CMOs Seek Better Metrics for Social Media-Revenue Linkage
More than eight in 10 (81%) CMOs expect to link up to 10% of their annual revenues to their social media investment in 2010, up from just 44% in 2009, according to a survey on social measurability conducted by Bazaarvoice and The CMO Club.
The survey, which was fielded among members of The CMO Club with both domestic and global P&L responsibility, found that social media measurement will become universal in 2010 as top-level marketing executives continue to invest more in social media and focus their social initiatives on driving revenue.
At the same time, social marketing metrics that focus solely on web goals (traffic, page views, fans) will begin to be supplanted by metrics like conversion, revenue, and average order value that track to the bottom line.
Key study findings:
- The exact impact of social tools on business goals remains elusive: More than half (53%) of respondents are unsure about their return on Twitter; 50% are unsure about the direct value of LinkedIn; and 50% are not sure how to measure the impact of industry blogs on business metrics. Customer ratings and reviews is the best understood marketing activity from an ROI perspective.
- As social spending grows, so do revenue expectations: More than 64% of CMOs reported that they plan to increase their social media budgets within the next year. The number of CMOs who don’t hold social media accountable for sales will continue to dwindle, as nearly three-fourths of respondents (72%) who did not attach revenue to social spend in 2009 reported they would create such linkage in 2010. CMOs who are already seeing a strong link between social media and revenue in 2009 expect this impact to be even more profound in 2010, with the majority of respondents (81%) expecting to attribute up to 10% of their 2010 revenues to their social media investments.
- Social initiatives must now track to the bottom line: In 2009, the top metrics tracked for social media initiatives included site traffic (90%), number of page views (85%), and number of fans (83%). In 2010, CMOs expect top metrics to track more closely to P&L business goals, not just web-related goals. The fastest-growing metrics for 2010 include revenue, conversion, and average order value, which grew 333%, 174%, and 150% respectively.
- CMOs will tap more consumer-generated content to shape products or services: Today, 80% of CMOs use customer insights to shape decision-making at the executive level and 90% of those surveyed use customer stories and product suggestions to shape a brand’s product or services. By the end of 2010, almost all CMOs say they plan to incorporate a broader range of content sources including customer reviews (59% increase), pre-sales Q&A (24% increase) and Twitter (407% increase) to influence product decisions.
“While 2009 may have been a trial run for many brands and social media, in 2010, CMOs expect social initiatives to directly impact their bottom lines, without exception,” said BazaarVoice CMO Sam Decker. “While not all brands know how to measure direct results, they strive to focus on business-generating impacts, rather than sheer volume of social interactions.”
Decker foresees more and more brands focusing their social initiatives on driving commerce and tying it directtly to their bottom line.
About the survey: The survey was conducted among 133 CMOs in September 2009. Industries included software/hardware (17%), finance/insurance (9%), travel/hospitality (9%), media/publishing (9%), consumer goods (8%), and retail (7.5%), among others. Annual revenues of CMO companies ranged from $6 to $50 million (25%), $51 to $999 million (42%), and more than $1 billion (23%).
December 10th, 2009 at 9:17 am
I would be interested to see how these statistics and findings line up if you sort by B2B vs. B2C CMOs.
December 10th, 2009 at 3:01 pm
The value of Customer Insight on profitability of products is hard to overestimate, however extraction of these insights from customer reviews and other unstructured text, in an actionable form is very difficult and expensive process.
I am aware of a few companies that invested significant amounts of money into people and technologies to do that, but results are still pretty sketchy in terms of ROI.
Bazaarvoice’s competitor - PowerReviews.com just got a patent awarded to them for a technology designed to tag the text automatically. I have not seen the results yet, but this may help to reduce the cost.
December 17th, 2009 at 1:35 pm
This is a good step forward on the marketing side, but only if the organization in question has a mechanism to actually sell through social media. So much of social media’s impact is reputational — that is, the monetization of social media activity is likely more to do with the goodwill entry on the balance sheet than on revenue, in a direct sense. Organizations that are doing brand disposition research, however, ought already to be including questions about social media activity in their research. Gregory is right, too, when pointing out the costs associated with extracting insight data from social media. Market Mix Modeling can account financially for all of the various communication touchpoints, but it’s hella expensive to do. If you’re a brand that has sufficient scope, it makes sense. But smaller enterprises cannot pop for that spend.