Social media spending as a percentage of marketing budgets will more than double over the next five years, according to a survey of almost 500 chief marketing officers in the US, which also found integration of social remains a key issue.
Chief marketing officers say they are currently spending 8.4% of their budgets on social media and expect that to increase by more than 40% over the next year to 11.5%, and in the next five years, it will reach 21.6% the survey found.
The biggest increase is set to come among big consumer goods firms such as Procter & Gamble and the Coca-Cola Company, which expect the most dramatic increase in social media spend, rising from 9.6% to 24.6%.
Christine Moorman, director of The CMO Survey and a professor of business administration at Duke University, said this showed that companies were searching for novel ways to interact with their customers that would drive the growth of their companies.
She said: “Unfortunately, marketers are behind the curve with their current levels of social media expenditure, given the amount of time customers spend engaged with one another and with companies online. The good news is that marketers are seeing the imperative to rectify this through increased investment in social media marketing in the upcoming years.”
The dramatic increases in social media spending wasn’t confined to one area of business, but was universal across different sectors, she said.
According to Moorman, along with the expected increases, marketers will need to continue addressing how social media is integrated in their organisation’s overall marketing strategy.
On a scale of 1- 7, only 9.9% of respondents believe that social media is “very integrated” to the firm’s strategy (the highest rank for the question), while 15.2% believe it is not integrated at all (the lowest rank for the question).
The average is 3.8%, which is the exact percentage recorded the first time this question was asked two years ago in the February 2011 CMO Survey.
Moorman argues that the this “integration gap” is a legacy of the way in which social media was adopted in many companies to begin with – starting outside of strategy, outside of typical organisational structure and outside of typical pathways of development for marketing managers.
She said: “It is therefore not surprising that firms still cannot figure out how to use social media to achieve organisational objectives. Leaders have not reconciled that this strategy should be planned, implemented and controlled like all marketing strategies. The integration gap findings should serve as a call to action.”
One reason she pointed to for this lack of integration is one of the key factors that has dogged social media since it first emerged – ROI. As companies continue to struggle to measure and show the impact of social media, so do they struggle to integrate it.
“Given that ‘what is measured gets managed,’ a more complete integration will occur when social media begins paying for some of the bills,” Moorman said.
The CMO Survey finds that companies have, over time, shifted from direct financial measures of social media’s impact, such as sales and profit, to intermediate referral metrics, such as willingness to refer the brand to others, buzz, and friends and followers.
Fuelled by the big data emerging from social media and digital marketing, CMOs expect their companies to increase their marketing analytics expenditures by 66% in the next three years. However, the number of projects using marketing analytics is expected to drop from 37% now to 30% over the next 12 months.
Moorman said: “Marketing analytics will only fill its ‘strategic shoes’ by impacting firm decisions, so CMOs will need to work on the use, not just the generation, of marketing analytics.”
With the rise of social media and other forms of digital marketing, spending on traditional advertising continues to plummet as CMOs expect a 2.7% decline.