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Web Merchants Keep Social Spending Low

Tactics like search considered more effective and measurable

July 19, 2010

Retailers seem to be working hard to socialize shopping; according to the e-tailing group, more than nine in 10 are planning a Facebook presence by the end of the year.

But social media still gets only a tiny slice of retailers’ online marketing budgets. Online merchants with annual sales of more than $100 million devote just 1% of their total marketing budget to social, compared with 39% that goes to paid search, according to Shop.org’s “The State of Retailing Online 2010” report.

Smaller web outlets spent proportionally more on social, but it was still a small share of total budgets.

Percent of Marketing Budget Spent on Search and Social Media by US Online Retailers, by Company Size*, March 2010

eMarketer estimates that, overall, 5.5% of US online advertising budgets will be spent on social networking advertising in 2010. The percentages are not directly comparable, but suggest retailer spending is low.

First, the Shop.org data includes not just spending on social networks but on any social media. Further, eMarketer’s figure includes only advertising, not non-advertising marketing. Since the social channel puts a heavy emphasis on marketing tactics over traditional ads, it seems likely that a look at overall marketing budgets should increase or at least maintain the share toward social.

The Shop.org study found most retailers were measuring their success in social media, but the most popular ways were through soft metrics like follower and subscriber counts.

Ways that Social Media Marketing Effectiveness Is Measured, Mar 2010 (% of US online retailers)

A majority was also measuring sales attributed to social networks and clicks through to the retail site as well.

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Check out today’s other article, “Bing Solidifies Growth as Yahoo! Loses Share in Q2.”


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