It’s not ALL about ROI.

In December, I began working on a project with Econsultancy to understand where marketers are allocating their budgets in 2010. Consistent with other reports, we found the migration of budgets from traditional to digital channels continues. In fact, digital marketing budgets will increase by an average of 17% in 2010, and 28% of marketers are migrating at least part of their overall marketing budgets from traditional to online channels.

54% of marketers plan to increase email budgets in 2010. Another 43% plan to keep their email marketing budgets the same, leaving only 3% that will decrease spending on email. So yes, our expertise will be in demand for the foreseeable future.

Questions about how and why budgets are being reallocated are more intriguing. We’re all familiar with reports showing that ROI from email is very good. The DMA reports figures each year and, while we may debate the finer points, few disagree with the general premises that email is very measurable and provides a good return. According to our study, email is one of the most successfully measured marketing channels, along with paid search. As such, it makes sense that people would increase their investment in email and search.

However, only 17% say they do a good job measuring ROI from social media, while 70% are planning to increase marketing budgets in this area. Granted, figuring out how to track and calculate ROI for social media is a hot topic. I attended OMMA Social in San Francisco last week and there was a lot of talk about ROI: tracking, proper calculation, allocation, etc. (Sorry, I didn’t walk away with any answers.) But that’s beside the point. The point is that something other than ROI is motivating brands to increase social media budgets — while cutting budgets for print, radio, and television.

So what is? Brand reputation.

While only 41% of marketers use “brand reputation” as a measure of marketing effectiveness, these marketers are significantly more likely to be shifting their budgets from traditional to digital channels than those using other success metrics. Ironically, marketers using ROI as a success metric (65%) were less likely to be shifting their budgets from traditional to digital channels. It’s not that ROI isn’t important. It’s just that these marketers have already made the transition.

Email marketers need to take note of brand reputation as well. Consider:

1) Monitoring brand reputation through social media can help avoid disaster in other areas. Promoting a product or service that is falling flat in the market only perpetuates the problem. By monitoring how your products (or those of your suppliers) are doing in-market through social media, you can get a good feel for which products should, and should not, be featured in your email program. Monitoring social media can also provide much-needed inspiration about the talking points that best highlight your products.

2) Relevance is only getting more important. We are all growing a bit tired of talk about relevance. However, your ability to deliver relevant content impacts your brand’s reputation, both online and offline. As brand reputation becomes a bigger online focus, make sure your email program is enhancing, not detracting, from that reputation.

3) Branding is no longer about simply being known, but being known as good global citizens. Several companies, like Chase Financial Services, have used social media as a tool for getting fans involved in their charitable endeavors. However, as fellow Email Insider Kara Trivunovic wrote recently, some companies have broadcast their relief efforts in Haiti by using email to notify subscribers.

So yes, ROI is a critical success measure. However, your brand’s reputation sets the stage for everything else. If your reputation is tarnished, no channel can be effective, no matter how efficient it is.

by Morgan Stewart
Morgan Stewart is Director, Research & Strategy, at ExactTarget, a provider of on-demand email and one-to-one marketing solutions.
Courtesy of http://www.mediapost.com