A decade after the advent of social media, Chief Marketing Officers still can’t figure out if it’s doing them any good. That’s the startling finding of The CMO Survey, a recently-released survey of 410 CMOs by Christine Moorman, my colleague at Duke University’s Fuqua School of Business and a fellow Forbes contributor. Almost half (49%) said they aren’t able to quantify whether social media has made a difference for their companies, while 36% said they had a good sense of qualitative – though not quantitative – results. Only a meager 15% said they’ve seen a proven quantitative impact. Not surprisingly, in a Big Data-driven era, that lack of clarity is coming under increased scrutiny; 66% of respondents say their boards and CEOs are tightening pressure to measure ROI.
Moorman says the quest to quantify is “complex but not unsolvable.” Indeed, companies are investing more in marketing analytics; it currently represents 5.5% of marketing budgets and is expected to rise to 8.7% by 2016. She speculates that Facebook and Google – “companies that have a stake in showing that there are sales and financial payoffs associated with social media” – are likely to be the first to crack the ROI quantification code. “What they can do is look across companies, and look at different indicators…with all the case studies they’re able to do study because of where they sit, they’re in a very good position to get those insights.”
In the interim, CMOs are turning to intermediate metrics (such as increases in the number of fans and followers, or an enhanced Net Promoter Score) to show progress. Until the ROI puzzle is solved, Moorman says, that emphasis makes sense. “Social media has effects on customer behavior,” she says. “It may not be directly purchasing, but in the short term, people start talking, following, listening, and paying attention. But ultimately you have to be able to show there’s a long-term payoff.”
The opacity of social media ROI shouldn’t necessarily deter companies from diving in, however. (Indeed, marketers are expected to increase their share of social media spending from 6.6% to 15.8% of their budgets by 2018.) The real question, says Moorman, is whether companies have a clear social media strategy. “A lot of companies don’t,” she says, “and they’re just doing a lot of stuff because other companies are doing it.” Instead, they should “develop a testable theory” to determine their marketing strategy. “Make a hypothesis, and then use those predictions to really nail down the metrics that you think should be used,” she says. “Otherwise, you’re just on the bandwagon.”
This post originally appeared on the Forbes website on September 12, 2013.
Dorie Clark is CEO of Clark Strategic Communications and the author of Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press, 2013). She is a strategy consultant who has worked with clients including Google, Yale University, and the Ford Foundation. Listen to her podcasts or follow her on Twitter.