Is social media just a tool kids can use to communicate with their friends, or is there some marketing advantage? For years, marketers have been grappling with if and how social media should be deployed. Numerous findings are showing a definitive answer: marketers are embracing social media in major ways—most notably their budgets.
New results from The CMO Survey indicate that companies continue to spend heavily on social media. All spending numbers are on the rise among the U.S. companies that took part in the August 2011 survey. Executives reported their companies are currently spending 7.1% of their overall marketing budgets on social media. This percentage is expected to increase to 10.1% over the next year and to 17.5% in the next five years.
Need more evidence to demonstrate the importance of social media? Consider these trends: (1) the “like button” packs more customer-acquisition punch than other demand-generating activities; (2) retailers fear smartphone apps that drive customers to the web or nearby competitors more than competitors themselves; and (3) B2B companies offer FREE solutions and insights in blogs and podcasts to foster key accounts rather than old-fashioned sales.
Effective use of social media is no longer an option for companies—it is a requirement. Going forward, companies that most effectively deploy social media will be best positioned to serve their client bases. This is particularly true as digitally-savvy customers assume a greater percentage of buying power and as these customers assume higher and higher positions in companies.
Against the backdrop of the struggling economy, the increases in social media expenditures are truly staggering. But the economy actually may be slowing these spending levels. When I first asked this question in August 2009, executives reported current social media spending levels at 3.5% to increase to 6.1% in 12 months and 13.7% in 5 years. A year later in August 2010, answering the same question, executives reported current spending levels at 5.9% to increase to 9.9% in 12 months and 17.7% in 5 years. The 12-month increase expected in August 2009 (6.1%) was nearly achieved by August 2010 (5.9%). However, compare the current figures to what was expected: current (7.1%), next 12 months (10.1%), and next five years (17.5%). Based on August 2010 estimates, I expected to see social media spending levels at 9.9%. However, we only achieved 7.1%. This is lower than expected. Also the 5-year rate did not increase; instead it decreased from 17.7% in August 2010 to 17.5% in August 2011. While small (and probably not statistically significant), I expected that number to continue to rise.
While slower than expected based on past CMO survey results, social media spending is fast emerging as a critical strategic tool for most companies. As this happens, customers shift the way they learn about and interact with companies. These interactions, in turn, become fodder for even better strategies by companies that listen, learn, and adapt their strategies to account for what customers are saying and doing.
A full set of survey results can be found at www.cmosurvey.org/results/