Paid Social Media Advertising. Industry update and best practices 2013

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1 Paid Social Media Advertising Industry update and best practices 2013

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

3 Introduction Social media use among consumers has exploded in recent years and shows no sign of stopping. Facebook now has 1 billion active users, or one out of every seven people in the world 1. Nearly four in five active U.S. Internet users visit social networks and blogs 2. Accordingly, marketers have flocked to the in order to stay in front of their customers. How and Agencies Use Social Media The term social marketing or social media marketing typically refers to two practices involving social media the use of free tools, such as Facebook, Twitter, or YouTube, and paid media, such as paid ads on Facebook or sponsoring blog content. Unsurprisingly, free tools are 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, paid social media has overtaken the use of free tools. <Fig. 1> Social marketing, whether free or paid, is heavily used by advertisers and. Every advertiser that we surveyed indicated that they did something with social media, and only 6 percent of that we surveyed said that they did not do anything with social media. Though paid social media advertising is increasing, it is still a relatively new practice among advertisers. Most of the advertisers and surveyed indicated that 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 a maturing field. 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. <Fig. 2> Fig. 1: How and Agencies Use Social Media 89% 71% USE FREE TOOLS 75% 81% PURCHASE MEDIA AND/OR SPONSOR CONTENT 0% 6% DON T DO ANYTHINg WITH SOCIAL MEDIA Fig. 2: : Percentage of 2012 Online Budget Dedicated to Social Media Advertising 1-10% of budget 11-20% of budget 21%+ of budget 70% 18% 13% 1 Facebook, October Nielsen, July 2012 Copyright 2013 The Nielsen Company. 3

4 Paid Social Media Advertising Budgets are Growing, at the Expense of Other Channels The majority (64%) of advertisers surveyed indicated they expect to increase their paid social media advertising budget for 2013 <Fig. 3>; however, those increases will be modest between 1-10 percent. <Fig. 4> Fig. 3: Advertiser Outlook for Paid Social Advertising Budgets Fig. 4: Paid Social Ad BudgetS will grow by 2% 41% 34% 64% 15% 11% 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 Copyright 2013 The Nielsen Company.

5 More than two-thirds (41%) of advertisers surveyed said that social media had its own dedicated budget, indicating that their organization has dollars earmarked specifically for that purpose. <Fig. 5> However, most advertisers indicated that they would be increasing their 2013 paid social media advertising budget at the expense of other channels. Nearly onequarter (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 other online channels namely rich media and video. Surprisingly, 39 percent of advertisers 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. Fig. 5: Where Dollars for Social Media Advertising are Coming From None, social media has its own dedicated budget 10% From other online channels 41% 23% From online display From OFFLINE CHANNELS 39% 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. <Fig. 6, Fig. 7> Agencies 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 Online Advertising? Fig. 7: How Often Do You Run Social Ads with Offline Advertising? 71% 66% 51% 41% 39% 31% 20% 18% 11% 11% 7% 5% Most or all of the time Half of the time or less Rarely or never Most or all of the time Half of the time or less Rarely or never Copyright 2013 The Nielsen Company. 5

