Spending on social media is easy. In the most recent CMO Survey, marketing executives reported their companies currently spend 11 percent of marketing budgets on social media. This spend is expected to grow to 19 percent over the next five years.
Figuring out how to convert these investments into effective marketing, however, is more challenging. The same executives gave low marks for social media’s contribution to company performance. Fully 44% felt social media’s impact was nonexistent or minimal (scores of 1 or 2, where 1=not at all and 7=very highly), whereas just 10% felt social media contributed highly (scores of 6 or 7; average rating was 3.2).
One cause of this spend-performance gap is how companies are (and are NOT) doing with social media (see my previous posts in which I explore other reasons).
Brand-related strategies dominant the ways companies are using social media (see Table 1), with 46% of companies using social media to create brand awareness and brand building. The next most common use is customer acquisition (31%), followed closely by the introduction of new products and services (29%) and customer retention (28%). Looking beyond these top activities, 20% of companies report using social media to improve employee engagement.
The least-popular activities can be classified as what I’ll call “social learning”—using social media for marketing research (15%), identifying new customer groups (14%), identifying new product and service opportunities (11%), and improving current products and services (7%).
These results point to several possible reasons why social media is not contributing to company performance.
First, results show that, on average, a company only uses social media for two purposes, indicating that companies use social media in very narrow ways. Leveraging social media investments, resources, and capabilities across a broader array of marketing might be part of the answer to improving ROI.
Second, brand-related activities dominate the social media landscape, whereas customer acquisition and retention is much less common. This suggests that companies are not using social media effectively to perform these key customer strategies.
The reasons for this are likely numerous. Companies may have not effectively integrated customer information across purchasing, communication, and social media channels (average score is 3.4 on a 7-point scale where 1=not at all, 7=very effectively), nor have they effectively linked social media to their firms’ marketing strategies (average score is 4.1, same scale). To contribute fully, social media needs to be fully integrated with the marketing strategy, and customer information needs to be integrated across different touchpoints to create a 360-degree view.
Finally, firms are not using social media to drive growth, as evidenced by the low rates of using social media for marketing research, identifying new customers or new products and services, or improving current products and services. If growth is not a major objective for social media activities, its contributions to performance are destined to be weak.
Table 1. How Companies Use Social Media 
Another lens on the performance issue is to consider the types of investments companies make in social media. Table 2 shows where dollars are flowing. It’s clear that content remains king, with a whopping 63% of companies reporting they will invest in content creation for social media. This drops off to 44% for analytics, followed by social listening (42%), campaign optimization (42%), and community engagement (41%).
These data reveal several interesting trends. First, companies report making, on average, four different types of investments—nearly double the array of uses for strategies. This makes sense, given that many of these activities are core infrastructure spend activities, such as analytics, new technology, and talent acquisition.
Second, the key to closing the spend-performance gap is to leverage these investments and pull them through to the strategies reviewed above. Spending money on analytics is a necessary step, but leveraging analytics—making effective use of the data to support critical brand, customer, and growth activities—is even more important! Lacking this, low ROI for social media is likely.
Third, the talent piece of equation seems to be undervalued. It is important for several reasons. To begin, social media investments play a vital role in attracting, retaining, and engaging employees. Further, companies need to remember that all employees—including those not directly responsible for marketing or social media activities—can be social media content creators and brand ambassadors. Performed well, these investments can translate into important customer performance outcomes.
Table 2. Company Investments in Social Media
To ensure that spending on social media translates into substantial performance gains, companies stand to benefit from leveraging social media across more core marketing activities. Importantly, these activities should be supported by investments in tools as well as human and technical infrastructure to build an effective social media presence in the marketplace.