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Quantifying Social Media Advertising Contribution

According to a new study by AOLplatforms, social media has emerged as one of the most popular marketing tools to reach consumers, with companies like Twitter, Pinterest, Facebook, LinkedIn, YouTube and others vying for advertising dollars. As with other marketing channels, it has become vital for marketers to understand the absolute value of their investments in social channels, or change tactics accordingly, says the report.

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Marketers intuitively know the power of social media and its virality, but they also want metrics that go beyond tracking clicks, likes and retweets. This includes more qualitative measurement to better explain the return on investment (ROI), such as how a specific social channel influenced a purchase online or in-store.

To understand how social media channels contribute to an advertiser’s efforts, the study leveraged Convertro’s multi-touch attribution technology to analyze all social media exposures that occurred in Q1 2014 across its entire client base. To reveal true user action, this report is based on real world, third party customer data rather than relying on survey data, which can be unreliable.

Key takeaways include:

  • Social Media provides significant impact on a customer’s path to purchase and strongly influences their buying decisions.
  • Paid social media advertising transforms the medium from an influencer tool into an effective upper and lower funnel solution that directly moves the needle on sales.
  • Some social networks are more conducive to awareness vs. conversions.
  • Social performance is not ubiquitous across all advertiser verticals, it varies by channel and product category.

News stories about advertisers increasing their spend on social have dominated many of the headlines recently, says the report. It also notes that eMarketer estimates that spending on social media ads will hit $6.6 billion in the US this year, growing more than 46% from 2013.  

Spending on Social media allows marketers to reach incremental audiences that they may not necessarily get through TV and other media channels. However, it’s important to understand how a brand’s presence on those sites, from a paid and organic standpoint, affects the path of a consumer’s journey towards purchasing a product, says the report.

The report shows that Social media is much more likely than any other marketing channel to serve as a MIDDLE touchpoint (87%) along the path to purchase, which is an important part of customer awareness and consideration of a product. 

Marketing Channel Impact On The Path To Purchase

 

Touchpoint

Marketing Channel

First

Middle

Last

Only

Affiliate

5%

69%

22%

5%

Social

6

87

5

3

Email

7

78

11

4

Display

8

89

3

0

Non Brand search

11

71

10

8

Brand search

17

52

17

14

Source: AOLtouchpoint, September 2014

In the analysis, YouTube appeared to be the strongest of the social networks at introducing new products (18%) and driving conversions (14%). This is a good indication that video is an important format for advertising to potential customers. Facebook came in a close second place in terms of introducing new products (11%) and closing sales (10%).

It’s possible to quantify this impact by comparing organic versus paid social media conversion rates. Marketers that allocate ad spend to social channels see a nearly 25 percent lift in the number of sales generated by advertising, compared to sales generated by organic, non-paid marketing touchpoints.

Funnel Position by Social Network

 

Funnel Position

Social Media

Only

First

Middle

Last

Twitter

 

 

 

 

   Paid

30%

16%

42%

12%

   Organic

1

3

93

4

Pinterest

 

 

 

 

   Paid

11

26

54

9

   Organic

2

5

85

8

Facebook

 

 

 

 

   Paid

24

26

37

13

   Organic

4

4

84

9

Source: AOLtouchpoint, September 2014

As Facebook, LinkedIn and others adjust with their algorithms for displaying user content, the report feels that the ratio “sales generated by organic versus paid” will continue to skew further towards paid social advertising, allowing marketers to control what is shown, when and to whom. While some consumer surveys have shown advertising on social to have a negligible impact on actual sales, and therefore relegating the sites to being more brand awareness, the real-world data collected in this study indicates the opposite, says the report. 

If you’re a marketer holding off on paid ads on Facebook and Twitter because your earned media is performing well enough, think again says the report; your conversion rate for paid social could be dramatically higher.

Organic Vs. Paid Social Media: Social Network Conversion Rates

 

Conversion Rate

Social Media

Paid

Organic

Twitter

3.85

1.45

Pinterest

0.21

1.08

Facebook

3.13%

2.95%

Source: AOLtouchpoint, September 2014

The study analyzed 500 million clicks, 15 million conversions, and three billion impressions (a total of more than $1 billion of attributed revenue) gathered during Q1 2014 across Convertro customers that invested in social media. The research involved the analysis of more than 13 million unique purchase paths and the touch points involved, looking at their position in the path.AOLPlatforms, September 2014.

For additional information from AOLplatforms, please access the full report, in PDF format, here

 

 

2 comments about "Quantifying Social Media Advertising Contribution".
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  1. Henry Fernandez from pitchussocial, September 20, 2014 at 5:29 a.m.

    For asserting presence on Web ,Most of the business marketers have started promoting their products and services online by using paid and free services .Social media platforms like Facebook and Twitter allows business marketers to promote their business by using paid advertising ,Business page creation ,by creating communities and many other services which helps marketers to present their products and services in front of billions of users .`

  2. Trung Ho from ASU, September 20, 2014 at 9:17 p.m.

    Social media can help many businesses promote their products and services to potential and existing customers. Facebook, Twitter, YouTube and LinkedIn are currently the most popular social media sites businesses are using. It is an affordable way to promote products and services, while building relationships with customers by utilizing free social media networks, while traditional advertising methods such as television and radio commercials, banner advertisements, print placements and participating in promotional events can be costly for businesses. Social media sites give business owners access to a large audience who can choose to like or follow their business and its updates. With social media, businesses owners can announce a sale or special event as soon they finalize plans. Social media gives them the ability to share information, such as blog posts, tips and ideas and coupons instantly. For example, if you want to find out which flavor of ice cream your customers like the best, you can interact with them directly through social media. When customers feel like they have a way to access you if they have questions and feel like you genuinely care about their opinions, they become more loyal to your brand. Social media marketing helps you develop ongoing relationships with your fans and followers each time you post, share or respond to a status update or video. You can use social media to post links to products and services offered on your website, or you can link your fans and followers to your blog posts.

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