CMOs not sold on social networking ads

5 Dec 2008

More than half - 55% in fact - of the chief marketing officers at leading brands surveyed by Epsilon said they're not too interested (22%), or not interested at all (33%), in incorporating social networking sites into their marketing strategies.

Though dialogue marketing is a bona fide trend in the industry, says the report, only 10% of CMO survey respondents said they already are using these social sites in their marketing plans.

In terms of being social media elements that marketing executives said they are very interested or somewhat interested in:
• 52% support Internet forums
• 47% like webcasts and podcasts
• 47% prefer email
• 37% pick blogs
• 52% select webinars
• 35% want Facebook and MySpace

Steve Cone, Chief Marketing Officer of Epsilon, observes, "These sites narrowly appeal to college and high school students, providing a challenge as far as measuring results and yielding a limited amount of actionable data."

In an almost simultaneous study about social network visitors from IDC, though more than three quarters of SNS users visit at least once a week, and 57% at least once a day, users are less tolerant of social network advertising than the best tolerated forms of online advertising. Ads on SNS have lower click-through rates than traditional online ads (on the Web at large, 79% of all users clicked on at least one ad on the Web in the past year, whereas only 57% of SNS users did), and they also lead to fewer purchases (Web: 23%; SNS 11%).

Karsten Weide, program director, Digital Marketplace: Media and Advertising, said "... the popularity of SNS (has proven to) attract a big audience... generate a lot of traffic... produce enormous amounts of user-generated content (UGC) and... advertising inventory... (but) social network sites have had a hard time selling this inventory."

The IDC study determined that there are four major reasons why consumers use SNS:
• to connect and communicate
• in response to peer-pressure
• for entertainment
• for work-related purposes
• ... while advertising does not factor into consumer motivations

At the same time, says the Epsilon report, 27% of the top consumer and business-to-business marketing executives at 180 brands identified social networking and word of mouth as the tool they most want to introduce to their marketing mix to compensate for anticipated budget cuts -- ahead of all other elements of traditional or digital marketing.

Other key results from the Epsilon CMO survey, looking at the marketers' playbooks for the coming year, find:
• CMOs bracing for budget reductions identified email as the channel they are least likely to cut back on versus any other tool in the traditional or digital marketing mix.
• While just over half of the companies surveyed already use consumer data mining, 23% more said that they plan to utilize the technology in the next 12 months.
• 55% of those not already employing web analytics plan to do so in the next 12 months.
• Customer loyalty and rewards programs remain polarizing, with 33% of companies already using the strategy and 17% planning to use in the next year, but 50% not using or planning to use.

Kevin Mabley, Senior Vice President, Epsilon Strategic Services, noted the value that marketers place on email. "According to our latest benchmark statistics, retailers see 20 cents in e-commerce revenue for every email delivered, showing the measurability and profitability of the email channel in times when people are seeking those two attributes."

The Epsilon CMO survey reports that no less than 93% of marketing executives said the current state of the economy would have a moderate or significant impact on their marketing efforts in the next few months. Regarding advertising expenditures specifically, 70% said they'd decrease spending.

For additional information on the Epsilon study, click here.

For more on the IDC study, click here.