Paid Social Media Advertising

Industry update and best practices 2013 Methodology Executive Summary A survey commissioned by Vizu, a Nielsen Social media has grown exponentially. One out of every 7 people in the world has company, of more than 500 U.S. digital a Facebook page. Nearly 4 in 5 active internet users visit social networks and blogs. marketing and media professionals was Accordingly, marketers are flocking to the medium. Whereas their customers are conducted by Digiday in September adopting the medium with purpose, however, marketers are approaching with -October 2012 on current attitudes and caution. Marketers are increasing budgets and using social media in conjunction practices regarding paid social media with other advertising channels, but return on investment (ROI) continues to be advertising. Participants were contacted a question. For this survey, we focused specifically on what marketers were doing via email and asked to take an online around paid social media advertising. survey. Participants were first asked to • Paid social media advertising is growing – three quarters of advertisers surveyed identify themselves as a Brand Marketer, indicated that they use this channel, and 64 percent of advertisers said they were Media Agency, or Publisher/ Social increasing their paid social media advertising budgets in 2013, though for the Platform. Each participant was then most part the increase is modest. presented with questions about their approach to paid social media advertising • To fund this increase, advertisers are shifting budget from online and offline specific to that classification. Results were budgets into paid social media advertising. summarized and cross-tabbed in order to • Advertisers are increasingly viewing paid social media advertising as an identify consistencies or inconsistencies integrated, cross-platform tactic, and are running it in conjunction with other in each constituent’s viewpoints regarding online and offline media. paid social media advertising in 2013 and opportunities to improve the outlook. A • Paid social media advertising is primarily being used to support branding-related synopsis of those results is presented in efforts. As a result of this and the increasingly cross-platform way that advertisers this whitepaper. are using the medium, advertisers “would prefer to use the exact same metrics used in the offline medium, and additional metrics specific to the online medium” to measure the effectiveness of their campaigns. Very few media sellers, however, can actually provide this. • Metrics such as likes, pins, and click-throughs are often used to measure paid social media advertising ROI, though advertisers and agencies think sales generated and brand lift, which are brand-related and have cross-platform applicability, are the most appropriate metrics to use to determine ROI. Media sellers and agencies would do well to ensure that they are able to provide these specific metrics to attract more social advertising dollars. • Unsurprisingly, many advertisers are doubtful or unconvinced about the effectiveness of paid social media advertising, indicating that the growth of the medium is being somewhat hampered by a lack of relevant, universally employed metrics. • There is a clear opportunity to get everyone on the same page, particularly around metrics. Some of the things that advertisers and agencies said would increase their use of paid social media advertising are: –– A clear link between social media and sales generated and/or brand lift –– Clarity around how to measure social media ROI –– Social media benchmarks Media sellers and agencies who invest in building out the capabilities required to deliver these capabilities are likely to capture dollars related to social media advertising.

2 Copyright © 2013 The Nielsen Company. Introduction Fig. 1: How Advertisers and Agencies Use Social Media Social media use among consumers has exploded in recent years and shows no sign of stopping. Facebook now has 1 89% 0% billion active users, or one out of every seven people in the world1. Nearly four in five activeU .S. Internet users visit social networks and blogs2. Accordingly, 71% 6% marketers have flocked to the medium in order to stay in front of their customers. USE FREE TOOLS DON’T DO ANYTHINg WITH How Advertisers SOCIAL MEDIA and Agencies Use Social Media 75% The term “social marketing” or “social media marketing” typically refers to two Advertisers practices involving social media – the use of free tools, such as Facebook, Twitter, 81% agencies or YouTube, and paid media, such as paid ads on Facebook or sponsoring blog PURCHASE MEDIA AND/OR SPONSOR content. Unsurprisingly, free tools are CONTENT popular – 89 percent of the advertisers we surveyed indicated that they use free social media tools. However, paid social media advertising is close behind at 75 percent. Among agencies, paid social media has Fig. 2: Advertisers: Percentage of 2012 Online Budget Dedicated to overtaken the use of free tools. Social Media Advertising Social marketing, whether free or paid, is heavily used by advertisers and agencies. Every advertiser that we surveyed indicated 70% that they did something with social media, and only 6 percent of agencies that we 1-10% surveyed said that they did not do anything of budget with social media.

