According to a CMO Survey by Duke University’s Fuqua School of Business, social media spending has grown from 3.5% of marketing budgets in 2009 to 11.7% in 2016. The growth rate attests to the importance companies place in these new marketing tools.
The figure for 2016 falls short of a projection made five years ago that social media would command 17.5% of budgets this year.
Actual vs Predicted Social Media Spending as a Percentage of Marketing Budget
The potential reasons for that gap include:
- A bandwagon effect where companies see a lot of hype in the media about social media spending and feel pressured to spend what they think other companies are spending.
- Companies fail to account for the effect of their own and competitors’ activities producing an over saturation of social media marketing and turning consumers off in the process
- Social media budgets are not being funded from marketing’s budget to the degree they were in the past. Funding may be coming from other department budgets, e.g. customer service, HR, etc.
- Marketers are not effectively utilizing their social media investments. ROI is not achieved and therefore budgets are reduced. Success in social media marketing requires a deep customer connection and the ability to drive a new type of engagement. Many organizations lack the knowledge and skills required.
Percentage of Firms Using Social Media
Social media has been challenging for marketers. It used to be a place where marketers needed to be, even though many marketers were uncertain how to handle communications on the various social channels. The early strategy was to organically build an audience and track engagement, including social chatter and sentiment around brands and even product categories. Nowadays, the approach is more towards paid media. Purchasing ads and sponsoring posts that target specific audiences and measuring conversions and ROI. The most advantageous approach is a combination of owned media and paid media.