Social media marketing budgets have been on the rise for some time. And now Forrester Research's new Interactive Marketing Forecast estimates that social media marketing will grow 34% over the next five years to $3.1 billion by 2014.
And while overall advertising budgets may stay the same size or decrease, that doesn't mean they don't still matter.
As Jake Hird pointed out in his post on our site earlier today, online consumers trust real people, not companies. Therefore, it makes sense that companies will spend more time and energy in the near future trying to reach out to consumers where and when they share their opinions online.
But other marketing efforts are still important. Forrester estimates that online advertising will grow from 12 percent of total marketing spend this year to 21 percent by 2014, and the battle between search and display is still raging. Those two categories are set to earn the most marketing dollars online for the foreseeable future ($31.6 billion and $16.9 billion by 2015, respectively).
Marketers are going to be spending more and more time trying to increase their brand recognition and word of mouth in social media. Forrester expects the Interactive marketing spend to double in the next five years and reach $55 billion by 2015. But the 34% growth of social media marketing is double the average growth rate of 17% for the rest of online marketing.
According to Forrester analyst Shar VanBoskirk:
"With dollars moving out of traditional media toward less expensive and more efficient interactive tools, marketers will actually need less money to accomplish their current advertising goals. But reasonable marketers won't relinquish budget because their programs are running too efficiently. Instead, marketers will allocate unused advertising dollars into investments like innovation, research, customer service, customer experiences, and marketing-specific technology and IT staff, in order to further marketing's strategic influence within their companies."
What does that mean for companies trying to promote their brands? Getting real people to talk about brands online matters.
However, turning consumers into brand evangelists can be a tricky — and expensive — task. And while brands are getting less traction out of traditional marketing dollars, there is no need to think that traditional marketing has stopped working.
Nielsen’s Global Online Consumer Survey released this week may have found that 90% of online consumers trust recommendations from people they know in real life, but the next most trusted source are companies' own websites. Nielsen estimates that 70% of consumers online trust brand websites. That's compared to 55% that trust billboards, 33% that trust banner ads and 24% that trust mobile text ads.
Even if the success rates of online ads continue to decline, the fact that 3/4 of the online audiences trust brand websites means that a lot of people are still willing to let companies define the conversation around their products.