6 When asked which online tactics they typically run their paid social media advertising efforts in conjunction with, advertisers top three responses were online display (83%), online video (46%), and mobile (40%). In the offline world, advertisers paid social media advertising campaigns were mostly combined with print (52%), followed by TV (37%). said that the primary purpose of their paid social media ads was branding-related (45%), such as raising awareness and influencing brand opinions, whereas only 16 percent was primarily direct-response related, such as driving product trials or site visits. <Fig. 8> In addition, when the campaign was a mix of both, a quarter (25%) of advertisers said more than half was branding-related. 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 online and offline platforms. Agencies and social media sellers should ensure they can offer brand-relevant that are applicable to and offline spaces to increase their share of brand advertising dollars in the paid social. 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. Fig. 8: PAID SOCIAL MEDIA ADVERTISING OBJECTIVES Primarily branding related, e.g. raising awareness, influencing brand opinions Primarily direct-response related, e.g. driving product trials or site visits A mix of both--more than half is branding A mix of both--more than half is direct-response 16% 15% 14% 25% 25% 29% 31% 45% ROI is still a Tricky Question But Cross-Platform Consistency is Preferred are taking a more cross-platform approach with paid social media advertising, so it s not surprising that advertisers desire that can span across both online and offline s and allow them to measure the different tactics they employ in a consistent manner. When asked what they would like to use to calculate ROI, brand marketers indicated by a wide margin that they would prefer to use the exact same used in the offline, and additional. <Fig. 9> This is reinforced by the fact that the majority of their campaigns primary objective is brandingrelated, as relevant brand are commonplace in the offline world but scarce in. This response also demonstrates, however, that advertisers recognize there is a unique aspect of 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. <Fig. 10> The majority of media sellers surveyed indicated they could provide that were. As only 17 percent of advertisers surveyed were interested in online-specific, there is clearly a disconnect between the advertisers want and what is available to them. 6 Copyright 2013 The Nielsen Company.

7 Fig. 9: Metrics Would Like to Use Fig. 10: Metrics Publishers Can Provide 42% PUBLISHERS 49% 29% 29% 17% 12% 12% 11% Exact same as offline media, and nothing else Exact same as offline, and some additional Some of the same from the offline, and some Metrics Exact same as offline media, and nothing else Exact same as offline, and some additional Some of the same from the offline, and some Metrics Reflecting the fact that media sellers typically report online-specific, the top two advertisers and said they had used to measure paid social media advertising ROI in the past were likes/pins and click-throughs. <Fig. 11> Media sellers indicated that they were using click-throughs and views. However, when asked what metric is most appropriate to measure paid social media advertising ROI, advertisers and responded brand lift (52% and 35%, respectively) and sales generated (49% and 46%). Media sellers also thought that brand lift was the most appropriate metric to measure paid social advertising ROI (52%), in addition to shares/reposts (38%). There is a clear opportunity for media sellers to capture more brand dollars by offering relevant brand lift. This morass, or data overload, is preventing marketers from clearly understanding the effectiveness of their paid social media advertising campaigns. The industry is going after the low hanging fruit when it comes to ROI. Likes/ pins, click-throughs, and views are online- specific actions that a computer can count out. However, what the industry really wants is insight into the campaign s impact on the audience brand lift and sales generated. It is not a coincidence that these translate to both offline and online s. Media buyers should ensure that they are using these relevant to get an accurate assessment of campaign ROI. Unsurprisingly, the morass has left the industry unsure of paid social media advertising s effectiveness. Twothirds of advertisers surveyed said that paid social advertising moves the needle when combined with other efforts, but [they are] not sure how to measure ROI or that it s a promising new tactic, but its effectiveness is unknown. <Fig. 12> Six percent of advertisers surveyed flat out said that paid social media advertising does not work. Media sellers who are able to provide relevant brand, and who proactively make improvements to ensure the campaign s effectiveness, will have the upper hand in capturing dollars from those advertisers on the fence about paid social media advertising s effectiveness. Fig. 11: TOP METRICS FOR SOCIAL ROI What Media Sellers Indicate They Use Likes/pins Click-throughs Views What and Agencies Indicate are Most Appropriate Sales Generated Brand Lift Shares/Reposts Copyright 2013 The Nielsen Company. 7

