Industry gurus have been preaching a mixed (paid, owned, earned) approach for a number of years now. But social’s “lack” of ROI has made it difficult for marketers to make the case for paid social advertising.
A recent study by Adobe Digital Index shows that marketers may have finally moved beyond social ROI. Social networks are having their moment in the sun. Marketers are shifting spend from cost-per-click (CPC) to cost-per-thousand (CPM) media looking for more value as the click through rates (CTR) for paid advertising have nearly doubled this year. CPM rates are up 120% YOY, with the majority of that growth occurring in just the last quarter. Advertisers buying on a CPC still outspend those buying on a CPM, but with this shift they’ve seen their marginal CPC rates decline 40% YOY.
Adobe Digital Index examined over 131 billion Facebook ad impressions, more than 1 billion Facebook posts and 400 Million unique visitors to social networks including Twitter, Pinterest and Tumblr in the first annual Social Media Intelligence report, which reviews all facets of social media—paid, owned and earned.
The report has found that Facebook Ad ROI and CTR have experienced strong growth. And, revenue per visit on Twitter is up 300%.
Twitter, which was already a major source of referral traffic for media companies, has improved its share of traffic to retailers by 2.5 times, outgrowing the other social media darling for retailers, Pinterest, who grew 84% this year. Just when we thought Facebook may be unstoppable, Twitter and Pinterest appear to be taking some of the referral traffic from the social media juggernaut as Facebook’s referrals to retailers has dropped 20% YOY.
Social networks become more marketing friendly, brands see big jump in ROI
In 2013, the major social networks got serious about making their platforms more marketing friendly. Facebook led with the new Timeline user interface, the introduction of Graph Search and improved audience targeting capabilities. Twitter also beefed up their targeting capabilities while acquiring Vine and MoPub to increase their video and mobile capabilities, respectively. Most recently, Pinterest got in the game with the introduction of Promoted Pins.
All these changes, along with marketers’ increased sophistication at leveraging the platforms, are paying dividends. On Facebook, ROI (defined as revenue / expense) has increase 58% over the last year.
On Twitter, revenue per visit (RPV) jumped 300%. While still not as profitable as Facebook’s $0.93 and Pinterest’s $0.55, this notable jump puts Twitter more in-line with the other major networks when it comes to delivering ROI.
Marketers figuring out how to use social media…sort of
Brands ever increasing commitment to social media is showing, but the discipline is a long ways from being mature. The amount of content published via brand pages jumped up 79% year-over-year, and engagement with that content is up 115%.
This shows marked improvement. But, marketers could be missing an opportunity with video. While not as strong as image posts (4.3%), video has the next best average engagement rate at 3.5%. That said, only 6% of posts contain video while 70% of posts have an image. Considering the typically higher cost of video, it will likely never become as frequent as image posts, but with similar results, it appears to be an opportunity worth exploring further as a means to keep consumers engaged consistently with rich content.
What’s next for social media?
Heading into the critical holiday shopping season, social media looks poised to take a much bigger share of marketing investments versus last year. Marketers are getting smarter with the ways they are engaging consumers on the social networks, and ramping up investments in paid social to help amplify. With increasing CTRs, decreasing CPCs, and with engagement on posts on Facebook up YoY this is an excellent time to ramp up ad offerings and with other platforms gaining share from Facebook, brands will expand social media programs to include a variety of sites.
Marketers should be cautious, however, not to over-use text posts and the abundance of these posts will likely become less impactful over time. Although it costs more, video postings will be more engaging. Marketers will want to plan ahead and dedicate more resources to managing social media content. Tracking social ROI remains difficult as the data is still held in silos and attribution algorithms are nascent in their design and availability. There is still tremendous upside potential for social media and we will bring you the results from the holiday shopping season on Black Friday and Cyber Monday.
You can download the full report here
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