Though paid social media advertising is 18% increasing, it is still a relatively new practice among advertisers. Most of the advertisers 11-20% and agencies surveyed indicated that of budget they had been using paid social media advertising for less than three years, with 20 percent indicating they had only started in the last year, demonstrating that this is still 13% a maturing field. 21%+ of budget This is also supported by the share of budget that marketers allocated to paid social media advertising in the last year. The majority of advertisers (70%) indicated that less than one-tenth of their overall 2012 online advertising budget was dedicated to paid social media advertising. 1 Facebook, October 2012 2 Nielsen, July 2012

The majority (64%) of advertisers surveyed indicated they expect to increase their paid social media advertising budget for 2013 ; however, those increases will be modest – between 1-10 percent.

Fig. 3: Advertiser Outlook for Paid Social Fig. 4: Paid Social Ad BudgetS will grow by… Advertising Budgets

2% 41%

64% 15%

Increase Stay the Same Decrease 1-10% 11-20% 21%+

64% of advertisers surveyed indicated they expect to increase their paid social media advertising budget for 2013.

4 Copyright © 2013 The Nielsen Company. More than two-thirds (41%) of advertisers Fig. 5: Where Dollars for Social Media Advertising are Coming From surveyed said that “social media had its own dedicated budget,” indicating that their organization has dollars earmarked 23% specifically for that purpose. 41% However, most advertisers indicated that None, social From they would be increasing their 2013 paid media has its online display social media advertising budget at the own dedicated expense of other channels. Nearly one- budget quarter (23%) of advertisers indicated they would be shifting budget away from online display to paid social media advertising, while 10 percent of advertisers indicated they would be shifting budget away from 10% other online channels – namely rich media 39% and video. From other From OFFLINE Surprisingly, 39 percent of advertisers online channels CHANNELS indicated that they would be shifting some of their offline budget into online paid social media advertising, pointing to a growing consideration of paid social media as a cross-platform tactic. Advertisers

Paid Social Media Advertising is an Integrated, Mostly Branding-Focused Tactic

Paid social media advertising is increasingly being viewed as an integrated tactic – 66 percent of advertisers indicated that they use paid social media advertising in combination with other online advertising, and 51 percent of advertisers indicated that they run it in conjunction with offline advertising. A gencies reported a similar degree of integration. Only 5 percent of advertisers responded that they “rarely” or “never” run their paid social media advertising efforts in conjunction with other online tactics, indicating a low incidence of social-only campaigns.

Fig. 6: How Often Do You Run Social Ads with Fig. 7: How Often Do You Run Social Ads with Online Advertising? Offline Advertising?

71% Advertisers 66% agencies

51% 41% 39% 31%

20% 18%

11% 11% 7% 5%

Most or all Half of the Rarely or Most or all Half of the Rarely or of the time time or less never of the time time or less never

Copyright © 2013 The Nielsen Company. 5 When asked which online tactics they Fig. 8: PAID SOCIAL MEDIA ADVERTISING OBJECTIVES typically run their paid social media advertising efforts in conjunction with, advertisers’ top three responses were Primarily branding related, 45% online display (83%), online video (46%), e.g. raising awareness, inﬂuencing and mobile (40%). In the offline world, brand opinions 31% advertisers’ paid social media advertising campaigns were mostly combined with print (52%), followed by TV (37%). Primarily direct-response related, 16% e.g. driving product trials Advertisers said that the primary purpose or site visits 15% of their paid social media ads was branding-related (45%), such as raising awareness and influencing brand opinions, A mix of both--more than 25% whereas only 16 percent was primarily half is branding direct-response related, such as driving 29% product trials or site visits. In addition, when the campaign was a mix of both, a quarter (25%) of advertisers said A mix of both--more than 14% half is direct-response more than half was branding-related. 25% Brand marketers are viewing paid social media advertising as a branding tool, and more often than not are running it in conjunction with other tactics across both Advertisers agencies online and offline platforms.A gencies and social media sellers should ensure they can offer brand-relevant metrics that are applicable to the online and offline spaces to increase their share of brand advertising dollars in the paid social medium. Paid social media advertising is not being treated as a stand-alone tactic, but being as part of a set of marketing tools to influence brand opinions.

