Chief marketing officers from top companies expect to spend more than ever on social media, but many remain unsure how to demonstrate its impact on their businesses, a new survey finds.
CMOs also continue to find it difficult to integrate social media activities into the rest of their marketing strategies.
These are just some of the findings of The CMO Survey, which received responses from 351 top marketing executives. The survey, started in August 2008, is conducted bi-annually and is the longest running survey dedicated to understanding the field of marketing.
Results show social media spending is currently nine percent of marketing budgets and is expected to increase to more than 13 percent in the next year. In five years, marketers expect to spend more than 21 percent of their budgets on social media.
Digital marketing, more broadly, is expected to increase 10.8 percent in the next year, while traditional advertising budgets are predicted to decrease 3.6 percent.
“These spending patterns reflect the sizeable opportunity marketers perceive on the Internet and they are right as companies have experienced a 25 percent increase in sales through the Internet in the last year, from 8.9 percent to 11.3 percent of sales,” said Duke University Fuqua School of Business Professor Christine Moorman, director of The CMO Survey, “However, only about 15 percent of marketers believe they can show the impact of social media on their businesses using quantitative approaches—an important prerequisite for marketers to get their ‘seat at the table.’”
Results show even though companies are spending more on social media, that doesn’t necessarily translate into more people working in the area. In fact, CMOs reported an average of three in-house social media employees, down slightly from earlier this year. Findings show CMOs use an average of two people from outside companies for social media needs.
“Given we see sizable spending increases together with limited growth in human capital, companies are likely spending their budgets on technology and infrastructure to support social media—payoffs that should help companies reach customers more effectively and measure their activities with greater precision,” Moorman said.
At the same time, social media strategies remain only modestly connected to the rest of the firm’s marketing strategy. That task will require leadership and organizational structure to bring these aspects of marketing together, Moorman said.
“If the same customer is being reached on and off the web with the same offerings and same brand, companies must ensure a high level of consistency between these efforts,” she said. “If not, customers will remain unconvinced how the company can meet their needs.”
Spending on marketing analytics is also expected to increase dramatically from about seven percent of marketing budgets to more than 12 percent in the next three years. But again, marketers struggle with determining what to do with all the data.
“CMOs tell us they only use about a third of the data that are available or requested.” Moorman said, “Companies need to think as much about managing the use of big data as they do about getting it in the first place. One does not naturally follow from the other and more than 30 years of research shows that companies that use more knowledge perform better in the marketplace.”
Results indicate that 41 percent of companies use online data they collect about customer behavior to help target those customers. Almost 82 percent of CMOs say the use of such data is increasing. None say it is decreasing.
Less than nine percent of CMOs say they are worried the use of online customer data could raise questions about privacy, while 33 percent say they are not at all worried.
“The privacy results have remained consistent since we first asked this question of marketers,” Moorman said. “It is important for companies to strike a bargain with their customers. If companies can promise more value to customers in return for collection and use of their data, many customers would gladly participate in this exchange. However, this exchange needs to be transparent and based on trust.”
Other findings include:
- Growth in marketing budgets is expected to increase more than five percent during the next year. This increase is down from a high of 9.2% in February 2010.
- Companies plan to hire about four percent more marketers during the next year.
- CMOs are the most optimistic about the economy than they have been in the last five years.
- Marketing spending generates more than eight percent of firm revenue and generally makes up about 11 percent of firm budgets.
- CMOs are increasing marketing spending that minimizes environmental impact and benefits society.
For in-depth analysis of the results, including business-to-consumer and business-to-business breakdowns, visit cmosurvey.org.