The Social Media Spend-Impact Disconnect

Social media spending is expected to climb to a 20.9 percent share of marketing budgets in the next five years. This share was only 5.6 percent in 2009. What is striking, however, is that only 3.4 percent of marketing leaders report that social media contributes very highly to firm performance; 40 percent report a below average contribution (see insert).

These are among the latest findings from The CMO Survey. Conducted biannually since August 2008,  the latest edition received responses from 289 top marketing executives.

The Contribution of Social Media to Company Performance2016-02-blog-graphWhat explains this social media spend-impact disconnect?

  1. Social media is often going solo: When asked to rate how effectively social media is linked to their firms’ marketing strategies on a 1-7 scale where 1=not at all integrated and 7=very integrated, marketing leaders report an average score of 4.2. Although higher than 3.8 from 4 years ago, this number is still too low to get the best returns on social media investments.
  2. Customer social media information is not integrated with other customer information: Companies are not integrating customer information from purchasing, social media, and other communication channels. On a 1-7 scale where 1=not at all effectively and 7=very effectively, the average customer integration rating across these three sources is 3.4, which is a poor showing and lower than last year. This means companies do not yet have the critical 360 that could help them increase customer acquisition and retention.
  3. Proving social media’s impact is elusive: This has remained a challenge for marketers, and new results indicate that they have yet to get a handle on it. Only 11.5 percent of marketing leaders report they have proven the impact of social media quantitatively. Another 40.6 percent report having a good qualitative sense, but not a quantitative assessment. 47.9 percent report have not been able to show any impact yet.
  4. Partners may not be fully utilized: As companies build a presence in social media, they often seek outside agencies to help. In fact, marketing leaders report that 20 percent of their social media activities are performed by outside agencies. One challenge is that old “not invented here” syndrome—where companies fail to accept new ideas developed outside their borders—could be keeping this external expertise from making its best contributions.
  5. Cross-functional marketing leadership is needed: Marketers lead social media activities in 83.9 percent of companies—a percent that has climbed from 71 percent in 2011. Marketing leaders managing social media need effective cross-functional skills in information technology and traditional marketing to make social media effective.
  6. Lack of social media goals: Many companies do not have clear objectives for their social media activities. Without objectives, what should be measured? The best social media activities have a clear objective and measure performance against it. For example, in the recent survey, 15.6 percent of companies reported they will invest in social media to develop new products. Given this, what process and outcome metrics make the most sense to assess impact in this area?
  7. Social media expertise is not embedded in marketing teams: Social media experts should be closely linked to the brand and customer teams they support. This involvement pays off because social media experts are tuned into the latest platforms and know which approaches generate interest from current and potential customers, fans, and enthusiasts. As a result, these experts can guide brand and customer teams to think differently.
  8. Failure to drive toward the financial performance connection: Results from prior surveys indicate that companies are using more intermediate performance indicators such as buzz. This is a good choice to show social media’s initial contribution. However, lifts must ultimately be understood in terms of customer outcomes, such as acquisition or retention rates. Doing so may require companies to perform more thorough experiments with their use of social media.

Sponsored by the American Marketing Association, Deloitte LLP, and Duke University’s Fuqua School of Business, The CMO Survey collects and disseminates the opinions of top marketers in order to predict the future of markets, track marketing excellence, and improve the value of marketing in firms and in society. To participate or for report downloads, visit

Post By Christine Moorman (71 Posts)


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