Companies will spend more than ever on social media marketing in 2011, but some businesses are boosting budgets for entirely the wrong reasons.

In my new report “Social Media in the Marketing Mix: Budgeting for 2011,” I demonstrate that companies are planning budget increases next year, as they move from cautious experimentation to full implementation.

That sounds great, and shows that social media is winning over skeptical marketing executives. But many companies are expanding budgets for social media marketing not because they have been successful at it, but because they are relying on gut instinct—the feeling that “this is something important so I’m going to do it even if I don’t know why.” Or worse, they have watched their competitors earn accolades in the press for their work in social media, and they are afraid of losing any more ground.

These are exactly the wrong reasons to increase spending on social media. A few years ago, you could run a few tests and gain some valuable learning without spending much. You could go on your gut and hope for the best. Or you could let your competition make all the mistakes, and learn from them.

But things have changed. Social media sites have matured, and you can’t do much for free anymore. A Promoted Trend ad on Twitter can cost $100,000 per day. Top social media agencies are in demand, and they charge premiums for their work. Social media is too expensive—both in actual dollars and in the cost to your company if you do it wrong—for businesses to spend for the wrong reasons.

Now, more than ever, marketers need a clear plan and strategy for social media.

Takeaways:

Focus on integration. Integrating social media with other corporate activities is a key challenge for marketers, but incorporating it is the only way to be successful, long term. While respondents to a September 2010 Econsultancy survey were likely to have at least some unity between social media and marketing or PR, that was not the case for other core business functions such as customer service, sales, CRM or product development.

Instead of adding social media, start with it. I’m not saying every marketing effort needs to have a social component, or that social needs to be at the forefront. But it must be assessed at the earliest planning stages, rather than tacked on at the end.

General Motors is transitioning social media management into its automobile brand teams, giving them budget and planning responsibility. That way, “you don’t all of a sudden have someone going off and doing something that doesn’t jibe with marketing, or where the brand wanted to go on something, ” GM’s social media chief, Christopher Barger, told me when I was researching the report. “You don’t have the marketers going off and doing a social activation that they think makes sense but in the end doesn’t really.”

Even if you don’t think you can measure ROI, at least try. The ROI question is a critical issue to resolve and I expect much solid work will be done in 2011. But in the meantime, there’s no excuse for not even trying to measure results.

A survey by Harvard Business Review and SAS found that even among companies that considered themselves effective users of social media, 31% were not even using any analytic tools to help guide their work.

Businesses can be forgiven for not fully understanding the impact of their social media marketing programs. Analytics tools still need a lot of work. But not using analytics at all—that’s inexcusable.

The bottom line: The expected growth in social media marketing spending next year is a positive thing—a sign that it has earned a place at the marketing dinner table. While there are still many challenges to using it effectively, increasing budgets without a solid strategy is a sure way to fail.

To listen and watch playback of the webinar, Tips for Reaching & Engaging the Elusive Millennial with eMarketer CEO Geoff Ramsey, click here. You can view the PowerPoint deck below.

Join eMarketer CEO Geoff Ramsey to find out about:

• The fluid ways these digital natives spend their media time
• What they really think about advertising
• Why their deep involvement with social media does not mean deep trust
  of social networks
• What brands need to know about the research and purchase habits of these
  device agnostics
• What are the marketing techniques that fail with millennials—and the
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About Geoff Ramsey
Geoff Ramsey is one of the internet’s most exciting digital marketing visionaries. As CEO and co-founder of eMarketer, Geoff is on the cutting edge of new research statistics, trends and best practices, covering every aspect of marketing in the digital age. He is frequently quoted in The Wall Street Journal, Forbes, CNN, Bloomberg Businessweek and Advertising Age.

A highly regarded speaker with an engaging presentation style, Geoff speaks at major digital, media and corporate events around the globe, including the American Association of Advertising Agencies, Association of National Advertisers (ANA), Magazine Publishers of America (MPA) and the Interactive Advertising Bureau (IAB).

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Helen Katz, Senior Vice President-Research Director at Starcom Mediavest Group, has seen her fair share of changes in the world of media planning and buying and advertising over the years. Katz, the author of The Media Handbook: A Complete Guide to Advertising Media Selection, Planning, Research, and Buying (Taylor and Francis-Routledge Division), has incorporated a few key updates in the book which came out in its fourth edition in June.

