Even though social media spending has climbed sharply in the last five years, U.S. companies report its contributions to company performance are weak, a new survey finds.
Chief marketing officers at leading firms also report their companies are becoming less effective at integrating all of the customer information they have.
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 289 top marketing executives.
Social media spending is expected to climb to a 20.9 percent share of marketing budgets in the next five years, the survey found. In 2009, it was only 5.6 percent. But barely one in 10 firms (11.5 percent) say they can demonstrate the impact of that spending. Only 3.4 percent of marketing leaders said social media contributes very highly to their firm's overall performance.
"Companies are spending a lot on social media right now, but demonstrating its contribution depends on more than investment in analytics, though that will help," said Christine Moorman, a Fuqua professor and director of The CMO Survey. "Firms must also take other steps to integrate social with the rest of the company's marketing strategies. This will require changes to where social media is located, its involvement in the planning process, and consideration of how the firm's customer and brand assets are managed in social media."
On a 1-7 scale, the average firm rated its integration of customer information from purchasing, social media and other communications channels at 3.4, continuing a slight but steady decline first seen in February 2015.
"This lack of 360 degree understanding of customers makes all of marketing, including social media, less effective," Moorman said.
Firms also reported their development and use of insights about customers was down slightly in the last year. Moorman called that a missed opportunity.
"This type of knowledge can be used to create very effective marketing strategies," she said, "and it is particularly difficult for competitors to imitate."
Spending on mobile marketing is expected to more than double as a share of marketing budgets in the next three years, from 5.9 percent today to 14.6 percent. But few firms rate mobile spending as contributing to their overall performance. More than 40 percent of firms said it did not contribute at all, with only 0.5 percent saying spending on mobile marketing contributed very highly to the bottom line.
"As marketing has shifted from one-way, controlled messaging to unscripted, multi-channel conversations, it has completely transformed the role of the chief marketing officer," said Deloitte CMO Diana O'Brien. "The findings show that while social, mobile and analytics spending is on the rise, they're falling short when it comes to boosting the bottom line. It's clear that more data doesn't always equate to more insight, and new technology has no intrinsic value to marketers unless it helps a company better understand its customers and enhances the customer experience."
Marketing budgets represent 8.4 percent of company revenue, and about 12 percent of overall budgets. Spending on digital marketing overall is expected to increase by 13.2 percent over the next year. Marketers predict they will spend 3.2 percent less on traditional advertising than in the last year, continuing a downward trend the survey has seen since February 2012.
Other findings include:
- Marketers are at their least optimistic about the U.S. economy since February 2013. The number reporting to be less optimistic increased from 12.9 percent to 34.5 percent over the last six months. But the overall optimism score of 64.4 score remains higher than it was throughout the financial crisis.
- Marketing hires are expected to increase by 5 percent in the next year, a lower rate than in August but higher than the previous two years.
- Marketing budgets are expected to increase by 6.9 percent over the coming year, a softer forecast than 12 months ago but stronger than at any other point since 2012.
For more analysis of the results, including business-to-business and business-to-consumer breakdowns, visit cmosurvey.org.