Companies Spend on Social, but Can’t Track Results

I am currently spending a lot of time with the CMO survey – a survey conducted annually by Christine Moorman at Duke University for McKinsey.  Though the response rate is relatively low (8%), the data show some interesting trends in digital marketing and social media.  I particularly like the data on marketing spending and marketing measurement. I am using some of this content in my forthcoming book Social Media and Mobile Marketing Strategy.

One key piece of research is that companies are increasing social media spending, which is verified by other sources. However, companies are having trouble measuring the impact of those strategies.

Here is the latest data from the CMO Survey on social media spend:

Social media spending is currently 9.4% of marketing budgets and is expected to increase 128% to 21.4% in the next five years (see Figure 1). However, the 351 marketing leaders responding to August 2014 survey overwhelmingly report that proof lags spending and only 15% of marketers report their companies can show the impact of social media using quantitative approaches.

What’s the buzz? Companies experienced a 25% percent increase in sales through the Internet in the last year—from 8.9% to 11.3% of sales. There does appear to be a sizable opportunity in reaching customers through the Internet that underlies this spending push. Consistent with this view, digital marketing, more broadly, is expected to increase 10.8% in the next year, while traditional advertising budgets are predicted to decrease 3.6%. In other words, there is a signal in all this buzz.

Figure 1. Social media spending as a percent of marketing budget

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The CMO Survey can be found here: CMO SURVEY

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