ROI is still a Tricky Question But Cross-Platform Consistency is Preferred

Advertisers are taking a more cross-platform approach with paid social media advertising, so it’s not surprising that advertisers desire metrics that can span across both online and offline mediums and allow them to measure the different tactics they employ in a consistent manner. When asked what metrics they would like to use to calculate ROI, brand marketers indicated by a wide margin that they would prefer to use the “exact same metrics used in the offline medium, and additional metrics specific to the online medium.”T his is reinforced by the fact that the majority of their campaigns’ primary objective is brandingrelated, as relevant brand metrics are commonplace in the offline world but scarce in the online medium.T his response also demonstrates, however, that advertisers recognize there is a unique aspect of the online medium that does not exist offline that they can use to their advantage – for example, the opportunity to validate the effectiveness of the campaign directly against the campaign audience. Unfortunately, only 11 percent of media sellers surveyed indicated they were able to provide these types of metrics. The majority of media sellers surveyed indicated they could provide metrics that were “specific to the online medium.”A s only 17 percent of advertisers surveyed were interested in online-specific metrics, there is clearly a disconnect between the metrics advertisers want and what is available to them.

49% 42% Advertisers PUBLISHERS

29% 29%

17% 12% 12% 11%

Exact same Exact same Some of Metrics Exact same Exact same Some of Metrics metrics metrics the same specific to metrics metrics the same specific to as offline as offline, metrics from the online as offline as offline, metrics from the online media, and and the offline medium media, and and the offline medium nothing some medium, nothing some medium, else additional and some else additional and some metrics metrics metrics metrics specific to specific to specific to specific to the online the online the online the online medium medium medium medium

Reflecting the fact that media sellers specific actions that a computer can count Fig. 11: TOP METRICS FOR SOCIAL ROI typically report online-specific metrics, the out. However, what the industry really top two metrics advertisers and agencies wants is insight into the campaign’s impact said they had used to measure paid social on the audience – brand lift and sales What Media Sellers Indicate They Use media advertising ROI in the past were generated. It is not a coincidence that these “likes/pins” and “click-throughs.” Media sellers indicated that they mediums. Media buyers should ensure that were using “click-throughs” and “views.” they are using these relevant metrics to get Likes/pins However, when asked what metric is most an accurate assessment of campaign ROI. Click-throughs appropriate to measure paid social media Unsurprisingly, the “metrics morass” has advertising ROI, advertisers and agencies Views responded “brand lift” (52% and 35%, left the industry unsure of paid social respectively) and “sales generated” (49% media advertising’s effectiveness. Two- and 46%). Media sellers also thought that thirds of advertisers surveyed said that “brand lift” was the most appropriate paid social advertising “moves the needle when combined with other efforts, but metric to measure paid social advertising What Advertisers and Agencies [they are] not sure how to measure ROI” ROI (52%), in addition to “shares/reposts” Indicate are Most Appropriate (38%). There is a clear opportunity for or that “it’s a promising new tactic, but media sellers to capture more brand dollars its effectiveness is unknown.” by offering relevant brand lift metrics. Six percent of advertisers surveyed flat out said that paid social media advertising This “metrics morass,” or data overload, does not work. Media sellers who are able Sales Generated is preventing marketers from clearly to provide relevant brand metrics, and who Brand Lift understanding the effectiveness of their proactively make improvements to ensure paid social media advertising campaigns. the campaign’s effectiveness, will have the Shares/Reposts The industry is going after the low hanging upper hand in capturing dollars from those fruit when it comes to ROI metrics. Likes/ advertisers on the fence about paid social pins, click-throughs, and views are online- media advertising’s effectiveness.

