• by Mark Walsh  @markfwal, March 23, 2009

A new report by Aberdeen Group spotlighted by eMarketer shows that 63% of "best-in-class" companies surveyed by the technology research firm plan to increase their social media budgets this year despite the recession.

Aberdeen defined best-in-class companies, among the 275 it studied, as showing the biggest gains in the last year in using social media to increase positive word-of-mouth and customer acquisition rates, among other marketing goals.

The findings are similar to Forrester's "Social Media Playtime is Over" study this month, indicating that 53% of marketers plan to increase social media spending and 42% will keep it unchanged. Why are companies allocating more dollars to social media as overall marketing budgets tighten?

Mainly because it's an inexpensive option and provides a promising way to benefit from word-of-mouth marketing. Marketers also sense the opportunity to seize an advantage by investing more in social marketing when competitors may be cutting back.

Another factor highlighted by Forrester is that budgets in this emerging category are still miniscule -- three-quarters of marketers have $100,000 or less earmarked for social media. So any increases start from a small base.

"We recommend to our clients, in order to be successful, not to approach social media marketing as experimental, but to put the right roles, process, and measurement capabilities in place to be effective," wrote Jeremiah Owyang, a Forrester analyst, in a recent post on his Web Strategy blog.

He added that the most expensive aspects of the social media campaigns stem from the "soft costs" involved in developing strategy, objectives, processes, and measurement.

According to Aberdeen's "The ROI on Social Media Marketing" report, investing in social media marketing is difficult to justify in terms of financial results. Part of the problem is the lack of established performance metrics in the space. Almost 40% of companies found it difficult to measure social media, and 20% found it very difficult.

But the dearth of standard measurements should keep companies from pursuing social media efforts. "The benefits of social media marketing have become increasingly clear and compelling, even if the metrics for measuring success are still evolving," states the report.

It emphasizes the use of social media to identify influencers and track their influence over time. "Best-in-class companies engage these top influencers as brand evangelists, and then track the impact of their words and actions in terms of return on marketing investment," according to Aberdeen.

While the Aberdeen and Forrester reports point to bigger social media budgets, eMarketer nevertheless expects spending to grow more slowly than previously expected. In a separate report this month, the firm reduced its estimate of worldwide spending on social network advertising to grow 17% to $2.4 billion, down from 32% to $2.7 billion.

In trimming its forecast, eMarketer cited the global economic downturn and a lack of proven social media ad models. Despite the urging of Forrester's Owyang, the eMarketer study found that many marketers still view advertising on social networks as "experimental." And that means more vulnerable to cutbacks.