“I added a whole new chapter on social media and the way in which non-traditional media, which includes social, mobile, in-store, guerilla marketing and other forms of communication with the consumer, are affecting the process of media planning and buying,” she said in a recent interview. The text is intended for both the professional and academic audience.

While social media has exploded since the last edition of The Media Handbook in 2007, that’s not the only thing that’s changed. Katz says media industry consolidation and the way media research is conducted have also evolved. For example, media buyers and planners must now take into account new considerations given the consolidation of media agency ownership–planners are routinely cutting deals across diverse media types as well as diverse properties within a single content company. The considerations and negotiation processes are more complex than ever.

There are also profound changes in the way media research is conducted. “It used to be about pulling something out of a computer system, but now we are much more interested in the data analytics in media research. It’s much more sophisticated than it was,” Katz observes. There is an impact on how audiences get measured and it makes a difference in how we think about media in the agency space. In addition, “there is a shift toward more digital measurement of audiences to put them into a market mix model.” And social media measurement remains very much in flux. “No one has the answer yet in terms of fully evaluating the impact of social media or social media audiences,” Katz adds.

Katz, who joined SMG in 2001 after stints in her own consulting practice, at Zenith Media and DDB Needham, also taught advertising at The University of Illinois and Michigan State University. “I really felt the need to offer a guide to both practitioners and students that provides a holistic view of where advertising media fit within a marketing context,” Katz says of the text.

Last week saw the annual Future of Digital Marketing conference in London, presented by Econsultancy. For me, a long day’s exposure to many stimulating speakers boiled down to a multifaceted take on the concept of value. How can marketing deliver value for advertisers in 2010? What value (and values) do consumers look for when they consider the options presented to them? What new behaviors made possible by digital media are attaining value? Below are a few points raised or prompted by the occasion.

Value comes in many forms these days.

At the most basic level, there is value in technology itself, including Internet access and mobile devices. These things make it easy to get information, find products and services, save time and save money. A milestone in this appreciation of technology as value, as keynote speaker Gerd Leonhard reminded us, is that from July 2010, access to broadband will be a legal right in Finland.

While some things are gaining value, others are losing it. A corollary of recent technological development, Leonhard observed, is that the intrinsic value of copies (such as songs, video and written content) has declined, turning many old business models on their heads. Now it is often the context of information or creativity that makes it valuable, and those who can create a compelling context will attract audiences.

One of the greatest sources of contextual value is online community. Facebook is the headline example—demonstrating that not only the site itself but advertisers who use it well can reap big rewards. But there are countless examples of smaller communities creating value through shared interests.

One speaker, Rowan Gormley of Naked Wines, has built his business on a blindingly simple win-win premise: Wine lovers get together to support independent winemakers with a proven pedigree, and commit to buying specific wines before they are made. Because the winemakers effectively pre-sell those wines, they don’t need to market them, and many upfront costs are also met. For their part, buyers save an average 33%—often more—on the wines themselves. The earlier they commit to buy, the lower the price.

Of the 80,000 members of Naked Wines, 20,000 also spend £20 per month to support winemakers who need modest investment to launch a new wine or begin a new project—perhaps buying an additional parcel of land to cultivate. In 2009, Gormley noted, Naked Wines was the largest single investor in new wine ventures in the world. Beyond this, the company works to harness the full value of users’ comments and to provide good customer service.

It’s not difficult to see the concrete value in Gormley’s business: for winemakers, for wine drinkers, and for Gormley himself, who clearly loves his job. Tom Savigar of the Future Lab discussed value in a broader sense. Savigar aimed to look “beyond retail” in his keynote speech, and ask questions that are fundamental in the multichannel age: “Why do I go to a store? Why do I go to a Website?” What are the differences, and how are these categories blurring as we all learn to shop in different ways?  More importantly, how are retailers recognizing the value they provide, and using that knowledge to rethink their businesses?

Angela Maurer, senior marketing manager at Tesco.com, lifted the lid on the grocery giant’s API strategy to reveal another win-win situation. First, Tesco managers spent some hours together brainstorming ideas for online and mobile applications, and drew up a list of priorities in various areas. These were written on Post-It notes and stuck to the walls of their very large meeting room. That same evening, the firm threw open the doors to interested programmers recruited online.

