Social Advertising in 2016: Where Should You Be Spending?

It’s safe to say social media is no longer the new kid on the block when it comes to digital marketing. According to the Pew Research Center, more than 75% of online adults use social networking sites, and more than half of online adults use two or more social networks regularly. Unsurprisingly, brands have followed suit as they see social media as a cost-effective way to reach their ideal customers. Between user growth and more brands joining the social media fray, this means tons of competition for eyeballs and clicks in the social space.

For most brands, the answer to this problem is simple: Cash.

eMarketer predicts that advertisers will have spent nearly $24 billion on social media advertising in 2015, more than a 30% increase over 2014. Social ad spend growth is expected to reach more than $35 billion in 2017, which represents a staggering 16% of total digital ad spend globally.

Why this growth in spend? Despite the number of advertisers who have jumped on board the social display train, it can still be more cost-effective than many traditional forms of advertising, like newspaper, TV and radio – with much better tracking and ROI. Social advertising even beats out some other digital media like traditional AdWords PPC and display advertising in terms of cost per thousand impressions and cost per click. On top of high performance metrics, social advertising offers something that some other ad formats simply don’t have: access to rich, individualized user data that allows marketers to laser-focus their message to the right people.

Although networks like Twitter and LinkedIn continue to gain share of total social advertising spending, Facebook is still the undisputed leader in the space, accounting for nearly two thirds of all social ad spending worldwide. Facebook’s $5.88 billion in mobile ad revenue alone outpaces total ad spending on Twitter and LinkedIn combined.

Facebook’s leadership in the self-service social advertising space can account for much of its success. The platform has consistently offered its advertisers the best variety of innovative ad types, rich consumer, behavioral and user data, and high-level tools like Power Editor, universal pixels and custom audiences that can be used for targeting or business insights. Facebook also has the largest user base with 1.55 billion monthly active users (by comparison, Twitter has 320 million MAUs, while Pinterest, LinkedIn and Snapchat all have 100 million MAUs).

However, with all this worldwide adoption and billions of dollars flowing into Facebook, there is some risk of increasing costs, user fatigue and platform saturation. Marketers are already familiar with the idea that younger users are deserting Facebook in favor of other networks like Instagram and Snapchat (in fact, Instagram recently passed up Twitter as the second most highly populated social network). Though there’s very little risk of Facebook disappearing or becoming irrelevant – its user engagement continues to increase in spite of a slowdown in new user growth – smart marketers should always be looking for new ways to reach consumers.

Where Should Advertisers Go Next?

For some brands, Instagram ads could be the next solution. When the platform announced that they were opening up their ad platform to all users in September 2015, the new advertising opportunity was met with lots of industry excitement. Instagram ads had previously only been available to select major brands with sky-high advertising budgets, so the move to open up the self-service platform was big news. The new ad option also came with a few additional benefits. Instagram ads would be managed and purchased through Facebook’s ad platform (or a select few programmatic networks in Instagram’s preferred partner network), which meant that Facebook’s extensive targeting and custom audiences could be applied to Instagram’s users, and made for an easy transition for current Facebook advertisers.

Since launch, Instagram/Facebook has introduced some new ad types, and will likely continue to do so as the advertising network’s user base grows. However, since Instagram is integrated into Facebook’s platform, some users might find it lacking in its ability to fully integrate with the native Instagram app. Advertisers cannot, for instance, select and pay to promote an existing organic post from their own Instagram account – they are limited to promoting Facebook posts on Instagram. Expect features to improve over the next few months as demand grows and Instagram features become more fully available within Facebook – to advertisers, at least.

Since the launch of Instagram ads in September, we’ve seen increased usage as more national brands and local businesses start to explore the new medium. Cost per click on Instagram for some of our clients at Fruition was very comparable to that of Facebook in September and October, but quickly became more expensive as competition increased in November and December. Of course, these are prime holiday advertising months (especially for ecommerce) when we typically see a bump in cost for our digital advertising clients, but when the holiday shopping season was combined with an influx of new advertisers, the costs increased much more sharply than usual.

If you’ve considered testing Instagram ads, now is the time to jump in and try them out. If your business is highly visual and has the ability to tell a compelling story through video, slideshows or gorgeous photography, Instagram may be a good fit. Instagram’s user base also skews younger than Facebook and Twitter, so these ads may be worth exploring if your target market includes young millennial professionals or teens. We have seen success on this platform with some of our travel-industry and specialty retail clients, and have noticed an influx of tourism- and food and beverage-industry advertisers. We’ve also noticed some corollary benefits to Instagram advertising beyond website clicks – in all cases, profile engagement and new follower rate both increased during the course of our campaigns.

Instagram ads are poised for success over the next couple of years, especially if the ad type offerings continue to improve and integrate more fully into the native platform. eMarketer predicts that Instagram ad revenue will make up more than 7% ($1.5 billion) of Facebook’s overall revenue in 2016, and could grow to more than 10% in 2017, up from only $595 million in 2015. Instagram’s US mobile display revenues are expected to outpace both Google and Twitter by 2017, which is impressive to say the least for a new and growing ad network.

Our advice: Get on board with Instagram advertising now, while some of your competitors are still lagging behind.

Our advice: Get on board with Instagram advertising now, while some of your competitors are still lagging behind. Become comfortable with the platform as it grows so your business will be prepared for new innovations and integrations in Instagram’s platform. But don’t forget to keep an eye out for what’s coming next!

Want to learn more about Social Media Marketing? Talk to the experts at Fruition to see how they can help take your company to the next level!

Sara Villegas

Sara Villegas is Fruition’s Senior Director of Digital Marketing. While she oversees all aspects of digital marketing to ensure they’re working together for a stronger presence and better success, Sara’s passion and background are in social media management. With her finger on the pulse of social media from both the user engagement and brand management side, Sara is uniquely positioned to help organizations navigate the quickly changing waters of social.

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