Ed Stonnis
In June 2020, social media spending surged to 23% of marketing budgets as the pandemic drove consumers online, forcing marketers to shift their focus to digital channels. By 2022, the digital transformation led to 57% of marketing spending being allocated to digital platforms, with advancements in marketing technology (MarTech) and AI further accelerating the trend.
However, despite this growth, social media spending has recently seen a decline. According to the *Spring 2024 CMO Survey* of 292 U.S. marketing leaders, social media’s share of marketing budgets fell from 17% in 2023 to 11% in 2024, marking its lowest level in seven years.
Why Social Media Spending Is Dropping
1. Crowded Landscape
The increasing number of advertisers on social media has created a cluttered environment. Platforms like Meta saw their ad revenue skyrocket from $39.9 billion in 2017 to $113.6 billion in 2022. This over-saturation makes it challenging for individual ads to stand out, prompting marketers to explore more effective channels for engaging with their target audience.
2. Consumer Fatigue
With an overwhelming influx of content, consumers are experiencing social media fatigue. Many users are cutting back on social media for mental health reasons, and attention spans have shortened. The average U.S. consumer now juggles between seven different social platforms, causing brands to struggle in maintaining meaningful engagement.
3. Limited Performance Gains
Since 2017, social media’s impact on business performance has remained modest. Survey respondents consistently rated its contribution to business success at around 3.5 out of 7, with only a brief improvement during the pandemic. These lackluster results have left marketers questioning social media’s effectiveness.
4. Difficult Attribution
Tracking the impact of social media on sales remains a challenge. Many companies struggle to measure marketing success across multiple channels, and only a third of surveyed leaders reported being able to quantify social media’s impact on their business.
5. Misalignment with Strategies
Social media is often criticized for prioritizing creativity over clear brand messaging. This disconnect between social content and broader marketing strategies has left many companies unable to maximize social media’s potential.
6. Rise of Retail Media
Retail media, which allows brands to advertise directly to online shoppers, has emerged as a formidable competitor to social media. With $125.7 billion in ad spending, retail media is on track to surpass TV advertising by 2028, and brands are increasingly using it to achieve upper-funnel goals like raising awareness—areas previously dominated by social media.
7. Overestimated Spending Projections
The CMO Survey revealed that while marketers often predict increases in social media spending, actual spending levels have fallen short of these projections. This cycle of overestimation may be contributing to marketers’ disenchantment with the platform.
How Marketers Can Innovate on Social Media
Despite the downturn, social media still offers significant potential for brands. Here’s how marketers can adapt:
1. Utilize AI for Content Creation
While AI and large language models (LLMs) are transforming content creation, only about 25% of companies are using them for social media content. By tapping into these technologies, marketers can produce content more efficiently, but must ensure it aligns with their overall strategy.
2. Integrate Across Channels
Companies that integrate customer information across social media and other channels report better performance. Investing in customer data platforms can provide a more comprehensive view of customer journeys, enhancing overall marketing effectiveness.
3. Use Social Media for Growth
Social media is underutilized for improving products and services or identifying new opportunities. Companies that leverage social platforms for these purposes can better engage consumers and drive higher revenues.
4. Benchmark Against Top Performers
Studying successful companies—particularly in B2C sectors—can help marketers link their campaigns to proven strategies for social media success.
5. Get Creative
To stand out in the crowded social space, brands must prioritize creativity. For example, Dunkin’s partnership with influencer Charli D’Amelio led to the launch of a specialty drink and a social media contest that boosted app downloads and product sales.
6. Respond in Real-Time
Marketers who can quickly react to real-world events can capture audience attention. For example, Lego’s humorous response to Tesla’s Cybertruck mishap in 2019 garnered significant engagement on social media.
7. Form Better Influencer Collaborations
Working with micro-influencers—who have smaller but more engaged followings—can drive stronger returns on social media campaigns.
8. Invest in Employee Training
With 88.5% of social media activities handled in-house, ongoing training is crucial to keep up with evolving trends. However, only 4% of marketing budgets are allocated to employee training, which may explain social media’s underperformance in many companies.
Conclusion
While social media spending is currently declining, the platform remains a key avenue for reaching and engaging consumers. By embracing new technologies, fostering creativity, and improving alignment with broader marketing strategies, brands can continue to unlock value from their social media investments.