Browsing among the posted ideas, programmers could choose the projects they wanted to tackle. Tesco managed the assignment process, and gave programmers all the information they needed about the store’s API and related infrastructure. Result: Tesco is taking advantage of some of the best brains in the field, programmers get payment and credit, and the customer gets better service. Moreover, said Ms. Maurer, the entire process of brainstorming, commissioning and delivery took a tiny fraction of the months that older processes would have required.

Marks & Spencer is also squeezing extra value from existing assets—in this case, its branded video content—according to Chris Gorell Barnes. Barnes is CEO of Adjust Your Set, which helped the retailer launch M&STV. The site is now populated with more than 1,000 pieces of intelligent content, and has generated over 4 million minutes of views.

Much of the content is also syndicated for broadcast on video sharing sites, social networks and other content and media portals. Crucially, these videos incorporate a click-to-buy facility, taking viewers straight to M&S for purchase. So far, data shows customers who viewed M&STV spending 23% more. And, said Gorell Barnes, video delivers value in other ways. His firm has seen e-mail response rates rise by up to 300% when outgoing messages contain video elements.

Inevitably, Facebook plays a growing role in any assessment of value on the Web. Beyond its importance to users and product advertisers, however, is its growing value as a broadcaster. As Gerd Leonhard noted, even content from major media owners is increasingly seen within this social environment, as a currency shared between friends or given new meanings by Facebook groups. Content owners are just beginning to think about how this may raise or lower the value of what they produce, and how their business models need to alter in response.

The emerging mobile arena was another key topic of the day. Douglas Orr of price comparison engine Sccope discussed the rapidly growing market for mobile commerce. His firm is the global m-commerce partner for BlackBerry, which aims to launch mobile buying facilities from this August. Orr and other speakers on mobile were joined on a panel by Jo Vertigan, Head of Digital at England 2018 (promoting England’s bid to host the FIFA World Cup eight years from now) and Patrick Mork, CMO of GetJar, a site offering “appsolutely everything” in the way of applications for mobile handsets.

M-commerce promises greater convenience for buyers and a new revenue stream for sellers. But what other values attach to mobile? Are apps better value for advertisers and consumers than mobile Websites? Advertisers often opt for a site strategy, which removes the need to cater for different handsets. But will the mobile Web win out in the long run?  

Mork, not surprisingly, favored apps over sites. Apps offered deeper brand engagement, he said; users experienced no network delays, and payment was (at the moment) easier and more secure from within an app. But he acknowledged that advertisers interested in reach probably find better value in building mobile sites.

A final insight agreed by all the FODM speakers: The pace of change in the industry, though frightening, is also inherently valuable, keeping marketers on their toes and sparking innovation.

When Steve Jobs first announced the iAd platform back in April, the clever analysts at Juniper Research put up a blog post asking “Will iAd Generate iAdspend?”

Following yesterday’s somewhat glitch-ridden introduction of the iPhone 4, the answer appears to be yes. Steve Jobs told an enthralled audience that Apple had over $60 million in commitments for 2H 2010 from the likes of Nissan, Sears, JCPenney, GEICO, Target, Best Buy, GE and Unilever, as well as longtime partners Disney and AT&T. Those commitments represent 48% of mobile display ad spending the second half of the year, according to Apple (which clearly based its calculations on more optimistic projections than eMarketer’s, below).

Of course, we have to factor in the Apple effect. Combine a new, slicker and seemingly more capable iPhone with a revised OS and a new ad platform and you have the potential for a rising tide. Apple’s entrance into the mobile advertising market in such a high-profile fashion undeniably serves as a validation of the medium. But whether it will lift all mobile advertising—or just mobile display—remains to be seen.

The iAd examples Apple demonstrated yesterday certainly looked impressive, as they should given how high Steve Jobs has set the bar. The bar for performance has likewise been set high, commensurate with the cost of participating in the iAd program. The awareness Apple has generated about iAd, which transcends the marketing community at this point, should work in favor of iAd advertisers, who will also get to bask in Apple’s glow.

The novelty factor associated with the first round of iAd likely could contribute to high levels of consumer engagement. Wired magazine saw a huge boost in sales when its iPad app was released, thanks to the considerable hype associated with the app’s engaging, touch-friendly content. The same hype could be applied to engaging, touch-friendly iAds, which launch July 1.

The question, however, is whether Apple’s halo effect will last with the iAd platform. The proof ultimately lies in the effectiveness of the campaigns once they are in-market, not in the flashy demos.

(Image Credit: James Martin/CNET)