A majority of marketers see a big disconnect when it comes to knowing what kind of return on investment their social media efforts are delivering, according to a report by marketing research company Demand Metric, sponsored by social intelligence company NetBase.
A survey of 125 top executives found that while almost 75% of executives use social media insights and intelligence to influence their decision-making, 70% don’t know what kind of ROI their social media efforts are delivering. The fault, it seems, lies both with the marketers who use social media measuring technology, and with the competing vendors who use different terminology to promote similar solutions, causing confusion in the marketplace.
The result, Demand Metric research director Danny Brown says, is that marketers “simply aren’t experienced enough to filter automated findings into human behaviors and what that means for a brand’s marketing message.”
The report found that companies of all sizes are using social media analytics. Among small companies (with annual revenues of $25 million or less), 60% are using some type of analytics. Among medium-size companies ($26 million to $500 million) it rises to 73%, while at large companies (with revenue over $500 million), it’s 57%.
Social media analytics across companies of all sizes are being used by 60% to optimize ad campaign tracking, 48% to optimize brand analysis, 40% to optimize competitive intelligence gathering, 36% to enable customer care, 32% to optimize product launches and 18% to enable purchase intent intelligence gathering.
Engagement was found to be “far and away” the leading source of insights from social media analytics, mentioned by 66% of respondents.
Respondents were asked how much of their company’s revenue was influenced by their social media content and 32% said they didn’t know. Another 8% said “none.” Another 42% said between 1% -25%. Only 3% said between 75%-100%.
Demand Metric says the fact that so many users of social media analytics don’t know its relationship to revenue leads to the conclusion “that their analytics implementation is incomplete, their skills are lacking or they simply haven’t invested the time to use their analytics solutions to the fullest.”
Heart of the Disconnect
Demand Metric also finds it ironic that so many marketers (60%) are using social media analytics to optimize ad campaign tracking, which is clearly related to revenue understanding, yet they have no idea what the impact is.
“Despite whatever use these organizations are making of social media analytics for campaign tracking, it is failing to translate into an understanding of the revenue relationship, as it should,” the report states.
Among the marketers surveyed, only 6% said social media insights and intelligence should influence decision-making to a “large extent,” while another 30% said they should influence decision-making to a “moderate extent.” Another 37% said social media should influence decision-making by a “slight extent,” and a fairly sizable 27% said social media should have no impact at all on decision-making.
The report finds that the tools for social media analytics within companies continue to evolve. Only 27% of marketers said they have a social media command center, while another 24% said they are making plans to implement one with no timeframe. Another 19% plan to implement a social media command center sometime in 2014. However, 23% do not plan to create a social media command center at all, while another 7% do not know what it even is.
The report states that if 70% of marketers say they can’t quantify their social media efforts’ impact on their companies’ return on investment, it raises important questions about “how much money is being wasted by these organizations that are using analytics tools but remain in the dark regarding the ROI of their efforts.”
While social media advertising is growing, there are still a sizable number of companies that are planning to spend the same in 2014 as they did in 2013 and a few others that plan to spend less. Here are the percentages: Spend significantly more: 25%; spend slightly more: 34%; spend the same: 32%; spent slightly less: 7%; spend significantly less: 2%.
“Today’s connected consumer has access to an insane amount of information, all at their fingertips, thanks to the ubiquity of smartphone and tablet access to the Web,” the report states. “This change of direction when it comes to the research part of any purchase has resulted in brands playing catch-up to try to make sense of this new paradigm.”
Organizations that are social media spectators—making periodic posts but having no analytics tools in place—are getting little value, the report adds.
“Social media can provide significant benefits for almost any organization, provided its efforts are analytics driven,” the report concludes. “As the use cases for social media continue to evolve toward delivering more powerful insights and enabling deeper customer engagement, an analytics process is imperative. A willingness to identify, implement and use analytics tools will separate the 'haves' from the 'have-nots' when it comes to leveraging social media.”