Social media spend currently courts around nine per cent of marketing budgets, but this figure is expected to surge by 128 per cent to account for over 21 per cent of budgets within the next five years, according to a CMO Survey from Duke University.
However, the ability to measure effectiveness and prove ROI lags considerably with only 15 per cent of chief marketing officers reporting that their companies can show the impact of social media using quantitative approaches.
The study garnered responses from 348 marketing executives, the largest proportion of which describer the company they served as being in the technology sector (17 per cent). Nearly 13 per cent represented the banking/finance sector while nine per cent were retail CMOs.
Budgets varied from less than $25m pa (33.6 per cent) to $1-$2.5bn (9.2 per cent), while 34 of those surveyed controlled marketing budgets of over $10bn.
Duke University Fuqua School of Business Professor Christine Moorman, director of The CMO Survey, explained that spending patterns reflect a the sizeable opportunity marketers perceive on the Internet.
“Given we see sizable spending increases together with limited growth in human capital, companies are likely spending their budgets on technology and infrastructure to support social media -- payoffs that should help companies reach customers more effectively and measure their activities with greater precision,” Moorman said.
The study found that spend on marketing analytics is also expected to increase from about seven percent of marketing budgets to more than 12 per cent in the next three years.
However, it was found that marketers continue to struggle with determining what to do with all the data with the CMOs surveyed stating that on average they only use about a third of the data available or requested.
41 percent of companies use online data to help target those customers. Almost 82 per cent of CMOs say the use of such data is increasing. None say it is decreasing.
Less than nine percent of CMOs say they are worried the use of online customer data could raise questions about privacy, while 33 per cent say they are not at all worried.
“The privacy results have remained consistent since we first asked this question of marketers,” Moorman said. “It is important for companies to strike a bargain with their customers. If companies can promise more value to customers in return for collection and use of their data, many customers would gladly participate in this exchange. However, this exchange needs to be transparent and based on trust.”
Overall, it was found that social media strategies remain “only modestly connected” to the rest of the marketing strategy.
“If the same customer is being reached on and off the web with the same offerings and same brand, companies must ensure a high level of consistency between these efforts,” she said. “If not, customers will remain unconvinced how the company can meet their needs.”