Interesting statistics from Duke University Fuqua School of Business and the American Marketing Association (via eMarketer).

The study found that companies are setting aside a greater percentage of their marketing budgets for social media and plan to continue that trend going forward. As of August 2011, marketers were spending an average of 7.1% of their marketing budgets on social media and planned to increase that to 10.1% in the next 12 months. Within five years, marketers expect social media to account for 17.5% of marketing budgets.

So good news – Social Marketing spending continues to increase (although, as the study also suggests, at a slightly reduced rate than previous expectations might have indicated). Interestingly, the study also suggests that CRM-related metrics are becoming relatively more important than financial metrics (including, but not limited to, ROI).

To prove the success of social media outreach and keep up budgets, marketers are looking at different metrics. Between August 2010 and August 2011, “The CMO Survey” found that customer-relationship-based activities became more popular to measure, while financial metrics lost steam.

So what does this mean? We would suggest these results should not be read as an endorsement of dropping financial metrics for Marketers, but rather an acknowledgement that marketing is only a piece of the CRM picture – and that metrics such as Revenue, Retention and Customer Lifetime Value belong at least as much to Sales & Customer Service functions (or more) than they do to Marketing.

In other words, brute-force attempts to achieve ‘marketing ROI’ by taking steps such as, for instance, attempting to attribute revenue directly to marketing programs (social or not) tend to be overly simplistic, not realistic, and ultimately not very useful. Why? Because in most organizations, Marketing does not own – or directly influence – the revenue metric. Rather, Sales does.

Effective marketing programs of course assist and support Sales by providing and qualifying lead flow, but an accurate and useful measure of ‘marketing ROI’ on any type of program or campaign must align with how organizations really work – and with their core CRM strategy.

In other words, the trends called out above are not about abandoning financial metrics so much as refining them. Direct measures of Marketing ROI remain challenging, but realigning measurement so it considers marketing not as a standalone function but as an integrated part of a more holistic CRM infrastructure and strategy – which includes Sales, Customer Service and Marketing – is indeed progress. It indicates a more refined and strategic approach to Social Marketing, which we heartily applaud.

This entry was posted on Saturday, September 17th, 2011 at 11:20 AM by cselland and is filed under Social CRM, Social Media Marketing, Social Media Metrics, Social Media ROI, Strategy and Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.