Social media is so ingrained in today’s culture that we forget Facebook is already a teenager, while Snapchat has just graduated preschool. Other social media — including LinkedIn, Twitter, YouTube, Instagram and WhatsApp — have joined them to gain an impressive user base. In the second quarter of 2017 alone, 110 million people started using social media for the first time, increasing total users to 2.9 billion globally.
Beyond their initial role as vehicles for communication and social expression, however, each social media application has also become a revenue-producing engine. And marketers have been eager to pay for access to a social media audience that is not only growing quickly, but is enriched with data that enables targeting around individuals’ likes and dislikes, demography, affinities, buying behaviors and much more.
Even setting audience growth aside, Facebook could be considered the greatest data management platform ever built, because its users self-declare demographic and psychographic information on a daily basis. Every Facebook “like” and “follow” represents extremely powerful third-party data for brands to harness.
The impact of social media on top line sales is undeniable. A recent study shows that social media is now the primary driver of all website referral traffic. U.S. social commerce sales — purchases made directly from social media posts — grew from $ 3 billion in 2012 to $ 14 billion in 2015. The most up-to-date marketers are riding the wave, spending $ 31 billion on social media ads in 2016 — nearly double what they spent just two years ago. And while Facebook continues to dominate the space, all social media platforms are advancing monetization strategies around their expansive user bases.
Most marketing executives have been scratching their heads as to how to take social media to the next level and show a measurable return on investment in it. Indeed, only 16.3% of CMOs report having the ability to quantitatively show the impact of social media on their business; in a seeming contradiction, they expect to expand social media spend by 89% in the next five years.
We’re now at that Holy Grail point where with social media, marketers can gain a measure of offline return on ad spend by taking sales data and matching it within Facebook to determine whether a product was purchased by someone who had seen an ad. And where POS data isn’t available, geo-based targeting and tracking is an alternative optimization strategy. This scenario drives people toward in-store coupons pages, for example using geo-fencing to measure “directions to the store” page visits.
We’d like to share some additional ways marketers can optimize their return on the investment they make in social media.
An important recent innovation in marketers’ use of social media has been the ability to allow first-party data to be easily and inexpensively ingested in multiple ways. Examples of this capability include Facebook’s Custom Audiences, Twitter’s Tailored Audiences, and Snapchat’s Snap Audience Match. It is possible to align campaign objectives by audience within these platforms, either by using offer ads to reintroduce a brand to audiences who have not made a purchase in the last 6 to 12 months, or by introducing new products and increasing purchase frequency with dynamic product ads. Targeting has thus reached a level of granularity that is producing better results for every dollar spent.
A logical next step for marketers using social media for targeting is lookalike audiences — that is, prospects that have many similar attributes to your top customers. Lookalike targeting isn’t a new concept — all platforms have their own methods of reaching “similar audiences” — but none of them seems to have extrapolated to having insights about the modeling and what is behind it. Rather than relying on one platform, marketers might consider leveraging a social ad-tech solution such as 4C Insights.
There are two reasons why this is a good idea. First, there is no certainty that first-party audiences will match demographically with lookalike audiences, since factors such as age, gender and location may be equally weighted among likes and interests within the algorithms. Second, and more obviously, the platforms will sometimes inflate the cost-per-impressions on their lookalike audiences.
Brands need to make sure that they have the Facebook pixel installed on their website — something that may seem obvious, but in fact many sites don’t have this tracking code properly integrated. Facebook’s remarketing pixel can help target all site visitors for up to 180 days at a granular level, giving brands a leg up in their targeting efforts.
Even with today’s data-driven approach to marketing, many brands are still using outmoded performance measures such as shares and likes, which do not translate into return on investment. Now there are ways to report on actual business goals achieved through social ad spend — typically sales and/or in-store visitors. Measuring offline conversions within the social media platforms is relatively straightforward as long as analytics and tracking have been properly implemented and maintained.
As mentioned above, Facebook and other platforms now allow marketers to connect offline transactions and events to their digital media efforts, providing a more objective measure of offline return on ad spend.
The importance and evolution of the social media platforms is nearly unparalleled in digital marketing. Until very recent years, businesses used social networks only to communicate to audiences that already knew them, or that may have been liked or shared by that audience. With this new ability to ingest first-party data for targeting and measurement, brands can now reach current customers, and find new ones, more often. This, combined with the fact that social media is driving more direct sales, makes it almost a certainty that the power of social platforms will only continue to increase and multiply.