Social media spending as a percentage of marketing budgets will more than double over the next five years according to new results from The CMO Survey. Responses from 468 top marketers in February indicate that companies are spending 8.4 percent of their budgets on social media. Over the next year, that number is expected to increase to 11.5 percent, and in the next five years it will reach 21.6 percent.
Looking back to the first time I asked these questions in August 2009, the levels were 3.5 percent of current budgets and expected to increase to 6.1 percent over the next year and 13.7 percent over the next five years. The increase in current spending from 3.5 percent to 8.4 percent alone represents a 140 percent increase in the last 3 years. No other part of the marketing budget has grown so much in such a short amount of time. In fact, during the same time period, traditional advertising has continued to plummet. It was decreasing by 7.9 percent per year three years ago and continues to drop 2.7 percent in the current year.
The dramatic increases in social media spending were universal across different business sectors: B2B-product, B2B-services, B2C-products, and B2C-services. The B2C-product sector, which includes companies such as Procter & Gamble and The Coca-Cola Company, expects the most dramatic increase, from 9.6 percent to 24.6 percent (see Table 1).
While spending on social media appears easy to do, CMOs reported their companies have not yet cracked the code on how to fully integrate social media with the rest of the firm’s marketing strategy. On a scale of 1-7, only 9.9 percent of respondents believe that social media is “very integrated” with the firm’s marketing strategy (the highest rank for the question), while 15.2 percent believe it is not integrated at all (the lowest rank for the question). Even more striking is the fact that the average score of 3.8 is the exact number recorded the first time this question was asked two years ago in the February 2011 CMO Survey!
Here are my questions: Why spend more but not solve the integration problem? Why is integration so tricky for companies?