Last week I reported on the expected increase in social media spend from an already high 7.4% of marketing budgets to 10.4% within a year and 19.5% within five years. It is therefore both interesting and somewhat disturbing that we continue to see a sizable fissure between what companies are doing with social media and what they are doing with the rest of their strategies. I asked CMOs to rate “How effectively is social media integrated with your firm’s marketing strategy” on a seven point scale where 7 is “very integrated” and 1 is “not at all integrated.” Results from The CMO Survey indicate an average score of 3.8 with a standard deviation of 2.0. Sadly, only 7 percent of respondents believe that social media is “very integrated” to the firm’s strategy while 18.4% rated social media as “not at all integrated.” The full distribution of responses is shown in Figure 1.
Figure 1. How Effectively Social Media is Integrated with Marketing Strategy
As these figures show, the average integration score is just above the mid-point on the 7-point scale, which is disturbing given the increasing amount of money that companies are spending on social media. Furthermore and perhaps more disappointing is that the score has not changed in the last year. I asked this same question in February 2011 and the result was identical (3.8 out of 7). This means that spending has gone up but the integration gap has not been closed.
Looking more deeply at the numbers, we see differences across sectors, company size (in terms of sales), and the percentage of a company’s sales that come from the internet. Considering sector differences, B2C companies lead B2B companies on closing this gap (see Table 1). On the one hand this is not surprising because B2C companies tend to have stronger and more well-developed marketing groups. However, given that B2B companies are likely to know who their current and prospective customers are, I find the low B2B score a little disheartening. I think the challenge with B2B companies is that the sales divisions also need to be woven into the social media strategy. So perhaps we are seeing old marketing vs. sales difficulties that routinely appear in B2B companies.
There is also an interesting finding regarding how the integration gap varies by company size (as measured by sales revenue). Figure 2 shows a classic curvilinear relationship between integration score and firm size. In this case, that curve is a U-shaped curve with integration scores highest for the smallest and biggest companies. This is likely due the fact that smallest companies are achieving integration because everyone can still talk to each other (and may be working side by side). Meanwhile he biggest companies achieve integration by having enough people and throwing enough resources against the problem that some degree (still not much) is happening. In the middle, firms are spending, but don’t have the human interaction, time, or money to make it work well.
Figure 2. Company Size Differences and the Integration Gap
Finally, we see companies that receive a greater share of their revenues from the internet score higher on the integration metric. Specifically, companies with 0% of their sales from the internet have an average integration score of 3.3. This climbs to 4.0 for companies with between 1-10% of their sales from the internet. Companies with more than 10% of their sales from the internet produce the most respectable score in this entire analysis: 4.9. The results suggest that when the company depends on sales from the internet, managers realize the need to close the integration gap.
Figure 3. Company Revenues from the Internet and the Integration Gap
Closing this integration gap is a huge challenge facing companies today. If the gap is closed, social media will take its place in the pantheon of effective marketing strategies. If not, I predict that social media will not generate a respectable return on investment. Given the importance of this topic to the future of social media, I’m going repeat some of the strategies I have proposed in prior work for closing the gap:Gain top management support. Get the biggest gun from management who supports social media. You need a champion to get people from across the organization to pay attention and act.
- Do not confine social media to its own separate department. I would put it in marketing or another key customer-facing group. Social media is a dynamic marketing function and not an IT function.
- Offer social media training to all employees so they can begin to “see” linkages.
- Assign social media personnel to key strategic teams doing cross-functional work, such as new product or new service development, new market development, and customer acquisition.
- Do not outsource social media completely to a strategic partner. Outside agencies may have expertise, but you also need a dedicated social media liaison inside. This will enable relevant information to flow both in and out of the organization through your own social media personnel and ensure you’re your own managers are always weighing in on social media activities.
- Put in place a system of accountability that demonstrates the effect of social media on valued intermediate outcomes (e.g., buzz) and financial performance outcomes (e.g., revenues). The choice of metrics should be influenced by whether social media is doing a push or pull job for your company.
- Use social media tools to collect customer information that is important to different areas of the firm, such as innovation, customer service, etc.
- Utilize social media metaphors to challenge the thinking of the company. At GE, CMO Beth Comstock asked the company “What if my aircraft engine had a Facebook page?” to kickstart a new business.
- Develop formal (strategy steps) and informal (e.g., eat lunch together) routines that ensure social media personnel talk to and listen to the rest of the company.
- Have social media and marketing personnel report to the same person.