CMOs Will Increase Spending on Social, Mobile And Analytics
Marketers are allocating more of their budgets to social, mobile and marketing analytics, but they still face challenges using these capabilities and proving ROI, according to the CMO Survey, conducted by Duke University's Fuqua School of Business.
The report, released Tuesday, was based on an online survey of 288 senior U.S. marketing executives at business-to-consumer and business-to-business companies. The twice-a-year study was launched in 2008 and is designed to gauge CMO intent for budgeting, hiring, and optimism about the economy.
Marketer optimism about the U.S. economy had an average score of 69.7 on a scale of 0-100 (with 0 reflecting the lowest level of confidence and 100 the highest level), down just slightly from a confidence score of 69.9 in February, when the survey was last conducted. However, the optimism score in the current survey is up 22 points from a low of 47.7 in February 2009, right after the recession hit. (The online survey was conducted between July 14 and Aug. 2, before the recent stock market downturn.)
Buoyed by this optimism, marketers are increasing spending in many areas, the survey found. Spending on digital marketing is expected to increase 12.2% over the next year, with some of the largest growth being seen in social, mobile and data analytics.
Social media spending now makes up an average 10.7% of marketing budgets, and will grow to 14% of budgets over the next 12 months, according to the survey. In five years, social media spending will account for 23.8% of total marketing budgets.
However, despite increasing their spending on social media, marketers are having a hard time proving the return on investment on this channel.
Only 15% of CMOs said they have been able to prove the impact quantitatively of social media, while 43.5% said they have a good qualitative sense of the impact, but not quantitative impact. And 41.5% of marketers have not been able to show any impact yet from their social media efforts.
"One of the areas we wanted to look at was how well companies are doing in measuring their knowledge and skills in using social media capabilities," said Christine Moorman, professor at Duke University's Fuqua School of Business and director of the CMO Survey.
For the first time, the CMO Survey asked marketers to rank, on a scale of 1 to 7 (1 being not at all and 7 being excellent) how effective they were in different areas of using social media. The highest score was given to developing social media strategies (4.1); followed by connecting marketing strategies and social media strategies (4.0); and executing social media strategies (4.0).
Lower on the list were measuring the success of social media strategies (3.5); training people to perform social media activities (3.4); and managing external social media partners and agencies (3.3).
Another area that is seeing a big increase in spending is marketing analytics, which currently makes up 6.7% of the total marketing budget, but is expected to grow to 11.1% of the total marketing budget in three years.
"One of the challenges CMOs face is using all this sophisticated information to drive decisions," Ms. Moorman said. "It's not just about getting the right data, but managing the processes and capabilities, and bringing marketing analytics into decision-making."
Only 31% of projects currently use marketing analytics, the survey found. B-to-c companies are doing a better job implementing marketing analytics than b-to-b companies; 45.6% of projects at b-to-c product companies use marketing analytics, compared with only 22.8% of projects at b-to-b product companies.
Mobile marketing is also seeing big increases in spending, growing from 6.0% of the total marketing budget now to 15.6% of the total marketing budget in the next three years, the survey found.
When asked to rate the performance of their company's mobile marketing activities on a scale of 1 to 7 (with 1 being poor and 7 being excellent) across a range of goals, the highest-ranking area was customer engagement (3.6), followed by delivering the brand message (3.5) and customer retention (3.2). Ranking lowest on the scale was impact on profits, which had a score of 2.6.
"Companies are using mobile devices to connect to social sites, but part of the challenge is figuring out how to use mobile to reach and persuade buyers," Ms. Moorman said.