Paid social ads ‘convert more customers than organic’ (but email still strongest)

12/09/2014

As Facebook continues to decrease the reach of organic brand content, new research suggests paid social ads are more effective at converting users- but email and affiliate marketing prove more effective overall.

The research, conducted in the first quarter of 2014 by Convertro and AOL Platforms, indicates that paid ads on social networks generally better conversion rates than organic content- especially in the case of Twitter.

On Facebook, the jump in conversion rates among Convertro platform users worldwide was just 0.1 percentage point, but on Twitter, ads were more than twice as likely as organic tweets to convert users.

On Pinterest, the situation was reversed, but overall, brands using Convertro saw around a 25% lift in conversions with paid social ads vs. organic social content.

In an analysis of conversions, social media (paid and organic in aggregate) was ranked at or just below middle-of-the-road in terms of introducing new products or driving conversions, compared to its digital peers.

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The research went on to analyse the impact of paid ads at different points in a customers journey to making a purchase (or conversion).

It defined these points with the following terms:

• First: a touch point at the beginning of the customer path. The customer may have interacted with other advertising sources, but this was the fi rst visit in the interaction mix, and therefore introduced the user to the product. TV is the typical channel for introducing audiences to a new product because of its national reach.

• Middle: a touch point in the middle of the customer path that rarely gets credited with conversions as, historically, it has been very diffi cult to prove its eff ect and relationship with the last touch point. Display and social media ads are typical middle touch points; they rarely close a sale by themselves (except maybe with customers who impulse-buy), but have a signifi cant impact on customer awareness and research.

• Last: the last touch point in the customer path. This is usually the channel the user was last exposed to before converting. For example, search advertising is a common last touch point, as consumers can search Google for a brand name to quickly and directly access a website to make a purchase.

• Only: a conversion event that is achieved without the user interacting with any other sources. These are special cases of fi rst visits where no other source was involved in the customer’s path to conversion.

For the most part, though, social media is not the last or only touch for consumers on the path to purchase.

According to Convertro’s figures, 87% of interactions with social content were a middle touch, while just over one interaction in 10 was either the last or only touchpoint.

YouTube stood out in Convertro and AOL’s research as the most likely social media property by far to turn a prospect immediately into a customer—likely because video content like that hosted on YouTube can provide 100% of the information an online shopper needs to make a purchase decision.

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Social media is commonly believed to be more effective for consumer-oriented retailers that can leverage powerful visuals and impulse buying. The research then went one layer deeper and analysed social media performance of advertising for specific product categories, rather than advertiser verticals.

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The research found that more impulsive purchases—such as subscriptions to services like Birchbox or Dollar Shave Club, personal care items and local services—were more likely to appear as social ads and lead immediately to a conversion, as the last or only touchpoint on a consumer’s journey.

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“Social works well as the first or only touch when it’s effectively ‘reminding’ you to make an impulse purchase you already planned on making at some unspecified point in the future,” suggested Jeff Zwelling, CEO and co-founder at Convertro. “And social tells you, in the case of subscriptions, for example, that other people have tried and liked it, and gives opportunities for strong offers like ‘first month free.’”

Methodology

Convertro tracks user-level interactions to predict consumer behavior. Specifi cally, our software scientifically determines which media exposures infl uence a purchase and by how much, and uses this information to help brands optimize media spend across advertising channels.

For this study, we analyzed 500 million clicks, 15 million conversions and three billion impressions (a total of more than $1 billion of attributed revenue) gathered during Q1 2014 across Convertro customers that invested in social media to analyze how paid and organic advertising on social networks infl uences sales and the eff ectiveness of other media channels. The research involved the analysis of more than 13 million unique purchase paths and the touch points involved, looking at their position in the path.

Convertro’s attribution methodology is not rule-based (i.e., it’s not last touch, fi rst touch or even, or any of the traditional fl awed methods). Convertro runs attribution by using an algorithmic, machine-learning model that analyzes all converting and non-converting paths and uses a complex statistical function to look for patterns in touchpoints to predict the exact influence (to the cent) that each touchpoint had on each individual sale, with 97% accuracy.

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