The challenge of how to prove marketing’s value has been hounding CMOs as they come under increasing pressure to demonstrate their impact, with this being one of CMOs’ key concerns this year. And, as the latest CMO Survey [pdf] from Duke University’s Fuqua School of Business attests,Â quantitatively proving the impact of marketing spending continues to be a struggle for US CMOs. But, on a positive note, they appear to be getting slightly more confident in their ability to measure the long-term impact of their efforts.
In this most recent survey, 37% of CMOs reported that they’re able to prove the short-term impact of marketing spending quantitatively,Â while 44% have a good qualitative sense, but not a quantitative one. That leaves about 1 in 5 unable to show the impact yet at all. In comparison to the February survey, there has been no change in the ability for CMOs to quantitatively prove their short-term impact, while there’s been an increase in the percentage unable to measure it at all.
On a more encouraging note, the share of respondents able to prove the long-term impact of their spending increased slightly, from 29% to 33%. At the same time, there was also an increase in the percentage unable to prove the impact at all, from 20% to 23%.
Those shifts are small enough to be potentially attributable simply to different survey samples. But it’s interesting to note that there was a fairly significant decrease in the reported ability to qualitatively – but not quantitatively – prove marketing’s ROI. In other words, CMOs might be feeling that unless they’re able to quantitatively demonstrate their worth, they’re unable to prove their impact at all. (Tellingly, respondents are more likely to be measuring marketing ROI via customer surveys and manager judgments than via econometric modeling, per the survey.)
Overall, 62% of respondents said they feel pressure from their CEO or Board to prove the value of marketing – and all of those respondents are seeing the pressure either increasing (65%) or staying level (35%).
Of course, no discussion of ROI can proceed without the inevitable question of social media’s ROI, and the CMO Survey has some numbers on that end, too. (Hint: they’re not any more encouraging.)
Indeed, just 15% of CMOs reported having proven the impact of social media quantitatively, a figure unchanged from the same time last year. A slightly greater share (40% overall) of respondents this time around say they have a good qualitative sense of its impact, but 45% still haven’t been able to demonstrate it at all.
Compounding the problem for proving social’s ROI quantitatively? CMOs appear to be moving away from revenue-based metrics and shifting more to “soft” metrics such as hits and page views, follower counts, and buzz indicators. Compared to August 2010’s survey, fewer respondents this year report measuring revenue per customer (12.5%, down from 17.2%), customer retention costs (6.3%, down from 7.7%) and profits per customer (6%, down from 9.4%).
Despite all of that – and continued reported difficulties in integrating social media with wider marketing activities – CMOs are still spending more on social. For the first time in several studies (see here for a discussion of social spending forecasts and actual behavior), their forecasted budget increases appear to be taking shape. That’s because last year, CMOs predicted that by this time, 9.1% of their marketing budgets would be devoted to social. And in this survey, respondents estimated currently allocating 9.4% of their spending to social media.
Forecast increases continue apace, too. Over the next 12 months, CMOs expect to devote 13.2% of their budgets to social (the highest forecast in several iterations of this study), and they expect to fork over 21.4% of their overall budgets to social in the next 5 years.
In terms of business sector, B2C product companies are (unsurprisingly) currently allocating the largest share (10.4%) of their budgets to social, while B2C services companies are devoting the smallest share (8.6%). Again, spending does not seem to be tied to ROI, as B2C product (18.4%) and service (17.9%) company CMOs are the most likely to be able to quantitatively prove social’s ROI.
About the Data: The CMO Survey is conducted online twice a year. The latest survey was fielded from July 22 to August 12, 2014. The survey had 351 respondents, of whom 89% were VP level or above.