Numerous CEOs doubt of the value of social media marketing, according to a new survey by a mobile payments platform.
The research by Bango, which surveyed more than 200 CEOs, maintains that poor digital marketing practices and meaningless metrics are “putting the board to sleep.”
More than half the chief executives (59 percent) say that social media channels aren’t generating sales for their businesses.
“Nobody’s saying that social media can’t add value,” Bango CMO and co-author of the report Anil Malhotra said in a statement. “The problem is that this value isn’t translating to the boards of the businesses surveyed.”
He maintained that digital marketers have got so wrapped up reporting on clicks, likes and engagement rates, that they’ve lost focus on the business metrics that actually matter in the boardroom — leads, sales and profits.
“But it’s not just the metrics that are wrong” he observed. “Digital marketing is also failing to deliver meaningful results because of poor targeting.”
“The rise of Facebook and Google as ad platforms has convinced marketers that what people like and share is an accurate reflection of what they will buy, so today’s marketing budgets capture browsers, not buyers,” he said.
“That’s why our report argues that digital marketers need to start targeting their audiences based on actual purchase behaviors,” he continued. “This is what will impress the board — the ability to turn social into sales.”
According to the survey, 62 percent of the CEOs believe that too much of marketing budgets is wasted on activities that don’t deliver meaningful results, while nearly as many — 60 percent — think that the marketing potential of social media has been exaggerated.
Meanwhile, 59 percent believe social media is good for building reputations, but not for generating sales.
What’s more, nearly two-thirds (66 percent) think marketers focus too much on tactical analytics and not enough on business results, while more than half (55 percent) consider digital marketing metrics that aren’t associated with sales to be meaningless.
Whether an activity delivers meaningful results or not, however, may not always be immediately apparent. “There are items that eventually turn into sales, even though they don’t directly have anything to do with sales,” said IDC analyst Karsten Weide.
He added that social media advertising has a conversion rate of three percent. “A three percent click-through rate would be good. A three percent conversion rate is a kick-ass number,” he told the E-Commerce Times.
Nevertheless, more than three quarters of the CEOs surveyed by Bango (77 percent) don’t see digital advertising as a reliable source of new customers or sales. That raises concerns about inaccurate targeting measures, the report maintained.
Rarely are digital campaigns targeted at audiences who convert to customers, it continued, and with CEOs expecting marketing to have a measurable impact on the bottom line, lack of targeting is becoming a major sticking point for CEOs and boards of directors.
Looking for Measurability
Digital marketing has lost its way, the report asserted, with many marketers trying to disguise poor performance results with a haze of meaningless metrics that are relevant to boards of directors.
“Marketers have always wanted some kind of measurability to see how effective their spend is,” explained Boston-based media analyst John Carroll.
“That’s what digital marketing holds out for them,” he told the E-Commerce Times. “The kind of measurability that you can’t get from a TV spot you can get in the digital world.”
“Return on investment has always been a key measure for marketers,” he continued, “but clicks and likes and engagement are not return on investment.”
Marketers make a mistake when they treat social media advertising like mainstream digital advertising. “Social media is an environment where direct selling usually proves to be counterproductive,” Carroll said.
“Social media is not the place to direct messages at consumers,” he continued. “It’s more effective to join in a conversation with consumers, to provide something of value to the community.”
“The hard sell that a lot of marketers employ isn’t really conducive to the social media environment,” he added.
Winning Back the Board
The results of CEO skepticism may have started to appear in future spending. Although projections for social media ad spending released in March by eMarketer show an increase in outlays from US$58.66 billion in 2021 to $79.83 billion in 2023, growth during the period slips from 26.9 percent in 2021 to 15 percent in 2023.
Those projections appear to be in line with the survey’s findings about CEO attitudes toward more social media advertising. More than half (52 percent) would not endorse buying more Facebook ads, 54 percent wouldn’t buy more Instagram ads, 60 percent gave a thumbs down to more search engine advertising, 66 percent would throttle Twitter ads and 77 percent would stop further spending on LinkedIn advertising.
There is fundamental problem with these hardline attitudes total social media. “Where you going to go?” asked Weide. “Everyone is on digital. The average person spends a lot of time on social media. That’s where people are. That’s where you’re going to have to pick them up.”
He maintained that there’s not a lot of understanding at the top of organizations of what’s happening in CMO departments.
That’s why the tenure of CMOs continue to drop. According to the latest numbers from executive search firm Spencer Stuart, the median tenure for a CMO is 25.5 months. “It’s an ejection seat job,” Weide quipped.
If marketers want to quell some of the criticism coming from the top of their organizations, the Bango report recommends the use of “purchase behavior targeting.”
Rather than targeting existing customers based on what they’ve previously bought, or targeting new users based on what they like on social or what they search for on Google, purchase behavior targeting can help marketers find new users who buy similar products elsewhere, the report explained.
If digital marketers are ever going to stop boring the board with meaningless metrics, they need to make sure their paid, digital and social campaigns drive more than just likes, it added. Using purchase behavior targeting to go straight to people who buy is the simplest way to acquire new customers, build revenue, and justify social spend to the board.