Understanding the social media advertising and marketing

 Understanding the social media advertising and marketing 

People log into their favorite social network for fun, relaxation, connection, and

perhaps to consume news or information. They aren’t there for ads.

Turn on the hard sell, and you’ll be disappointed. However, if you adopt a new

marketing mindset, social media advertising can be fruitful indeed. Focus on

driving word-of-mouth endorsement, brand engagement, and qualified leads, and

you can drive big numbers at great return on ad spending (ROAS).

Social networks encourage low-key, conversational marketing, and serve as a

conduit for person-to-person buzz.

And that personal focus comes at a perfect time, because traditional advertising

and selling are in trouble.

Money spent on online advertising has now eclipsed that bastion of old-school

media, newspaper ads. But even online advertising is under pressure. Consumers

are deluged with more commercial impressions than ever before, with

overflowing e-mail inboxes, banner ads on every web page, and ads before every

video.

We live in a jaded, impatient, overworked, and suspicious age. Ordinary people

don’t trust ads or the marketers behind them. When shopping for goods or

services, what they do trust, overwhelmingly, are recommendations from friends.

It’s no surprise that we trust the judgment of people closest to us. But amazingly,

in the social media age, the opinions of strangers are nearly as powerful.

And that’s where social media shines for marketers: allowing word of mouth to

do the selling in a relaxed, personal, noncommercial way. The ads you run in

social media are embedded in the fabric of the online community. Your

campaign truly succeeds, gains extra traction and reach, through the “shares,”

“likes,” comments, and other social interactions it earns.

We’re now witnessing a turning point in commerce—where ordinary consumers

engaging in social media trust each other more, and could be more influential for

you, than traditional advertising.

I have five guidelines to help you identify the highest-return social advertising

options and optimize your performance as you go along:

1. Start with a top-line budget

2. Establish measurable goals

3. Allocate money and time between core platform and test-and-learn

campaigns

4. Test constantly

5. Rebalance efforts and budget based on return

Let’s look at each in more depth, as well as touch upon the idea of social media

burnout, promotions and “earned” media, and a dark side of social media

spending—fan or “like” buying.

Your Social Ad Budget

How much should you spend on social media advertising? I allocate about 3% of

my annual online advertising budget to social platforms, chiefly Facebook.

Coincidentally, Facebook currently has about a 3% market share of all online ad

spending.

Note that I’m talking exclusively about advertising expenses—media buying—

not the costs of maintaining and staffing to support an online presence, creative

design, and so forth.

Estimates of social media ad spending vary widely, but overall they suggest that

in the United States today, marketers spend somewhere between 5% and 10% of

their online ad budgets on social ads. In other words, in 2012, social advertising

represented an estimated $2.0–3.5 billion of the overall $35–40 billion in online

ad spending.

Tip Most marketers expect to be spending 5–15% of their online advertising

budget on social media ads in the next few years. If you’re not already getting

your feet wet, with 3–5% of your budget going to social media ads, you’re

falling behind the curve.

Because consumers spend about 15% of their online time on social media, some

experts argue that current media budgets are underallocated to social. A survey

by Buddy Media found that ad media buyers plan to increase spending on social

advertising: while two-thirds of respondents currently dedicate less than 5% of

their ad budgets to social, most expect in the next two years to be allocating 5–

15% to social media.

1

I concur that the slice of our ad budget pie dedicated to social advertising will

grow over the next few years. Some companies are already there: the social

shopping site Fab.com disclosed that fully 75% of its ad dollars are allocated to

social media sites.

2

In making budgeting decisions, marketers will inevitably have to balance the

proven, high, immediate ROI of direct-response search and remarketing ads

(think Google AdWords and Yahoo/Bing adCenter) with the less direct, brand-

building and lead-generating benefits of social ads.

To manage a successful social media ad spend, you need the discipline of a fixed

monthly budget that forces you to plan in advance, tailor promotions to seasonal

peaks, pursue the best opportunities—and say “no” to the many marginal ones.

Note that I’m talking specifically about advertising budgets. You must also

budget your overall social media operating expense. 

Where Are Social Ad Dollars Going?

Advertisers are spending their money where the overwhelming majority of users

are spending their time: Facebook.

In a survey of media buyers, a resounding 86% of those who intended to

advertise in social media planned to do so on Facebook. 

Some 39%

and 36%, respectively, planned to advertise on Twitter and YouTube. LinkedIn

was in the ad budgets of 21% of media buyers, while Google+ attracted spending

from just 18%.

Allocate 90% of your budget to core strategic platforms and 10% to

“test and learn.” Tests are at the heart of successful marketing innovation,

but too much test-and-learn on second-tier networks is the kiss of death.

Unless you establish clear budget guidelines, you’ll waste time and

squander your attention on a crowd of small, “me too” social platforms with

no ability to really move the needle. They simply don’t reach enough

people, and whatever reach they offer is seldom unique; it’s easily

duplicated on major platforms. Be disciplined, set limits for how much

money and time you’ll spend on small platforms, and you’ll never fall

victim to social media “shiny object syndrome.”

Establish quantifiable goals. Before rolling out an ad-supported social

media campaign, state your objectives up front: we expect 12,000 new

Facebook fans, say, and 10,000 contest sign-ups, of which 9,000 will opt

into our e-mail program. We expect 100 new buying customers, or leads

tracked directly from social media links, and X number of brand

impressions from news-feed activity and retweets. Every campaign has its

vital signs; they could be votes, poll responses, game-plays, dollars donated

to a cause, customer-uploaded content, tell-a-friend referrals, free sample

requests. With experience, you’ll learn what to expect for ad cost, click-

through, and conversion rate. You’ll be able to establish benchmarks for

efficient cost per fan, cost per lead, and cost per order metrics.

also set less tangible but still trackable goals: survey-driven customer

satisfaction levels or brand awareness and usage, positive sentiment, brand

mentions—before, during, and after the campaign.

Remember, every dollar you spend on social media advertising will come out of

some other marketing “bucket.” By setting up a fixed budget, establishing clear

goals, tracking results, and redirecting funds based on performance, you’ll never

be caught off balance by these three innocent questions from your boss:

What are we spending on social media ads?

What are we getting for our money?

Is that good?

Measure Results—and Rebalance

Buyer, beware. Sure, your friendly account rep at Facebook or any other ad-

supported social network wants to see you succeed so you’ll become a long-term

client. But don’t expect him or her to worry about your ROAS. You, and only

you, are accountable for the return on your ad dollars.

Whether your principal goal is to drive fan acquisition, e-mail newsletter or

sweepstakes sign-ups, sales, free sample requests, or brand awareness and

positive perception, you can measure it. Establish your goals, in raw numbers

and in performance ratios, and broadcast them to your team in advance.

Tip It’s important to establish a unit cost for the most trackable goals of a

social media ad campaign, like cost per fan, cost per app download, or cost per

e-mail sign-up. The key is to track the conversion rate of those social media

leads to paying customers—via e-mail marketing, say. Then you can calculate

your social media customer acquisition cost.

Always structure your social media ad campaigns as A/B tests. Review daily

results, and optimize toward the winning media-pricing, offer, or creative model.

You’ll be surprised by how much variance can exist between two different ad

images, headlines, calls to action, or other elements. Some of what you’ll learn

will be counterintuitive. For instance, I once ran a Facebook ad campaign for a

sweepstakes contest; we found that ads promoting our online community (and

not even mentioning the sweepstakes) generated more “likes” and more

sweepstakes entries than the ads that pitched the sweepstakes explicitly.