Social media is taking up a bigger portion of marketing budgets, but few companies said they have been able to quantitatively measure its impact.
According to new research from Duke University, spending on social media outlets such as Facebook and Twitter currently represents 9% of marketing budgets and is expected to increase to more than 13% over the next 12 months. And in the next five years, that percentage is projected to rise to more than 21%.
The study, which is based on responses from 351 top marketing executives, found that spending on digital marketing broadly is expected to jump 11% in the next year while traditional advertising budgets are expected to contract 3.6%.
Despite the increasing investment in social media, it’s still difficult for marketers to quantify their return on investment. Only 15% of marketers in the study said they can show the impact of social media on their businesses using quantitative approaches, while 40% of marketers can only demonstrate the impact qualitatively. Nearly half of marketers said they haven’t been able to demonstrate the impact of social media spending on their business at all.
Justifying how ad dollars get spent is a constant concern for marketers, who face increased pressure to deliver on margins and show results. Marketing spending typically generates more than 8% of company revenue, according to the Duke study. Marketing budgets are expected to increase more than 5% this year.
Marketers’ increased spending on social media are likely going towards technology and infrastructure to support the medium, rather than towards hiring more social media employees. Duke, which checks in with companies twice a year, found that respondents’ most recent estimate of in-house social media employees had dropped slightly to an average of three from earlier this year. That’s in addition to an average of two people from outside the company for social media help.
Another issue weighing on marketers is what to do with big data. Spending on marketing analytics is expected to jump from 7% of marketing budgets to more than 12% in the next three years. But CMOs reported they only use about a third of the data that is available or requested.
The study found that 41% of companies use online data they collect about consumers to better target them and nearly 82% said the use of such data is increasing. Fewer than 9% of CMOs are worried the use of customer data could raise concerns about privacy.