January 30, 2013, 1:56 PM

Social media advertising grows at the expense of other channels

But many retailers still don’t have a clear sense of ROI, Nielsen says.

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64% of marketers plan to increase their social media ad spending this year—including 31% who plan to increase their social media budget by more than 10%, according to a new report by the The Nielsen Co. and its subsidiary Vizu.

The report is based on a survey of more than 500 U.S. digital marketing and media professionals conducted last September and October. 

For most of those advertisers, that growth is coming at the expense of other marketing channels. For instance, 23% say that they are shifting marketing dollars away from online display ads to social. Another 39% say they are moving some of their offline marketing budget to social media advertising and 10% are taking money away from other online channels. 41% say that they aren’t moving dollars into social. The total percentage exceeds 100% because advertisers could select more than one response.

Advertisers are increasing their social media ad spending because they view social media as one piece of broader marketing campaigns, the report suggests. For instance, 66% of advertisers say they run social media ads that relate to other online advertising “most or all of the time” and another 51% say their social media ads relate to offline advertising “most or all of the time.”

Despite the growth of social media marketing, challenges remain. There is little consensus on how marketers view their return on investment for social media ads. 45% of advertisers say the primary purpose of their ads is branding or raising awareness of their brand. That has led many to use metrics like Facebook Likes, Pinterest “pins” and click-throughs to gauge the success of their campaigns. However, the marketers say the metrics they’d prefer to use—but haven’t mastered how to measure—are sales generated and brand lift.

“Unsurprisingly, the ‘metrics morass’ has left the industry unsure of paid social media advertising’s effectiveness,” the report says.

Indeed, only 29% of advertisers say social media advertising is effective and produces a measurable ROI. Another 33% say it “moves the needle when combined with other efforts, but I’m not sure how to measure ROI,” 33% say it offers promise but its effectiveness is unknown and 6% say they don’t think it works (The percentages add up to 101% due to Nielsen’s rounding).

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