Marketers Struggle to Connect Social Media to Higher Sales

Thu Sep 14, 2017

Kathy Crosett

For nine years, Deloitte, the American Marketing Association and Duke’s Fuqua School of Business have joined forces to produce the social-mediabiannual CMO Survey. The August 2017 report shows rising business confidence. This confidence will be accompanied by an 8.9% increase in the marketing budget over the next year. But, marketers are still having a hard time proving their social media efforts are improving the bottom line. Here are the details.

About 65.8% of business owners say they are optimistic about the U.S. economy. The CMO Survey breaks out businesses by type and the optimism scores by type are as follows:

  • B2B Product 66.2
  • B2B Services 64.2
  • B2C Product 67.8
  • B2C Services 67.0

While these are strong numbers, only 34.7% of business owners feel more optimistic about the economy than they did last quarter. The sector which has increased optimistic feelings the most in the last quarter is education, while consumer services’ businesses have experienced the steepest decline in optimism.

Businesses look to a variety of sources for future growth. The primary driver of new revenue, 73.2%, will come from internal growth. Leaders will also look to partnerships (12.5%,) acquisitions (10.4%,) and licensing (4.0%,) as other growth drivers. Deeper penetration of existing markets has driven past-year growth for 52.2% of operators. These enterprises also lean on new products and services, 22.3%, and the development of new markets, 15.0%, for growth.

Online commerce is a critical part of business and accounts for revenue as follows by business category:

  • B2B Product 7.6%
  • B2B Services 14.2%
  • B2C Product 14.2%
  • B2C Services 13.6%

Businesses rely on solid marketing strategy and budgets in order to achieve their initiatives. After increasing marketing budgets by 6.7% during the past year, enterprises plan to get a bit more aggressive and spend 6.9% of their total revenue on this effort in the next 12 months. For the purposes of this study, marketing expenses include marketing employees, analytics, research, training, advertising, and social media.  By sector, businesses that will increase marketing the most are:

  • Banking/finance/insurance 15.6%
  • Consumer packaged goods 12.7%
  • Tech/software/biotech 12.2%

The trimming of traditional ad spending will continue in the year ahead. Marketers in this survey indicate they’ll cut another 2.0% from these formats. B2B product companies will make the deepest cut: -3.6%. Average digital spending increase will be 13%, with the B2C product group opening their wallets by the largest amount: 18.6%.

Social media accounts for 9.8% of a typical enterprise’s advertising budget. By next year, this figure could be as high as 13.0%. Not surprisingly, BtoC product companies lead the pack by spending 16.3% of their marketing budgets on social media.

But is this investment doing what it should? Businesses aren’t sure. In fact, when analysts looked at the 5-year history of their survey, they found that projected increases for social media spending failed to materialize and that may be because execs lack confidence in the format. On a scale of 1 to 7, businesses give themselves a 4 in terms of integrating social media with the overall marketing strategy. And, only 16.3% of businesses can definitely prove social media’s quantitative impact on the bottom line.

Reps may want to discuss clients’ future marketing plans and help them place ads in media formats that will deliver results.

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About Kathy Crosett

Kathy is the Research Director for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel.

View all posts by Kathy Crosett