The Effectiveness of Social Media Advertising

CategoriesSocial Media

John Wooton

April 27, 2008

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In a previous post, I blogged about Social Media and Advertising and how advertising on social media and UGC websites will have a moderate growth in the coming future. In this post, I’ll expand on the previous post as well as highlight the effectiveness of social media advertising in order to determine if it’s a valuable investment.

Social media advertising is not for every business or organization. For instance, ComScore released the results of a survey last year on advertising effectiveness with various mediums and the responsiveness of consumers to that advertising. Overall, they found that 28% of respondents were likely to notice advertising on social media and less than that 23% are likely to trust the advertisements they notice. Those numbers put social media websites at #5 on the list behind television, print, news and corporate websites.

Influencing Factors

Effectiveness can also be influenced by a number of factors.

Industry

There are certain industries that convert better on social sites than others. For the entertainment industry, 66% of respondents were more likely to be receptive to advertising on social media sites while 48% were more likely to be receptive on news and general media websites. At the same time, the telecom industry had the same number of respondents in both the social media and general media category. And for industries like pharmaceuticals and financial services, respondents were less likely to respond on social sites than they were on general media sites.

Audience

In any marketing campaign, you have to look at the demographics of the audience. Depending on the audience of a social media website, a campaign can have a better or worse response. There are networks available for any demographic you are looking for; from kids, to teenagers, to twenty and thirty somethings, to new moms, brides, sports fans, technology enthusiasts and more. Generally speaking, you have to find the right demographic for what you are marketing to have the best conversion.

Reach

For a social media site to be an effective medium, it has to have a large audience reach or a large audience that fits your demographic. For instance, according to compete.com, Facebook has a monthly audience of 31 million people and pageviews of 350 million. Now is that a targeted demographic, no; but with that number you can use targeting to filter down to your desired demographic.

Targeting

Social media has offered a tool that has not been best utilized until now. You see with social media, we’re better able to target our marketing campaigns to specific demographics because their advertising power is based on the personal information that is entered by the users. For instance, a singles website could target their advertising only to those consumers who are single and looking, a movie studio could target a specific age range that they think would be most interested in their film, and a college could target those who don’t have a college degree. The power of targeting is directly tied to the ability of the consumer to control the information they input in an online community.

Other factors

There are a number of other smaller factors that can influence social media advertising. Some of those include the mood of the consumer when they are influenced by your ad, their history with your company or brand, whether the information they’ve entered into their profile is really accurate, etc. These are smaller influences, but still important ones to consider.

Click Thru Rate

Does social media convert when it comes to click thru’s? First, let me say that I don’t have access to hard numbers when it comes to the average social media advertisements. What I can safely say from my research is that social media advertisements seem to have lower response rate than that of traditional online media. From my research, I have found certain networks, Facebook for example, to have anywhere from a 0.1% response rate to a 4% response rate depending upon the marketing campaign. With other online advertising mediums (Google Adwords in this instance), the response rate has been anywhere from 1% to 7% and higher (again depending upon the campaign).

Now, this isn’t to say that there are not social networks pulling really good numbers, but because Facebook is a large player, I wanted to pull a large average statistic.

This would indicate that social media advertising is a medium that still has some maturing yet to go. The power of it though, is phenomenal and social media will be a big player as time goes on and the industry advances, but for now, it’s not as great a medium as is offered by other online mediums.

I’ll be watching this trend closely and will update as time goes by. For updates and new items on this topic, follow me on twitter or friendfeed .