Why Social Matters (The Paid Version)
You should know by now that social media is where all the conversations are happening these days. It’s where the eyeballs are, and where the eyes go, the ads follow. But we’ve had digital ads since the early internet, so what makes paid social media different?
Well that requires a short history lesson.
The first banner ad had a click through rate of 44%. It’s been downhill ever since. The glorious openness of the web over the past few decades has created a free for all for advertisers to use whatever tactic to reach you and for publishers to put as many ads on their page as possible. Twenty-five years of bad practices has yielded an ad experience that irritates consumers in the best case, and is simply blocked as a worse case.
Banner ads, also called programmatic, or Display, or simply “digital” have gone from click through rates of 44% to .05%. That’s not 5 percent. It’s 5% of 1%. Five out of 10,000 people are clicking on these programmatic ads. And when you look at fraud rate and miss-click rates, you have to wonder if the whole industry is based on one dude in New Jersey who clicks on everything he sees.
But on the social networks, it’s a different story. Platforms like Facebook and Twitter understand that without their audience, they don’t exist, so the ad experience is very tightly controlled and curated. Practices that lead to bad user experiences are removed or not implemented at all (ex. Facebook’s text in ad rule). As a result, the CTR on Facebook is around 2%. Forty times the rate you see with banner ads. And if you are good at it, you can achieve even better results. We at Nail have run LinkedIn ads with CTRs above 12%.
And it’s not just clicks either. View-a-bility rates are higher on the social networks and the audience is entirely human. With programmatic display, more than half of the traffic is from bots. So unless your audience has a shiny metal ass, the case for paid social media vs programmatic can be won, with numbers alone, in terms of effectiveness and ROI. If you want to put money into digital advertising, and you actually respect your consumers, you’ve find an effective channel with social media.
The second part of the story is that paid social media has opportunities that other digital media doesn’t. When is the last time you commented on a banner ad? Or liked and shared a pre-roll video because it was so good. This happens millions of times a day on the social networks. A good ad on social media will spark comments and conversation. This is an opportunity to not only have a conversation with engaged consumers but identify the most passionate ones for retargeting.
And last thing you need to be aware of is that paid social media is where advertising and content intersect. There were a few golden years when brands could build huge organic followings, and then hit them with messaging for free. Zuckerberg ruined that fantasy, and now the typical brand reach is under 5%.
Meaning, your content could reach only 5% of the followers you have built. You will have to pay for the rest. So if you are engaged in content marketing and don’t have a talented team to work the paid social channels, you are going to have a hard time getting the reach you deserve.
But don’t take our word for it. The market has spoken. Here are the US advertising expenditures and forecasts across various channels, in billions of dollars, between 2015 and 2020. In 2015 social media was dwarfed by the standard channels. Not only is social media taking off like a rocket, but other channels are crumbling before our eyes.
Don’t get me wrong. The paid social media sphere is dominated by only a handful of companies. This is not good news. Some more competition will drive prices down. But at least for now, these companies have managed to walk a delicate balance between highly effective ads and an engaging user experience. The overlap between those two is a very fertile space for brands to be in, especially if they are willing to experiment with what an “ad” actually looks like.
