Social Media’s Biggest Obstacle?

Guest Post by Joshua Carnes

Efforts to build customer loyalty gather more social media spending from marketers than campaigns aiming to build brand awareness or increase customer acquisition, according to the results of a new survey conducted by the Direct Marketing Association. At least, that seems to be the case among companies which actually take the trouble to keep track of their social media budgets: remarkably, the DMA and Colloquy also found that a good number of companies engaged in social media marketing couldn’t say how much they were spending!

On average, companies which primarily use social media to bolster customer loyalty spent $88,000 on these efforts in 2009, the DMA and Colloquy survey found, compared to an average $53,000 for companies which use social media primarily to build brand awareness, and an average $30,000 for companies which use social media primarily for customer acquisition.
Loyalty-building is also the strongest growth area, jumping almost 300% over the last 12 months, according to the DMA and Colloquy, “easily surpassing allocation increases for all other social media-related marketing objectives.” Tellingly, smaller companies tended to spend more on social media, with a significant number saying they devoted more half their marketing budget to social media efforts (including all three categories).

So far, so good. Now for the bad news: a full 24% of surveyed respondents said they didn’t know how much their companies spend on social media. Perhaps even more alarming, almost two-thirds of respondents said they didn’t know how to measure the success or failures of social media, and 65% said they don’t monitor customer sentiment about their brand with social media tools.

A number of other surveys have produced similar findings in recent months. A Lion Marketing survey of 457 marketing executives in the second quarter of this year found only 30% of respondents said they had executed a social media ad campaign — and only half of these had attempted to measure the ROI of their campaigns. And in June Digital Brand Expressions released the results of a survey of 100 marketing execs in which 78% said their companies were using social media, but just 41% said they had a strategic plan.

It’s not hard to come up with a charitable interpretation of this data: they obviously reflect the new, still-experimental character of this emerging platform. But businesses aren’t built on charitable interpretations, and this last set of data frankly paints a picture of an entire industry that appears to be flying blind. Pleading avant-garde status is unlikely to satisfy chief marketing officers who have to account for their budget allocations, let alone persuade them to spend more; to do this they need clear, convincing critics before they will loosen the purse strings.