Is social media advertising worth the effort and money?

Social Media advertising platforms are serious business giants that channel the attention of your customers. Considering that more and more people are evaluating your social media engagement, it is becoming dangerous not to manage your social presence. Their (paid) engagement is on a constant rise in the last decade, creating a very fast-moving attention economy.

Table of Contents

 

some of the most popular social media platrofms

Most entrepreneurs and companies benefit from social media, and we’d like you to be one of them. The questions arise: Is Social Media Advertising necessary for every type of business? How do you determine that investing in social media is the right fit for your company?

In this article, our PPC company in Chicago will answer all of your questions.

As platforms such as Facebook, Instagram, LinkedIn, YouTube, and TikTok have grown in popularity, small and large businesses have begun to use them to connect with their customers. Since then, there has been a lot of debate, with one side claiming that Social Media Advertising is essential in today’s market – and the other claiming that the money would be better spent elsewhere. But where does the truth lie?

You don’t want to invest in irrelevant clicks, letting Zuckerberg and Jack Dorsey snatch your hard-earned money. To avoid that, what you need to do first is to determine what you would like to achieve by advertising on social media and what is your go-to strategy. Would that be more likes on your pages, more views on your videos, or maybe you would like to drive traffic to your website by acquiring more clicks?

Paid or Organic?

Do you think that your company’s budget may not fit in those statistics? And how necessary is it to invest in Social Media if there is no budget for that? Alternatively, you can always hire an agency to produce content for your Social Media that is on the level of your budget instead of purchasing ads, but in this day and age, results from organic social media are diminishing (unless you’re on Tik Tok). Take a look inward to your team when it comes to creating content for your Social Media coverage, and try to observe things from a bit different angle.

Alpha Efficiency enjoys focusing on the fine line between creating content and promoting it. You can use the organic presence as the testing ground, before fueling the fire of your next content piece with paid reach.

What you shouldn’t do is make assumptions. That is what happens with many companies that have started their social media accounts without a clear direction. Seeking the truth behind those next parts of the article will lead you down a path– either to one where you are going to determine what you can adjust to, or what you don’t. Anyway, keep in mind that you will leave your business open for much better opportunities when you have a plan, and you will no longer be preventing your company from enjoying social media exposure. When advertising campaigns are done correctly, long-term benefits justify short-term costs. A balance between paid and organic is the key to finding a sweet spot for social media success.

Rarely Mentioned Social Media Advertising Statistics That Paint the Clear Picture

Although TV commercials are not fading away, 2019 is the first year when digital ad spend surpassed traditional advertising. The opportunities that Social Platforms offer to their users are ideal for advertisements. Research has shown that over 50% of people are using Facebook daily (more than two hours a day, on average), but only 39% of them watch Television. That is what encouraged many marketers to invest their dollars into Social Media rather than TV commercials. Budget flexibility is also helping with this.

expected us advertising spending

eMarketer research

According to eMarketer.com research, the Total amount spent on Digital Advertising in the US will grow 19% to $129.34 billion this year, which is 54.2% of estimated total US ad spending.

There is 45% percent of Americans that are using ad blockers, though, to the fact that they may not use them on every device. In China, 54% of users are blocking most ads, but generally speaking, about 50% of people say that they ignore the ads. Fortunately, the new rise of “native ads” on Facebook and Instagram is tough to avoid and is proven to have a higher level of engagement than traditional banner ads.

Adobe’s State of Digital Advertising research

According to Adobe’s State of Digital Advertising, people by the age of 36 are the most active social media users. They are considering social media as the best platform to use for advertising. On the other hand, people above 37 think that TV adverts are still keeping the advantage, putting social media in second place.

These statistics tell us that Social Media Advertising is on the continuous rise. And as new generations mostly prefer spending their free time on Social Platforms instead of watching television – this trend will likely continue. It is important to keep this in mind when developing a long-term business strategy. You should aim to place advertisements where your target audience will see them. 

How to Structure Social Media and Respective Advertising Accounts

Including components such as quality content, editing tools, and software, paid partnerships and adverts, and also management is necessary for a successful advertising campaign. Around fifty million small companies are using their Facebook pages to connect with their customers, and more than four million of them are using paid advertisements. We suggest companies keep Social Advertising budgets in a 5 to 10% range for optimal performance. More money should be used on Google ads, Email Marketing, and other online activities that yield better ROI.

Although LinkedIn is business-related, and Facebook is used for fun, both of them are people-based platforms. That creates opportunities for your marketing strategy to reach your audience. Which one would you choose as a marketer? Let’s compare these two networks to determine which one would be the best for your business.

