Social Revenue Underreported By 245%, Report Finds

Here’s something to think about: “For every $1 million in sales that your web analytics tool reports as generated from social, it’s actually likely to be closer to $2.45 million.”

Why? Well, according to a new report by social ecommerce company SimplicityDX, the typical analytics and reporting tools for measuring brand site social revenue aren’t very good at understanding sales not directly made through ads on social, ultimately leading to a number understated by almost 245%.

There’s nuance to the effects a social ad has on a customer’s decision to buy. For example, research shows that 71% of shoppers who discover a product on social don’t click through the ad, but buy directly on the brand site, with 23% doing so immediately and almost half waiting a while to head to the brand site later.

“Brand marketers spend on average 25% of their digital budgets on social media but are unable to accurately measure its impact,” says Gerry Widmer, co-founder and chief executive officer of SimplicityDX. “This research suggests that CAC (customer acquisition cost) is dramatically lower and ROAS (return on advertising spend) significantly higher for social campaigns than previously thought.”

And there are specific reasons for this trend. The majority of consumers, the report finds, don’t trust buying directly through social due to a general fear of a platform abusing their personal and financial data. In fact, the report shows only 15% of consumers prefer to purchase via social media.

In addition, 86% of respondents reported issues when migrating from social media to the brand site to buy, likely because inventory, pricing and promotions are not synchronized, and also due to  shoddy returns experiences (66% of customers were reluctant to make a second-time purchase through social).

You’d think that influencer recommendations would help a brand’s chances of selling directly on social, but SimplicityDX found that 64% of customers would prefer to buy not from influencers, but from the brand itself.

Social, it seems, is simply where people like to begin their shopping journey (which makes sense due to frequent personalized ads wedged in between entertaining posts). The brand site is where most consumers complete their purchases.

Perhaps publicly adopting the credo “discover on social, buy on the brand site” would register with customers and even build trust. Especially if the brand makes sure to link customers directly to their site.

Moving forward, it is important to ask how much revenue your social media channels are actually sending your way, and what you can do to cater to modern-day buyers.

1 comment about "Social Revenue Underreported By 245%, Report Finds".
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  1. Roger Brooks from Research & Marketing Strategies, February 8, 2023 at 8:02 p.m.

    A partial solution is to leverage the Purchase Intent metric in survey based *Test and Control) digital ad effectiveness evaluaion. Doesn't give you actual coversion and $ but, at least, it takes into account other pathways to coversion with lifts in purchase intent stimulted from ad exposure. 

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