The CMO Survey Blog

Measuring Social Media ROI: Companies Emphasize Voice Metrics

The influential economist Albert O. Hirschman argues that customers can have a disciplining effect on companies and markets through their exit and voice behaviors. Instead of simply “quitting” a product, Hirschman urged customers to voice their complaints so companies could improve and learn. Hirschman would be a happy camper these days because social media puts a megaphone on the voice of the customer. Results from The CMO Survey® show that companies, in turn, are also starting to see the value of emphasizing voice-based metrics.

The CMO Survey investigated which metrics companies are using to measure the impact of social media investments. In August 2010 and then again in February 2013, top marketers were asked to share which metrics they use to evaluate social media. Looking across the results, we can see which metrics companies most often use. The survey did not, however, ask respondents to rank or rate each metric in terms of importance. (more…)

Six Reasons Marketing Budgets are on the Rise

Marketing budgets as a percent of overall firm budgets and as a percent of firm revenues are both on the rise as noted in my prior post. Why are firms spending more on marketing? Here are six reasons I see in The CMO Survey™ data and in my research.

  1. New jobs: Marketing appears to be taking a leadership role in managing social media activities in companies. Given social media spending as a percent of marketing budgets is expected to rise from 7.6% to 18.8% over the next 5 years, this means new funds are flowing toward marketing.
  2. New skills: Companies plan to increase marketing training by 3.7% in February 2012 to 7.2% in August 2012. In particular, I see many companies in investing in programs to build marketing capabilities. A good example is GE’s Experienced Commercial Leadership Program, which develops cohorts of young marketers for the company. Another example is Becton Dickinson’s Marketing Excellence Initiative, which provides non-marketers with a big dose of training in key marketing tools and processes.
  3. New knowledge: Big Data has captured the imaginations of leaders in companies big and small. The ability to leverage information about customers in order to deliver and demonstrate value opens the door for marketers to fill the role as analysts and “data whisperers” as McKinsey calls them. As noted by McKinsey in its Chief Marketing and Sales Officer forum, “Data whisperers are those analysts who can coax meaning and insights from the increasingly sophisticated and massive data sets available today.” (more…)

Investing in Social Media

The August 2011 CMO Survey reported that companies are increasing spend on social media (from current levels of 7.1 percent of marketing budget to 10.1 percent over the next year and to 17.5 percent in the next five years). These are big numbers and they have been waved around a lot on the internet. What’s striking to me is these same companies report that they employ, on average, only two people dedicated to actually doing social media (standard deviation 4.8). Houston, we have a problem—well, maybe three problems. (more…)

How Much Firms Spend on Marketing

The August 2011 CMO Survey reported that companies spend, on average, approximately 10% of their overall budgets on marketing. That figure is up from February 2011 where it was reported to be 8.1%. Using a 95% confidence interval, these numbers are not statistically significant from one another. This is important; but it is more important to note that marketing budgets did not decrease during this period of great economic turbulence. (more…)

Social Media and Strategy: How to Integrate

In the social media integration report card, I offered a set of company behaviors that we can use to diagnose how well a firm integrates social media into its strategy. These behaviors range from integrating social media with customer management, brand management, and innovation management to monitoring information flows within the company. (more…)

A Social Media Integration Report Card

Is your company being strategic about social media?

The August 2011 CMO Survey reported that companies are increasing spend on social media (from current levels of 7.1 percent of marketing budget to 10.1 percent over the next year and to 17.5 percent in the next five years). (more…)

Marketers to Spend Despite Tumultuous August: Smart, Crazy, Saviors?

While the general public can be accused of having short memories, it doesn’t take much for us to remember the volatility the financial markets experienced in the month of August. Standard & Poors’ downgrade of US credit and a tumultuous battle in the US Congress left many frazzled as their stocks moved in various directions. The words “double-dip recession” inundated the headlines and prognosticators’ outlooks. (more…)

Fasten Your Social Media Seatbelts: Marketers Ready for Full Take-off

Is social media just a tool kids can use to communicate with their friends, or is there some marketing advantage? For years, marketers have been grappling with if and how social media should be deployed. Numerous findings are showing a definitive answer: marketers are embracing social media in major ways—most notably their budgets. (more…)

Marketing Metrics: What CMOs Report

The August 2010 CMO Survey included a special section on marketing metrics. Seven important facts stood out when I analyzed the responses from the 574 marketing executives who participated in the survey.

1. Revenue metrics dominate: Revenue metrics (sales, market share) are the primary means they use to evaluate marketing activities. Unfortunately, few link marketing actions to critically important firm outcomes, such as customer retention (15%), profits (14%), brand value (11%), net promoter score (7.5%) and stock market performance (2 percent).

2. The quality and use of market insights not evaluated: While market insights are very important drivers of innovation and growth, only 25% of the firms surveyed use metrics to evaluate the quality of these insights, and only about one-third evaluate how market insights influence managerial decision making.

3. Marketing metrics examine the long-term impact of marketing: 72% of marketers report that metrics focus on the long-term impact of marketing. This number is much higher than I expected. Although I don’t have information about this metric over time, I asked this question because I thought it would be lower and a big press splash. Bravo marketers!

4. Marketers fail to account for revenue and cost information across channels: 53% report below average integration of cost information about customers across channels and 33.4% report below average integration of revenue information about customers across channels. It is no wonder marketers also report elsewhere in The CMO Survey that the highest level of marketing spending is going towards integrating what they know about customers.

5. Metrics fail to assess competitor reactions to firm marketing actions: Only 24% of firms use metrics that assess competitor reaction to their marketing programs. The casinos online focus is on customer reaction, which I agree is central. However, firms appear to be largely ignoring how competitors’ actions might interfere with customer reaction.

6. Social media metrics focus on hits, page views, and repeat visits: Instead, firms are measuring the number of followers or friends (25.4%), sales levels (17.9%), revenues per customer (17.2%), buzz indicators (15.7%), customer acquisition (11.8%), profits per customer (9.4%), customer retention costs (7.7%), and net promoter score (7.5%). Firms use an average of 2.4 social media metrics.

7. C-suites use an average of five marketing metrics to guide decision making (95% confidence interval around the mean—3.6 to 6.7): This number is higher than I expected and it shows increasing influence of marketing in the firm. The average number of marketing metrics used by the C-suite was highest among companies in the B2C services (10.4) and B2C product (7.4) sector and lower among B2B product (3.9) and B2B services (3.2) companies. C-suites of companies that sell products on the Internet use more marketing metrics (7.4) compared to companies that do not (3.2).