Social media marketing (SMM) appeals to consumer companies as a means to better anticipate customer preferences, understand attitudes toward their brands, and engage with consumers at a personal level. Interacting with customers via social media allows companies to build brand loyalty, immerse consumers in brand “experiences,” and incorporate brands into a customer’s lifestyle. Most brands see a need for social media marketing, yet many marketers remain uncomfortable with the channel and uncertain of their own strategy. Their hesitancy is understandable: the data generated by social media amounts to a wall of “white noise;” analytical tools seem more complex every day; vendors and consultants sprout at every turn; and missteps are public and embarrassing and can go viral as fast as an ingenious ad campaign. Even popular social media campaigns present a challenge: marketers struggle to quantify the revenue generated by SMM or the metrics by which success should be measured. Even so, the marketing community has recognized the impact SMM can have on consumer behavior and the superior credibility of brand advocates within a consumer’s online community.
“We Just Don’t Know Which Half.”
Social media shares a fundamental challenge with its predecessors in print, radio and television. Paraphrasing Henry Ford, many CMOs seem to know that only half of their social media marketing efforts are effective, they just don’t know which half. In IBM’s September 2011 report, 68% of CMOs surveyed felt “unprepared” for social media and 71% said the same for “data explosion” – a result, in part, of social media itself. Despite this uncertainty, marketing investment in social media is growing substantially as illustrated by the statistics below.
To help alleviate this anxiety and guide SMM strategy and investment, The Smart Cube has analyzed attitudes of CMOs toward SMM, uncovered effective examples and identified trends across the major social media channels. For marketers, the numbers below can act as benchmarks. While allocating budget, be it for a page on Google+, a corporate blog or the company’s Facebook profile, decision-makers can weigh their investment against the broader trends in SMM. Further, the examples and quotes from industry leaders within our report will help marketers thinking about their own SMM strategies.
Marketers Continue to Increase Investments in Social Media
As per a September 2011 report by IBM, global CMOs are highly optimistic about social media, increasing their ad spend despite factors such as the contraction of the global economy.
Social Media Networks Capturing More Ad Revenue
The global advertising spend on social networks is expected to record a significant jump of 72%, to reach $5.97 billion in 2011, accounting for about 9% of the total online advertising spend.
The US will continue to remain the biggest market, accounting for about 52% of the total spending on social networks globally at $3.08 billion, representing an increase of about 55% over 2010. Further, the spending is expected to increase by about 28% in 2012 to reach nearly $4 billion.
Measuring the Efficacy of SMM Remains a Challenge
Even the most popular social marketing ads face a significant challenge: assessing the effectiveness of the campaign. CMOs struggle with this fundamental dilemma – knowing their peers and competitors are significantly investing in SMM yet lacking a reliable metric on which to base decisions. In short, there is no one method to calculate the ROI on SMM.
To address this gap, many CMOs combine a wide array of metrics, such as number of clicks, likes/dislikes, fans, and average time spent per page. However, each company uses a different set of metrics to evaluate the effectiveness of social media and many disagree as to the best or most reliable measures.
CMOs Increasingly Skeptical about ROI Metrics and Lack Consensus
» According to a survey by Chief Marketer, about 60% of the marketing professionals consider ‘number of followers’ as the best way to measure social media success. The next most significant metric being used was sharing, forwarding, re- tweeting/posting of brand content.
» In another related survey by Bazaarvoice and The CMO Club, CMOs for business- to-consumer companies considered customer reviews or ratings, and other community tools most important. While B2B companies found that customer reviews, community tools, and corporate blogs had the biggest ROI.
» In surveys by Bazaar Voice, many CMOs in 2009 measured the success of their social media activities through tools such as website conversion, number of fans and followers, and increased website traffic. However, in 2011, they were found to be skeptical about these metrics, as they struggle to relate to sales.
No one solution to the challenge exists. Rather, marketers plan to leverage a host of tools simultaneously.
Industry Veterans Weigh in on SMM Strategy
Organizations both large and small are embracing social media and attempting
to develop a comprehensive marketing strategy including a social media element. However, many marketers are skeptical toward social media channels and are taking a ‘wait and watch’ policy by relying on conventional media channels.
Many marketers also feel that a comprehensive marketing mix strategy will be a combination of TV, print, and digital spend, and focusing on a particular media with limited emphasis on other media will not be prudent.
Industry veterans also believe that an organization should devise its social media strategy bearing in mind the overall marketing and organizational objectives. The strategy should be flexible and dynamic, and should be able to adapt to the changing dynamics of social media given the ongoing evolution of the channel.