Social media marketing investment is up - but is it a money trap for many?
By now, most businesses will have locked down their marketing budgets for 2015. And although there will be many variations from company to company, there will likely be one characteristic that will be same across the majority of budgets - an increase in social media spend.
In a survey of over 2,500 global marketers in the 2014 State of Marketing report, a whopping 57% said they plan to increase on social media, making it second only to marketing automation as the most popular area of increased spend.
The findings are replicated elsewhere. A survey of over 350 marketing executives by Duke University, for instance, found that while spending on social media platforms such as Facebook and Twitter currently represents 9% of their marketing budgets, in a year’s time this figure could have risen to 13%, reflecting its growing influence in the marketing mix. What’s more, the marketing executives estimated that social media marketing could represent as much as 21% of their overall budget in the next five years.
So where is that investment going?
Certainly social media advertising spend has been on an upward trend throughout 2014, with eMarketer reporting that 10% of all digital advertising revenue is now driven from social media – a 50% uplift on 2013’s figures.
Facebook dominates the social picture when it comes to advertising spend, with eMarketer reporting it represents nearly 80% of the advertising revenue driven from social. And the research house also predicts that this is a trend that will continue in the coming years, potentially absorbing one-tenth of all digital advertising spend by 2016.
Elsewhere, a good proportion of the spend is also likely going into technology and infrastructure to support social, as well has hiring more social media employees.
“There are a number of reasons we’re seeing investment in social media increasing,” notes Laura Crimmons, head of PR & social at Branded3. “First of all, the increase in the number of social channels available means that more resource is required for brands to maintain good presence on these. Secondly, we’re seeing a huge push from social platforms towards paid advertising in order to actually reach your audience – Facebook is constantly tweaking its EdgeRank algorithm meaning that in order to get in front of your own fans you have to invest in paid promotion. Finally, the number of members on social channels continues to rise and as does the amount of revenue generated from these, so as long as that’s on the rise, brands will continue to invest more in it.”
Continuing to evolve
Supporting this last point are figures from Adobe’s first annual Social Media Intelligence report, which suggests that social platforms, and Facebook in particular, are experiencing strong growth in ad ROI.
The report, which examines paid, earned and owned social media trends across retail, media, entertainment and travel websites, details how Twitter experienced a 300% revenue per visitor growth rate year on year (YoY), while Facebook’s clickthrough rate and advertising ROI increased by 275% and 58% respectively.
Regarding all owned social figures, RPV grew 39% for Facebook, 300% for Twitter and 150% for Pinterest. In terms of earned social trends, the study found that social engagement on Facebook grew by 115% while the number of brand postings increased by 9% YoY.
“Increased investment signals, for me, evidence of a much clearer level of understanding - by those that hold the purse strings - of social media’s role in the overall marketing mix,” says Simon Preece, founder of slp consulting limited. “Marketing budgets remain tight, so any areas experiencing an increase are clearly receiving support from key decision-makers. The growing level of focus on social media across the industry has helped to push it higher up the marketing agenda, given it more airtime in senior leadership meetings, and thus a greater share of the budget.
“[But], most basically, social media has continued to evolve in being, quite simply, a great way to get your message in front of a lot of people very quickly, in a highly targeted way. The improved ability to target and measure activity makes it easier for the numbers to do the talking, and for marketers to justify their decision to push more of their paid-media investment into social versus, for example, classic online display.”
And it’s not only the platforms themselves that are evolving – the ways that brands are using platforms to engage with consumers is also changing and becoming more sophisticated.
“What is interesting is how the role of social media has shifted for brands; previously it was used mostly as a method of communicating *to* customers, and it proved an invaluable part of a brand’s marketing armoury,” says Andy Mallinson, UK MD of Stackla. “Now however, brands are increasingly using social media to harness the positive sentiment around their brand (whether via Tweets, Facebook ‘likes’, etc.), to do the marketing for them.
“Brands are acutely aware of the importance of peer-to-peer recommendation, or ‘social advocacy’, and the value it provides in driving sales. After all, customers are more likely to buy a product or engage in a brand which is recommended by peers. As a marketing trend, social media advocacy is still in its infancy, but it is going to play an increasingly significant role within social media marketing for brands. It’s not enough for business to just talk *at* customers via social media anymore; brands need to use it to curate and distribute positive content from the fans themselves.”
However, just because marketing is maturing and developing, it doesn’t mean that we now live in a world of master social media marketers – far from it. Those that are capitalising on advocacy remain in the minority.
