Nielsen has released a study suggesting that marketers are allocating more of their budget to digital than TV, radio or outdoor.

The Community Engine 2010 Social Media Business Benchmarking Study also found that 70% of all Australian businesses intend conducting some form of social media activity this year, compared with just 40% in 2008.

The study, commissioned by social networking technology company Community Engine, found that businesses are moving a significant percentage of marketing budgets out of traditional media into social media – the greatest shifts of budgets were out of print media (47%) and direct marketing (33%).

Unsurprisingly, of the 347 organisations surveyed, many struggled with how to measure return on investment (ROI) in social media, with 29% indicating they had either not measured ROI from their social media activity or did not know how to.

In the SME sector, growth in the uptake of social media has been even stronger – in 2008, just 32% of SMEs used social media, which has more than doubled to 67% in 2010.

More than half of large businesses had allocated funds away from traditional media to fund social media – an example the report points to includes Jetstar’s decision to redeploy 40% of its marketing budget to social media.

Although 26.5% of Australian businesses now have a Facebook presence (17% on Twitter, 10% on YouTube and 5% on MySpace), the study revealed a high level of concern about ownership and control issues around third party social media platforms and their impact on customer relationships.

More than a third of big businesses and 27% of SMEs said they would prefer to create their own social network as an extension of their own website.

Melanie Ingrey, research director of Nielsen’s online division, asserted that Australian organisations cannot afford to overlook social media as an effective means of engaging with their customers and stakeholders.

“In the past year, there has been substantial growth in the number of consumers engaging with companies via social media, up from 23% in 2008 to 38% in 2009,” explained Ingrey.

However, the difficulty of measuring ROI or uncertainty on how to establish KPIs for social media were perceived as barriers to entry by 34% of respondents.

Among big businesses, 42% also said the fact that senior management had not yet ‘bought into’ social media was a barrier to their organisation investing in it.

“The really smart companies are recognising that instead of putting all their social media budgets into the likes of Facebook and MySpace, they should be allocating funds to establishing their own proprietary social networks to provide them with the best possible insights, and a more connected environment with their customers and other stakeholders,” said Community Engine managing director, Piers Hogarth-Scott.