Measurement will look more toward the bottom line
Marketers appear to be inching closer to answering the question of social media ROI—or at least making a serious effort—as the stakes get higher.
eMarketer estimates four out of five US businesses with at least 100 employees will be marketing on social media this year, and US ad spending on social networks is expected to reach over $4 billion in 2011. And according to research from Bazaarvoice and The CMO Club, marketers are planning to change the way they measure the effectiveness of those dollars.
Site traffic, which was the top metric for social marketing success in 2010, will still be on top this year. But the No. 2 spot will change hands, as twice as many companies plan to pay attention to conversions AND revenues. More marketers will measure success with conversions than by tallying fans and followers, positive buzz and a variety of other “soft” metrics. Revenues will see a similar surge in interest.
Asked about social media activities with the highest ROI based on older metrics with less of a focus on the bottom line, CMOs were most likely to say they did not know the return from any channel other than their company’s online community. Even Facebook and ratings and reviews, the two top venues with “significant ROI,” failed to win over more than about 15% of respondents.
It remains to be seen whether CMOs’ evolving focus will lead to a shift in which venues are perceived to be the most valuable, or what other changes might be in store in the social media marketing landscape.
How Many Marketers Are Using Social Media?
As consumer usage of social media continues to increase in the US and around the world, marketers have transitioned from cautious engagement to full deployment.
Next year, four in five US businesses with at least 100 employees will take part in social media marketing, eMarketer estimates. That’s up from just 42% as recently as 2008, and the number of marketers using the channel will continue to rise through 2012.
”2010 was the year that Facebook firmly established itself as a major force not only in social network advertising but all of online advertising,” said eMarketer principal analyst Debra Aho Williamson, author of the upcoming report “Worldwide Social Network Ad Spending: 2011 Outlook.” “In 2011, its global presence is something multinational advertisers can’t ignore.”
eMarketer predicts ad spending on the world’s top social network will reach $2.19 billion in the US this year and just over $4 billion worldwide—both more than double last year’s figure.
“If Facebook can continue to increase its global user base and boost the amount of revenue it generates per user, it could even surpass these forecasts,” Williamson said. “Facebook must continue to innovate its user experience and its ad platform.”
“Marketers that have spent the past few years ramping up their internal social media marketing infrastructure—and their presence on sites such as Facebook and Twitter—will take social media to new heights in 2011,” said Debra Aho Williamson, eMarketer principal analyst and author of the new report “Social Media in the Marketing Mix: Budgeting for 2011.” “And as they do, they will evolve the way they market across all media, not just online.”
eMarketer developed its social media marketing forecast through analysis of a dozen third-party surveys and their methodologies. The increase in usage stems from several trends:
- Rising consumer social media usage
- Facebook now has a truly massive audience
- Promotional firepower companies have seen in action on social sites.
Social media is top of mind not only when it comes to usage but also spending. A worldwide survey of marketers by Maxymiser, a provider of website personalization tools, found that social media ranked third among areas marketers planned to focus their online marketing budget in 2011, after search and their own website.
According to several independent studies, spending on social media continues to rise.
“As spending increases, other marketing channels may lose budget,” said Williamson. “Total marketing budgets in general are not increasing, so social media spending must come from other types of marketing. Early indications are that offline media and promotions may be hit first.”
While the spending picture is bright, future increases will be tied to ROI. The need for effective measurement will reach its strongest point to date in 2011.
The full report, “Social Media in the Marketing Mix: Budgeting for 2011,” answers these key questions:
- What percentage of companies use social media for marketing?
- How are marketers budgeting for social media?
- Are social media marketing budgets growing?
- What are the obstacles to future spending growth?
- How are General Motors, Intel and PepsiCo budgeting for social media in 2011?
To purchase the report, click here. Total Access clients, log in and view the report now.
COMMENTARY: Facebook's huge audience, now estimated at 600 million users, gets a lot of attention. What is disregarded is Facebook's high CPMs and abysmal results. Having said this, I think chief marketing officers now have better social media management tools at their disposal, a better understanding of social media measurement metrics, what metrics they need to measure, and another year of social media data they can look at for trends.
Social media advertising effectiveness remains a big issue with many social media marketer's, and what CMO's said in the past doesn't appear to correlate with eMarketer's CMO survey. In the past, I have raised serious doubts about Facebook's effectiveness as an advertising platform for the following reasons:
- Marketer's still not certain about social Media.
- A study showing that Facebook does not drive traffic to retailer's websites.
- A WebTrends survey that Facebook ad-performance in 2009 and 2010 was abysmal when compared to other media channels.
- Less than half of marketer's like Facebook, with the general concensus that Facebook ROIs suck.
In a blog article dated February 10, 2010 titled, "74% Of CMO's Confident Of Measuring ROI From Social Media, Plus A Dynamite Model For Calculating Social Media Financial ROI", I discuss how to calculate social media financial ROI and a neat model to use.
I am not here to convince CMO's from not using social media. That's difficult to do when social media is smoldering HOT right now. Facebook's audience has grown from 350 million in 2009 to 500 million in July 2010, and now it stands at 600 million. That's hard to ignore.
It is important for CMO's to understand how to use social media properly. They need to keep in mind the following:
- Social network users do not engage with a brand. They engage with people.
- The size of a social network's audience is not important. Conversions from clickthrough's is what should matter. CMOs should compare all advertising channels for effectiveness and ROI.
- Social media is not an end all solution. It is part of the media marketing mix.
- For social media to be effective, it must be integrated with traditional media like email, search, print and mass media.
- Social media is not effective for branding. It works best for promotions. If you are not already branded when you open your first Facebook page, all the wall postings and tweets in the world are not going to increase brand awareness or loyalty. Loyalty MUST already exist.
- Social media is a means by which a brands talk with and influence their customers. They do this by providing information about their products and engaging with their fans by keeping things fresh, interesting and fun. A great sales promotion like a sweepstake or game can go a long ways in keeping customers engaged.
Courtesy of an article dated December 9, 2010 appearing in eMarketer and an article dated January 18, 2011 appearing in eMarketer
This is way so informative! And it does reflect with what's happening with social medias. Superb post.
Posted by: von rod limpot | 07/11/2011 at 01:52 AM