The recent CMO Survey from the American Marketing Association, Deloitte and Duke University's Fuqua School of Business shows that, although spending on social media marketing is soaring, US companies report its contributions to company performance are weak.
Social media appears to offer the perfect B2C and B2B marketing channels and consequently while spending on traditional advertising has plummeted, social media is all the rage. In fact according to Fuqua professor Christine Moorman, the Director of The CMO Survey, spending on social media is set to rise to a 21% share of marketing budgets in the next five years.
But does the Emperor have any clothes?
Barely one in ten of the companies surveyed said they were able to demonstrate the impact of social media spending and only 3.4% said social media contributes very highly to their firm's overall performance. The 289 CMOs (chief marketing officers) at leading companies who completed the survey also reported their companies are becoming less effective at integrating all of the customer information they have.
"Companies are spending a lot on social media right now, but demonstrating its contribution depends on more than investment in analytics, though that will help," says Professor Moorman. "Firms must also take other steps to integrate social with the rest of the company's marketing strategies. This will require changes to where social media is located, its involvement in the planning process, and consideration of how the firm's customer and brand assets are managed in social media."
The surveyed also showed that integration of customer information from purchasing, social media and other communications channels was poor and continued a decline first seen in the 2015 survey.
"This lack of 360 degree understanding of customers makes all of marketing, including social media, less effective," Moorman said.
The use of insights about customers was down slightly in the last year. Moorman called that a missed opportunity. "This type of knowledge can be used to create very effective marketing strategies," she said, "and it is particularly difficult for competitors to imitate."
Spending on mobile marketing as a share of marketing budgets is expected to more than double in the next three years to nearly 15%. But few companies rate mobile spending as contributing to their overall performance. More than 40% said it did not contribute at all, with only 0.5 percent saying spending on mobile marketing contributed very highly to the bottom line.
"As marketing has shifted from one-way, controlled messaging to unscripted, multi-channel conversations, it has completely transformed the role of the chief marketing officer," said Deloitte CMO Diana O'Brien. "The findings show that while social, mobile and analytics spending is on the rise, they're falling short when it comes to boosting the bottom line. It's clear that more data doesn't always equate to more insight, and new technology has no intrinsic value to marketers unless it helps a company better understand its customers and enhances the customer experience."
See The CMO Survey