February 26, 2010, 12:00 AM

Spending on social media increases, but companies struggle with ROI

Even though 81% of companies say they plan to increase spending on social media over the next year, most of those companies are still struggling to figure out how to measure their return on investment, says web marketing consultants E-consultancy.

Even though 81% of companies say they plan to increase spending on social media over the next year, most of those companies are still struggling to figure out how to measure their return on investment, according to a new study from web marketing consultants E-consultancy.

61% of companies say their organizations are either poor or very poor at measuring ROI from social media, according to “The Value of Social Media Report.”

The report, which based its findings on a survey of 400 U.S. companies and agencies (19% of them retailers) in December and January, found that among the reasons companies are pursuing social media are to:

  • Drive traffic to the company’s web site, 74%
  • Raise brand recognition, 64%
  • Improve the brand’s reputation, 62%
  • Increase sales, 56%
  • Improve customer retention, 51%
  • Bolster customer satisfaction scores, such as NetPromoter, 52%

 

Despite the difficulty of finding a direct relationship between the social media efforts and those goals, companies are growing their social media efforts, in part, because those efforts are relatively inexpensive, says the report. 32% of companies do not spend anything on their efforts (aside from their employees’ time), 36% spend less than $5,000 and 12% spend $10,000 or less.

Facebook is the most commonly used social media site, with 85% of companies using it, followed by Twitter (77%), LinkedIn (58%) and YouTube (49%).

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