Copyright © 2013 The Nielsen Company. 7 Improvement Fig. 12: Media Buyer Views on Paid Social Media Advertising Effectiveness Opportunity Getting on the Same Page 29% 33% There is a clear opportunity for increased collaboration between media buyers and sellers. Nearly all advertisers indicated that “defining the campaign’s primary 27% 43% advertising objective before campaign start” and “establishing the metric that will be used to measure success before campaign start” was either “very It’s eFFective and produces I think it moves the needle when measurable ROI (with ROI deFIned as combined with other eFForts, but important” or “somewhat important” metric achieved per dollar spent) I’m not sure how to measure ROI for a successful paid social media advertising campaign. However, the media sellers surveyed indicated that these communications were actually happening less than one-third of the time. 33% 6% Advertisers indicated that it was important to calculate ROI—it speaks to the metrics morass that this figure is not 100 percent— though media sellers indicated that this 27% 3% was actually happening less than one-third of the time. Media sellers and buyers should invest It’s a promising new tactic, but its I don’t think it works in systems that allow everyone involved eFFectiveness is unknown in the campaign to directly collaborate around improving the campaign’s brand performance. This investment would help Advertisers agencies media buyers increase campaign ROI, and media sellers’ ability to offer such collaboration would attract more brand dollars. Fig. 13: What Advertisers Say is Important for a Successful Campaign Improvement (and vs. What Publishers Say Happens for Every Campaign Business) Opportunity Deﬁne campaign’s primary 98% Align Campaign Measurement advertising objective before around Sales and Brand Lift campaign start 32% Speaking to the same “metrics morass” that plagues the industry, 58 percent of Establish metric that will 96% advertisers and 65 percent of agencies be used to measure success 19% indicated that “clarity around how before campaign start to measure social media ROI” would lead them to increase their use of paid 92% social media advertising. The Calculate ROI confusion is so prevalent that 14 percent 29% of brands said “no one” monitored the ROI of their paid social media efforts. Advertisers PUBLISHERS

8 Copyright © 2013 The Nielsen Company. Specifically, 52 percent of advertisers Fig. 14: ROI Clarity Would Increase Paid Social Media Advertising Use and 66 percent of agencies said a “clear link between social media advertising and sales” would increase their use of paid social media advertising. Roughly half of advertisers (46%) and agencies (53%) also indicated a “clear link between social media advertising Clarity around and brand lift.” As noted, these are the 58% how to measure 65% metrics that advertisers and agencies social media ROI think are the most appropriate for measuring the ROI of their paid social media advertising efforts.

Advertisers agencies Improvement Opportunity

Social Media Benchmarks Fig. 15: What Would Increase Media Buyer Use of Paid Social Media Advertising In addition to clarity around how they are doing, marketers have indicated that they would also like to understand how they’re doing in comparison to the rest 52% 46% of the industry. Nearly half of advertisers (44%) and agencies (48%) said that the availability of “social media benchmarks” would lead them to increase their use of paid social media advertising, as well 66% 53% as provide some context for their social media performance. Currently, advertisers receive benchmarks from a Clear link between social media Clear link between social media disparate variety of sources, ranging from advertising and Sales advertising and Brand Lift internal benchmarks they keep themselves to benchmarks from their agencies and vendors. However, one-fifth (21%) of advertisers say that they do not have any Fig. 16: Social Media Benchmarks Would Increase Media Buyer Use social media benchmarks, leaving them of Paid Social Media Advertising in the dark as to how they compare to the rest of the industry. When evaluating partners to work with, or measurement 44% tools to adopt, media sellers and buyers should look for the ability to compare their campaign to industry norms or to internal benchmarks. 48%

SOCIAL MEDIA BENCHMARKS

Advertisers agencies

Marketers are increasingly viewing and using paid social media advertising as an integrated tool. Social media is no longer being viewed as its own discrete medium but instead used alongside other tactics to achieve an overall, usually branding- related, objective. However, there is a gap between how marketers would like to use the medium and the current reality.

This gap is the most pronounced when it comes to measuring ROI. There is an opportunity for the industry to work together and get on the same page, especially around providing and using the right metrics. By addressing the “metrics morass” that plagues advertisers, agencies, and media providers alike, the industry can address the challenges highlighted and help grow the medium so that advertising spend on social media equates to consumer usage.

About VizU

Vizu, a Nielsen company, brings offline advertising effectiveness metrics to the online medium.B y providing the first real-time, enterprise technology platform that allows digital advertisers and their partners– publishers, ad networks, exchanges and demand- side platforms – to collaborate directly around measuring and optimizing brand lift metrics, Vizu enables brands to move consumers through the purchase funnel, from building awareness to creating intent and preference. Used by over 60% of Advertising Age’s Top 100 Brand Advertisers and the majority of the 50 largest online publishers and networks, Vizu’s platform is now part of the Nielsen Brand Effect and Nielsen Campaign Ratings suites, which deliver advertising reach and resonance metrics across media. To learn more, visit www.brandlift.com.

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