ago, a new survey finds.
Most firms remain unable to prove the impact of their social media spending and say it contributes little to their overall performance.
These are among the latest findings from The CMO Survey. Conducted biannually since August 2008, and sponsored by the American Marketing Association, Deloitte and Duke University's Fuqua School of Business, it is the longest-running survey dedicated to understanding the field of marketing. The latest edition received responses from 427 top marketing executives.
Marketing leaders spent 11.7 percent of their budgets on social media in the past year. That's more than three times the 3.5 percent they were spending in 2009, but well short of the 17.5 percent predicted five years ago.
"It's important to note that while these increases are impressive, they don't reach the levels marketers expected to be spending at this time," said Christine Moorman, a Fuqua professor and director of The CMO Survey. "There are a number of possible reasons for this. There is a type of bandwagon effect that we've observed in spending on social media. Companies feel the pressure to spend when they observe other companies spending and see a lot of hype in the media about social media spending."
Companies have also failed to account for their competitors creating a clutter in the marketplace, Moorman said.
"Consumers are saturated with company involvement in social media, so that marketing is not as effective perhaps as it used to be," she said. "So firms are reducing their spending levels as a result."
Another reason may be that companies are simply not managing social media investments as well as they hoped.
"Moving more deeply into the social and digital world of marketing requires a deep connection to the customer and the ability to drive a transformation of the company to a whole new type of engagement," Moorman said. "Most companies lack the knowledge and skills to make this happen."
Almost half of firms (44.1 percent) say they haven't been able to show the impact of their social media spending and only 4.6 percent said it contributes very highly to company performance.
The survey found marketing budgets represent 7.5 percent of company revenue, and 11.3 percent of overall budgets. Spending on digital marketing is expected to increase by 9.9 percent over the next year, the slowest rate since February 2014. Marketers predict they will spend 1.2 percent less on traditional advertising than in the last year, continuing a downward trend.
Other findings include:
- Marketing budgets are expected to increase by 7.2 percent over the coming year. Budgets grew by 6 percent over the past year, slightly more than the 5.5 percent increase predicted 12 months ago.
- Marketing hires are expected to increase by 5.4 percent in the next year, a slightly higher rate than in February but lower than a year ago.
- Marketers rate their optimism about the U.S. economy at an average of 63.7 on a 100-point scale, the lowest since February 2013.
For more analysis of the results, including business-to-business and business-to-consumer breakdowns, visit cmosurvey.org.