LinkedIn and Facebook

linkedin and facebook comparison

While Facebook is using interest-based targeting as a way of targeting consumers, LinkedIn focuses on more professional targeting, such as job titles and industry. Facebook has more active users and a wider range of age groups who use it. That’s because it attracts everyday consumers rather than just those looking for professional networking. Both platforms enable you to join groups in order to connect with other users. But it is worth noting that group members usually have different motives and mindsets on Facebook and LinkedIn. The former is often used for light conversations, while the latter is used for work-related topics.

According to that, we can conclude that LinkedIn would suit B2B commerce, while Facebook is better for B2C companies.

Another difference between these two networks when it comes to advertising is the price. The median Cost Per Click for Ads on Facebook is the lowest at $0.51, while for Ads on LinkedIn, it is the highest at $5.61, although LinkedIn ads aren’t necessarily overpriced. In one survey, it was determined that clicks on LinkedIn Ads are 500% more likely to enable quality leads compared to Facebook. But in order to advertise effectively, you must first define your target audience and then choose the right platform.

 

If you are planning to use Facebook Ads in your marketing strategy, there’s a tool that you should start using straight away. Facebook Pixel will help you get the most out of your budget by enabling you to maximize your existing visitors into meaningful audiences. That is a piece of Javascript code that you must place on your site in order to drive value from it. It is collecting data that will help you track conversions and visits from Facebook ads in order to better optimize your ads for the future and remarket to the audience that has already taken action on your website.

How to Calculate Your Social Media Budget?

most used social media platforms in 2022

What you should consider when it comes to your social media advertising budget is: Ad spend, Technology and Tools, Talent, and Services. Here are some of the percentages that may help the benchmark.

As reported by the CMO Survey, the percentage of the total budget for marketing spent on social media was about 12% in 2018. According to their expectations, it will rise by the end of 2022 by 89%. How is that compared to your business? How big should your budget for social networks be?

Spending large amounts of money does not necessarily equate to success, although wasting your advertising dollars on your social media can be quickly done. According to the research of the Business Development Bank of Canada, a rule of thumb is that B2B companies should spend around 2-5% of their revenue on social media marketing. On the other hand, B2C companies should set aside between 5-10%. When you define your goals you will get a much clearer picture of how much money you should invest in advertising. 

Importance of Calculating Social Media ROI

The significance of this lies in the ability to improve your campaigns for engagement after measuring your Social Media ROI. Of course, it can happen to any business that they are putting so much effort into their social, but not seeing results yet. To get the most of your social media advertising, what’s important is to determine how much of your advertising dollars you can invest in your social media presence. Make sure to identify your KPIs (Key Performance Indicators) and assign values to them; then it’s time to track the movement of your goals.

Some KPIs we live by here at Alpha Efficiency are:

CTR (Click-through rate) is a marketing metric that allows us to determine the relationship between impressions and clicks.

The other one is the Conversion rate – Which shows us the percentage of people that visited our website and completed the form for purchasing our services (which is a conversion) out of the total number of visitors. A high conversion rate indicates a successful Advertising campaign, which means that people want what we’re offering to them, and they can quickly get it. The average conversion rate on social media is different for each industry and often depends on prices. For example, it takes more time for people to make a decision to buy an expensive product. We always aim to keep conversion rates above the industry average by providing a great user experience for every visitor. Considering that people often access social media on their mobile devices, designing a separate mobile landing page might be a good idea.

roa vs roi

ROAS

There is also ROAS (Return On Advertising Spend), which is the marketing metric for determining the efficiency of your digital advertising campaigns. ROAS shows us the relations between how much we have earned from conversions. That way, e-commerce businesses are making decisions on how much of their advertising dollars they should invest and how they can become more efficient at maximizing their revenue. You should determine the minimum, acceptable, and target ROAS for each campaign across different social media.

Annually, around 15% up to 25% of the digital marketing budget is spent on social media (both organic and paid).

Measuring Social Media ROI can show you the impact that social media has across the business. It tracks where your efforts are used the most effectively,  and also if you’re wasting money so that you can shift your tactics. It helps you understand much better what your audience cares about, what are they responding to, and similar.

Comparing yourself with your competitors may help you uncover some opportunities that will make you stand out in the crowd. If it turns out that your results are a bit different than your competitor’s, that should not put you down. To improve, you must comprehend the consequences of your actions.

Next Steps

Need help with your social media campaigns? Set up a call with one of our experts on the following form, and we’ll audit your existing campaigns, and ensure that your campaigns are on point and profitable.

Brian Djordjevic
About The Author

Brian Dordevic

Brian is Marketing Strategic Planner with a passion for all things digital. Feel free to follow him on Twitter or schedule a consultation call with him.

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