And there are some that suggest that the trend for rising social media budgets is indicative of brands merely throwing money at the problem, when these platforms require a much more sophisticated touch than traditional advertising.
As Matthew Bennett, co-founder, chief creative officer of Wolfpack, part of ZAK Media Group, notes: “Until they understand how to use it and find a use for it for their brand, they will continue to attempt to use social platforms as just another channel to advertise, when actually it presents another opportunity to connect, research, educate, entertain, engage, etc.
“There is room for advertising in a traditional sense, but only after you have built trust and rapport with users. The brand needs to be invited in. Broadcasting your content on social only works if you have enormous sums of money to seed and syndicate it. If the content is developed with another objective, other than talking about your brand and product in a way that consumers can also find elsewhere, then the content has more chance of being successful (however you choose to define success).”
Preece echoes these concerns.
“I’m thrilled to see a growing level of investment in this area, but I still have a big question – is the investment being allocated correctly? Paid social is just one (important) part of the puzzle in using social media effectively. But failing to invest in the right support network of people, process and technology (e.g. social media monitoring, customer service) and you may wish you'd spent your budget elsewhere.”
Certainly, the evidence suggests that marketers aren’t universally satisfied with the results of their endeavours to date.
Forrester recently surveyed 400 marketers from the US, Canada and UK and asked how they use Facebook for marketing. Currently, the main reason organisations use the network is to post updates to brand pages (72%), respond to customer queries (64%), promote branded posts (61%) and buy paid ads (49%).
Asked how satisfied they were with the business value they get from 13 different online marketing sites and tactics – including on-site ratings and reviews, search marketing, email marketing, online display advertising and mobile marketing – Facebook took the bottom spot, with marketers claiming that it offered less value than anything else on the list. LinkedIn marketing YouTube marketing and Twitter marketing (which came second to last) only fared slightly better.
Keeping up with the Joneses
Even then, these figures only reflect the opinions of those that are measuring ROI – and while this may seem like a basic prerequisite for successful marketing, a huge number of organisations aren’t even measuring the returns on social media investment
As the Sixth Annual State of Inbound Marketing report from Hubspot has revealed, a very small percentage of marketers actually make ROI a priority. In fact, despite finding that marketers that measure ROI are 12 times more likely to generate a greater return year-over-year, the study reported that only 53% were actually tracking ROI at all.
Sadly, even those attempting to rigorously measuring ROI can find themselves struggling to find the right numbers.
“One of the biggest obstacles that marketers have to overcome with social media marketing is measurement and proving ROI,” notes Crimmons. “Although we’ve been ‘doing’ social media for a while now it can still be a challenge to really understand the value of social media marketing and even more difficult to actually attach a return to that.”
And at a time when investment in social media is rising, the danger is that without accurate figures, social media could prove far more costly than expected, warns Mallinson. “Social media is often viewed as a cheap alternative to other more traditional marketing channels,” he says. “Whilst it can stimulate a lot of reward, it still requires investment in terms of time and money.
“Everyone has the opportunity to make use of social media marketing, but few brands and businesses do it exceptionally well. In the same way that buying a puppy for Christmas is easy, so is deciding to embark on social media marketing. But like an untrained and neglected puppy, social marketing which is badly considered and ill-informed may lead to the same result - a mess to clear up!”
All of which indicates that brands would be wise to take a calm-headed and steady approach to social media marketing. Yet that’s easier said than done when the pressure to be on social continues to escalate.
“There’s an element of ‘keeping up with the Joneses’ as brands see each other doing more,” says Preece. “Try booking a Facebook advertising reaching-block for Christmas in September - you’ll be lucky to find a slot. Brands want to be seen as innovative and willing to try new things, which is perfectly mirrored by the increasing range of ad formats offered by social networks. Instagram is a good example – a few weeks ago paid ads simply weren’t an option for brands… suddenly it’s another consideration for their mix, another area not to get left behind in.”
And so it is with these challenges and pressures in mind that MyCustomer will be turning its focus onto social media marketing in the coming weeks. As part of a comprehensive series, we’ll share best practice from leading experts on pain points such as strategy building, ROI measurement and marketing execution. If you’re one of the many organisations that is ramping up its social media marketing investment, and you’re keen to ensure that your money is well spent, then you’ll want to read our series.
Next week, we’ll be sharing advice on how to build a robust social media marketing strategy.
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Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.