Digital marketers have become accustomed to the intent-driven behavior of mature channels like search in the fourth quarter, but how are they applying those audience insights into paid social? And what other native social and mobile capabilities are marketers leveraging to drive performance on networks like Facebook? In Skai’s Q4 Search and Social Snapshot, you can find a high-level analysis of paid social behavior, but there’s much more beneath the surface.
If we only look at paid social campaigns that generate revenue (filtering out pure branding investments) for advertisers who have been spending in the channel through Skai for the entirety of the five calendar quarters being studied, we see 30% growth in ad spend, 82% growth in revenue, and 40% growth in ROI year-over-year. ROI dipped slightly from Q3 as marketers relaxed their efficiency targets in a trade-off for driving revenue volume during the peak Q4 shopping season. Nonetheless, at $2.50 ROI, social advertising still proved to be a shrewd investment for direct response marketers.
All of the previous analysis is based on the digital version of “same-store sales,” in that only advertisers with a full 15 months of social ad spend through Skai are considered. As a relatively new and growing channel, however, this can be a somewhat limiting view, and as analysts, we want to ensure that we’re looking at both the growth of more stable advertisers and the new players in the market.
If we were to switch off that “same-store” filter, and look at total growth in spend, the result is an increase of +157% in Q4 over the same period in 2013.
Social is, and will likely continue be, an evolving landscape. In 2015, we expect to see continued growth in the social channel, both from longer running, more mature advertisers, as well as new entrants into the space. Structural changes to Facebook advertising such as the migration of inventory from the right hand side to the news feed have helped boost engagement and conversion rates. Further adoption of Facebook Exchange and mobile will also continue to impact performance. Lastly, we expect to see more video advertising on Facebook in the short- and medium term. Video ads will likely become a key tactic for many marketers, sparking a bump of branding budgets on Facebook.
As ever, it promises to be an exciting time to be a digital marketer.