• by Mark Walsh  @markfwal, July 29, 2008

A recent JupiterResearch study underscores that actual spending on social media marketing has not caught up with the hype surrounding the emerging category.

The report found that half of all advertisers are spending less than 5% of their online budgets on social marketing in 2008. Keeping budgets small is the highly customized nature of social media campaigns, compared to search or display advertising.

"Each social network site offers a wide variety of tactics to choose from, and in such a new market, social marketers have little or no performance history to rely on," wrote Emily Riley, a Jupiter analyst who focuses on online advertising and authored the report.

Nearly 30% of social marketers surveyed said figuring out which tactics suit campaign goals was their biggest challenge, with that figure increasing to 47% for large advertisers. Acknowledging that many advertisers don't have clear goals when approaching social sites, publishers are starting to offer more assistance.

Jupiter says MySpace has taken "a very consultative role," advising marketers when to use sweepstakes, for instance, or in helping to interpret new kinds of metrics such as number of "friends" in a meaningful way.

Facebook, meanwhile, is creating drag-and-drop tools that marketers can use on their branded Facebook Pages to show in real-time which tactics drive the highest level of engagement. A post on the Inside Facebook blog on Monday also suggests the social network needs to do more to let advertisers more fully customize the look and feel of their Pages and incorporate applications.

Jupiter found that MSN focuses on the overall brand message rather than social tools to determine which mix of traditional and new tactics works best. That approach might include banner ads for a movie release in Hotmail that link to a downloadable widget.

For large marketers, better ways of measuring ROI and brand metrics would have the biggest impact on their social marketing in the future. To that end, publishers have to work with advertisers to link audience activity from their own sites, marketer's sites and on search engines.

"Marketers could then use 'scores' to compare relative site performance," according to the report. "If the level of engagement on an advertiser's site resulting from a game widget scored low, the publisher could provide guidance as to how to increase the score based on its knowledge of its own audience."

Jupiter also urges social sites to offer behavioral targeting, which MySpace does through its HyperTargeting program and Facebook via its self-service Facebook Ads platform. But even with social sites making it easier to advertise, the broader economic downturn is expected to slow ad growth.

Market research firm eMarketer this spring lowered its forecast on social network ad spending to $1.4 billion from $1.6 billion, in part because of a weakened economy.