Senior Director of Marketing Research, Kenshoo Kenshoo
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The trends that prove social ads are no longer an experiment

21st Sep 2016
Senior Director of Marketing Research, Kenshoo Kenshoo
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It wasn’t too long ago that brand marketers were unsure about how effective social advertising would really be. Sceptics felt that people visit social networks to interact and socialise with their friends and family. Few were convinced it could be successfully used for directly promoting products.

Perceptions change, however, as does behaviour. There’s been a steady evolution happening over the last few years in digital advertising, with brands that began initially by experimenting with social ads now growing in confidence and increasingly spending more budget on the area.  Kenshoo’s data suggests that ad spend directed at social has increased nearly every quarter for the last two years, and our global data from the second quarter of this year suggests that social advertising grew by 47% over the same period last year.

Brands are seeing paid social as increasingly effective, to the point where they are willing to pay 21% more on average for every social ad click than a year ago. The steady introduction of social ad types that have become more specialised, and subsequently valuable, has been a key factor in that trend.

Social advertising grew by 47% over the same period last year

As with other forms of online advertising, mobile continues to be a big driver of growth, with smartphone and tablets together accounting for 64% of social ad spend.  Also very important is a new wave of direct response product advertising on social that has been embraced by retail advertisers.  This, together with the rise of video, has had a significant impact on the growth in social advertising.

The popularity of product ads

Product ads, or more specifically, Dynamic Product Ads, were launched by Facebook in early 2015 to give online retailers an automated way to promote large numbers of products.  Earlier this year they also became available on Instagram and Kenshoo data suggests they now account for 19% of paid social spend by online retail and e-Commerce advertisers.

Brands are willing to pay 21% more on average for every social ad click

Appearing directly in Facebook's News Feed or Right Column (desktop only), on Instagram, or across Facebook's Audience Network, dynamic ads require advertisers to connect their online product feeds to their Facebook ad accounts. This means Facebook can dynamically create the ads from the feed by pulling together information such as product IDs, names, descriptions, images and landing pages.

Ads can be focused on promoting single products or come in a multi-product carousel format.  The next big step is picking the audience, and Facebook’s versatile targeting means this can be defined by people’s interests, likes or demographic profiles, as well as offering the option to incorporate an advertiser’s existing customer database or email list which can be uploaded to Facebook or Instagram using the custom audiences feature. Taking this one step further, advertisers can let Facebook decide what a potential customer looks like, by creating “lookalike” audiences based on existing customers.

Social trends

Retargeting using social ads

One approach that has been particularly effective is retailers using dynamic ads to retarget those who have visited their website or app. By placing a Facebook pixel on their site, advertisers can track the product pages a visitor has viewed, which products they’ve added to shopping baskets and what they’ve purchased, to name a few.  This allows the advertisers to show people personalised social ads based on their previous visits and behaviour.

500 million people watch videos on Facebook every day

So a retailer can, for example, target someone who’s looked at a specific product page and show them ads displaying different versions of the same or related products or offer incentives to help them convert.  They can also retarget visitors who have returned to the same page a number of times or spent a certain amount of time there or according to the value of a visitor’s last purchase.

Intent-based retargeting such as this is helping to make social ads more relevant and less intrusive.  It is one of the reasons why Kenshoo has seen clients generating click-through rates of 2.3% in the second quarter of 2016, outperforming the overall social average of 1.2%.

Video on the rise

What about video? Kenshoo’s data indicates that video, which is available across both Facebook and Instagram through the dynamic ad format, is attracting greater interest, accounting for 19% of all spend and impressions on paid social (compared with 8% of spend and impressions last year).

500 million people watch videos on Facebook every day and a Nielsen study suggests the average viewer is watching at least 30 seconds of a video on Facebook – which helps drive a 40% lift in ad recall (way higher than the Nielsen norm for average online brand ad recall which is only 6%.)

Social video advertising isn’t just about helping to improving recall and brand building, however. It can directly fuel conversions and sales.  

According to Kenshoo data the conversion rates on video ads tripled between Q4 2015 and Q1 2016, while a test of social video ads by a Kenshoo retail customer found that ROI on video ads was 3x higher than standard formats. So it is not surprising that according to eMarketer, video advertising is expected to make up nearly 20% of digital ad spend in 2016, with rates of growth that are significantly outpacing other ad types.

Social trends

 

Dynamic ads allow retailers to run carousels that include up to five short videos, or a combination of videos and images that viewers can swipe through. 

Advertisers are getting savvier about how they use video in social and what works. For example, Kenshoo’s experience suggests that re-using existing video content, such as from TV ads, is often not effective.  Furthermore, most video on social is viewed with the sound off, so ads need to be immediately understandable without the benefit of audio.  And because users on Instagram--a network built on rich, engaging visuals--and Facebook have different expectations, advertisers need to spend time understanding the type of content that works on each in order to create bespoke ads.

The average viewer is watching at least 30 seconds of any video they open on Facebook

It is essential that video ads engage the audience quickly, before they scroll away, which in a carousel format means getting them interested enough to swipe to the next video. Telling a story through a succession of related image and video content is one technique that works to holding the viewers’ interest across multiple videos.

As advertisers are increasingly using video ads to drive conversions, a clear and prominent call-to-action is also an essential, whether this is an opportunity to download an app, click-through to a website or take advantage of a special offer.

Social ads are no longer an experiment

Within just a few years social advertising has evolved from something brands were just happy to experiment with, to becoming a regular component of many companies’ ad budgets.  The continued growth of mobile has been one element of the expanding opportunities to reach a social audience. However, the development of ad types, sophisticated targeting options and a growing understanding of what works has also played an important part.
 

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