8 Improvement Opportunity Getting on the Same Page There is a clear opportunity for increased collaboration between media buyers and sellers. Nearly all advertisers indicated that defining the campaign s primary advertising objective before campaign start and establishing the metric that will be used to measure success before campaign start was either very important or somewhat important 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. <Fig. 13> indicated that it was important to calculate ROI it speaks to the morass that this figure is not 100 percent though media sellers indicated that this was actually happening less than one-third of the time. Media sellers and buyers should invest in systems that allow everyone involved in the campaign to directly collaborate around improving the campaign s brand performance. This investment would help media buyers increase campaign ROI, and media sellers ability to offer such collaboration would attract more brand dollars. Improvement (and Business) Opportunity Align Campaign Measurement around Sales and Brand Lift Speaking to the same morass that plagues the industry, 58 percent of advertisers and 65 percent of indicated that clarity around how to measure social media ROI would lead them to increase their use of paid social media advertising. <Fig. 14> The confusion is so prevalent that 14 percent of brands said no one monitored the ROI of their paid social media efforts. Fig. 12: Media Buyer Views on Paid Social Media Advertising Effectiveness 29% 27% It s effective and produces measurable ROI (with ROI defined as metric achieved per dollar spent) 33% 27% It s a promising new tactic, but its effectiveness is unknown 33% 43% I think it moves the needle when combined with other efforts, but I m not sure how to measure ROI 6% 3% I don t think it works Fig. 13: What Say is Important for a Successful Campaign vs. What Publishers Say Happens for Every Campaign Define campaign s primary advertising objective before campaign start Establish metric that will be used to measure success before campaign start Calculate ROI 19% 32% 29% PUBLISHERS 92% 98% 96% 8 Copyright 2013 The Nielsen Company.

9 Specifically, 52 percent of advertisers and 66 percent of said a clear link between social media advertising and sales would increase their use of paid social media advertising. <Fig. 15> Roughly half of advertisers (46%) and (53%) also indicated a clear link between social media advertising and brand lift. As noted, these are the that advertisers and think are the most appropriate for measuring the ROI of their paid social media advertising efforts. Improvement Opportunity Social Media Benchmarks 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 of the industry. Nearly half of advertisers (44%) and (48%) said that the availability of social media benchmarks would lead them to increase their use of paid social media advertising, as well as provide some context for their social media performance. <Fig. 16> Currently, advertisers receive benchmarks from a disparate variety of sources, ranging from internal benchmarks they keep themselves to benchmarks from their and vendors. However, one-fifth (21%) of advertisers say that they do not have any social media benchmarks, leaving them in the dark as to how they compare to the rest of the industry. When evaluating partners to work with, or measurement tools to adopt, media sellers and buyers should look for the ability to compare their campaign to industry norms or to internal benchmarks. Fig. 14: ROI Clarity Would Increase Paid Social Media Advertising Use 58% Clarity around how to measure social media ROI Fig. 15: What Would Increase Media Buyer Use of Paid Social Media Advertising 52% 46% 66% 53% Clear link between social media advertising and Sales Clear link between social media advertising and Brand Lift Fig. 16: Social Media Benchmarks Would Increase Media Buyer Use of Paid Social Media Advertising 44% 48% 65% SOCIAL MEDIA BENCHMARKS Copyright 2013 The Nielsen Company. 9

10 CONCLUSION 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 but instead used alongside other tactics to achieve an overall, usually brandingrelated, objective. However, there is a gap between how marketers would like to use the 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. By addressing the morass that plagues advertisers,, and media providers alike, the industry can address the challenges highlighted and help grow the so that advertising spend on social media equates to consumer usage. About VizU Vizu, a Nielsen company, brings offline advertising effectiveness to. By providing the first real-time, enterprise technology platform that allows digital advertisers and their partners publishers, ad networks, exchanges and demandside platforms to collaborate directly around measuring and optimizing brand lift, 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 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 across media. To learn more, visit ABOUT NIELSEN Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit Copyright 2013 The Nielsen Company. All rights reserved. Nielsen and the Nielsen logo are trademarks or registered trademarks of CZT/ACN Trademarks, L.L.C. Other product and service names are trademarks or registered trademarks of their respective companies. 13/ Copyright 2013 The Nielsen Company.

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