Social media has long been hailed as the future of advertising, but basic challenges, including the difficulty of measuring return on investment (ROI), continue to prevent it from living up to these lofty expectations.
That’s according to the latest edition of the CMO Survey, which surveyed 388 marketing chiefs from big U.S. companies and found that social media ad spend has lagged behind predictions substantially over the last few years.
Execs’ current forecasts are rosy, as always: respondents predicted that the proportion of their marketing budgets devoted to social media advertising would rise from an average 10.5% currently to 12.9% over the next twelve months, and 18.5% in the next five years.
But an analysis included in the survey shows that CMOs have been telling the same story for quite some time – and it simply hasn’t come true.
Looking at previous five-year forecasts from 2010-2012, previous surveys predicted that social media advertising would grow to 17.7% of total marketing spend in 2015, but the actual share was just 10.6%.
Similarly, in 2016 the proportion was predicted to reach 16.5%, but the actual share was 11.7%; and for this year the proportion was expected to reach 19.5%, or almost twice the actual share of 10.5%.
So what gives? One consistent problem is marketers’ failure to coordinate social media advertising with their overall marketing strategy, the survey found.
Asked to assess how well social media has been integrated with other marketing functions on a scale of 1-7 over the last five years, respondents have barely budged, with the average level edging up from 3.9 in 2012 to 4.1 in 2017.
These mediocre results may in turn be due to the inability to leverage customer information in social media and communication strategies: here the mean integration level as assessed by respondents has actually decreased from 3.8 in 2012 to 3.4 in 2017 – perhaps reflecting the explosive growth in available information over this period, outstripping companies’ ability to manage the data.
Above all CMOs remain skeptical about their own ability to determine the impact of social media on the bottom line.
Asked how they measure social media’s contribution to their business, the proportion who said they have proven it quantitatively has gradually increased from 14.6% to 18.4%, while the proportion who say they have a qualitative – but not quantitative – sense of its impact has remained basically flat, with a slight decrease from 40.4% to 38.2%.Meanwhile almost half of CMOs have consistently said they have no way of assessing social media’s contribution either quantitatively or qualitatively, with the proportion of “no idea” respondents scarcely moving from 45% in 2012 to 43.3% in 2017.