Seventeen years after the dawn of social media marketing, this medium continues to be an intriguing puzzle—a place where brands are investing more time and money, but are still struggling to determine what works well and where the returns on investment can be found.
Social media spending has increased by 200 percent in the past eight years, rising from 3.5 percent of marketing budgets in 2009 to 10.5 percent in February 2017, according to The CMO Survey 2017. And that upward climb is expected to continue: Marketers say they will expand their social media spending by 90 percent over the next five years, or 18.5 percent of the total by then.
“All brands, big and small, are firmly in social media today,” says Jill J. Avery, senior lecturer at Harvard Business School. “Social media has become a mainstream tactic.”
Is this ever-increasing focus on social paying off? Forty-three percent of respondents said in the CMO Survey that they have not been able to show the impact of social media on their businesses. After all, it can be tough to pinpoint a direct connection between a social media chat about a product with the actual purchase of that product.
“The biggest challenge right now is that all this money is shifting into digital marketing, but there are still a lot of questions about return on investment,” Avery says. “Social media marketers are feeling pressure to show ROI.”
Still, since those first Facebook ads were posted in 2004, social media has proven itself a valuable tool for helping companies create consumer perceptions about particular brands (Old Spice) and has even sparked social movements (Ice Bucket Challenge). More recently, it has allowed companies to reap creative ideas on product improvements directly from their customers (Lay’s flavored potato chips). And it has also managed to get brands into trouble (United Breaks Guitars).
As marketers have experimented, what have they learned about what works on social? We sat down with four marketing experts on the Harvard Business School faculty to find out.