Misguided Growth in Local Social Ad Spending

An InternetRetailer.com article yesterday reported research by BIA/Kelsey projecting local social media ad spending to hit $2.3 billion in 2015.  Much of the growth is expected to be in display ads (i.e. Facebook banner ads) and non-display ads (i.e. Promoted Tweets).  The reports further notes the hope that Twitter banner ads will develop making advertising easier for small advertisers.  While social media has real potential for advertisers at the local level, it should be noted that perhaps a general lack of understanding of social media ad strategy may hinder the effectiveness of these larger expenditures and create waste depending on the advertising objectives sought.

 

Social media display ads have shown to work best if the advertising objective is aimed at the bottom end of the purchase funnel in enhancing brand loyalty or affecting preference.  Using Facebook as a case study, figure  1 illustrates that Facebook ads tend to acquire “Friends” or “Fans” of brands.  While brand awareness is a goal, more luck has been found in producing “friends” or “fans” rather than initially driving website traffic and converting the sell directly from the display ad.  Once the consumer is a “fan”, the brand attempts nurture a relationship with those “fans” and eventually convert the fans into profitable customers.

Figure 1: Facebook Ad Strategy

If the advertiser’s objective is at the bottom of the purchase funnel, social display ads are appropriate and may be quite successful.  However, there are two substantial difficulties with display ads if you goal is a reach goal seeking new consumers.  First, once consumers become “fans,” brands have created an outlet via the fan page to communicate information to the “fans.”  Unfortunately, this brand information only reaches those who are indeed “fans” of the brand.  It does not reach the friends of those consumers.  A recent whitepaper entitled “The Power of the Like” by comScore illustrated the millions upon millions of impressions that available if friends of “fans” are activated.  This is where new customer acquisition can occur.

Secondly, branded information delivered to “fans” comes from brands.  Consumers trust peers more than brands and are more likely to act on brand information if it comes from their friends via the social network rather than the brand itself.  So, display ads are to a certain extent against the point of social media when it comes to discussing brands.

So what is the key to accomplishing reach goals?  Brand must get into the Twitter scrolls and Facebook newsfeeds of consumers by encouraging consumers to share brand information rather than pushing it out themselves.  This is why advertising campaigns are being designed with a viral scope.  In terms of expenditures, if local social media advertisers seek brand awareness and new customer acquisition, then money should be put towards promotions that incentivize their current customers and “fans” to create user-generated brand content and share brand-generated content with their social networks.

It should be noted the promoted tweets are a step in the right direction as they do create content within the Twitter scrolls of consumers.  However, note that being “promoted tweets” the obvious involvement of the brand in the content likely decreases authenticity of the referrals.  Also, unlike Facebook where online networks mostly consist of offline, trust relationships, Twitter users tend to follow people who are only acquaintances or people they do not personally know further questioning the impact.  Brand conversations should be as organic as possible.  Providing a reason for consumers to talk about a brand will be much more effective than simply prompting a topic for consumers.

Social media advertising can be an important tool for local advertisers.  When executed correctly, social media initiatives can be more cost efficient and build strong brand communities.  This is particularly important to local advertisers considering their often small ad budgets and need to fight off large national retailers.  However, expenditures still need to be considered in reference to the advertising objective the business seeks to achieve.  Advertisers must think about what tactics work best at the end of the purchase funnel they seek to attack with their social media strategy.

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