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Grow Your Business Sales & Marketing

Social and Mobile Aren't Paying Off for Marketers

Social and Mobile Aren't Paying Off for Marketers
Credit: RawPixel/Shutterstock

Despite the amount of money being poured into social media and mobile marketing efforts, most businesses aren't seeing much of a return on their investment, new research finds.

Currently, companies are investing, on average, 10.6 percent of their marketing budget in social media efforts, up from just 5.6 percent in 2009, according to a study from the American Marketing Association, Deloitte and Duke University's Fuqua School of Business. Investment in social media is expected to climb to 13.2 percent of marketing budgets by next year and to 20.9 percent in the next five years.

However, while social media spending continues to increase, most organizations are having a hard to proving its value. Less than 12 percent of the companies surveyed can demonstrate the impact of that spending, while only 3 percent of marketing leaders said social media contributes very highly to their firm's overall performance.

In order to prove its worth, businesses need to take steps to integrate social media with the rest of the company's marketing strategies, said Christine Moorman, a Fuqua professor and director of research.

"This will require changes to where social media is located, its involvement in the planning process, and consideration of how the firm's customer and brand assets are managed in social media," Moorman said in a statement.

Many organizations aren't doing enough when it comes integrating all of the customer data. On a scale of 1 to 7, the average business rated its integration of customer information from purchasing, social media and other communications channels at 3.4. [The Key to Long Term Business Success? Great Marketing ]

"This lack of 360-degree understanding of customers makes all of marketing, including social media, less effective," Moorman said.

Spending on mobile marketing is also projected to increase in the coming years. This year, businesses devote, on average, 5.9 percent of their marketing budget to mobile efforts. By 2019, mobile marketing is projected to rise to 14.6 percent of total marketing budgets.

Similarly, with social media marketing, however, most organizations are having trouble justifying their mobile spending. More than 40 percent of the firms surveyed said mobile marketing did not contribute at all to their bottom line, with less than 1 percent saying spending on mobile marketing made a significant positive impact.

"The findings show that while social, mobile and analytics spending is on the rise, they're falling short when it comes to boosting the bottom line," Moorman said. "It's clear that more data doesn't always equate to more insight, and new technology has no intrinsic value to marketers unless it helps a company better understand its customers and enhances the customer experience."

Overall, the marketers surveyed predict they will spend 3.2 percent less on traditional advertising this year. The drop in traditional advertising spending has been on the decline since February 2012.

This study has been conducted biannually since August 2008. This year's research is based on surveys of 289 top marketing executives.

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.