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What is Social Media Advertising? Strategy, Targeting and ROI

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Social media advertising is a category of digital advertising that places ads on social networking sites. It has one of three purposes: branding, response or both. It is one of two major social media marketing tactics: paid and organic.

Unlike paid advertising, organic marketing requires no upfront cash expense. But it does require the expense that comes with labor and the amount of time managing an organic social presence. Social media advertising has both labor and expense.

The difference between the two tactics lies in how the marketer reaches the target audience. A common organic effort in social marketing is simply regular and highly optimized posts in the social media account.

With paid social advertising, the marketer is trying to reach new audiences that he or she can’t reach with organic efforts. For example, a Facebook account owner spends money to reach new zip codes, age groups or other demographic audiences.

An effective social media strategy has a balance between paid and organic social media marketing. Which one costs more in cash or labor? Which one has the best return on investment?

Some marketers find that they can get the results they want with a strategy that focuses 100 percent of their effort on organic tactics. Others find they have to place a heavy emphasis on advertising, especially if organic growth has slowed.

Marketing strategists constantly fine tune their efforts until they find the best balance between the two tactics.

Social Media Companies

The four largest social media companies at the time of this writing are in order of audience size according to Quantcast are:

  1. Facebook
  2. Twitter
  3. Linkedin
  4. Pinterest

What makes these sites attractive to advertisers starts with their vast reach and the potential to target large niches.

The ability of advertisers to communicate with such a vast number is impressive. But in reality the attractiveness lies in segmenting that huge audience. The larger the audience, the greater the ability to target at a micro level.

A social network with 1 million users of whom 10,000 who have an interest in gardening is not attractive to a company such as Home Depot. But a network with 100 million users and 1 million gardening enthusiasts is more attractive.

Add the ability to segment those gardeners even further — landscapers versus flower gardeners — creates many opportunities for campaigns based on location, a specific sale or the time of year.

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Geographic Targeting Appeal

Major social media sites have another appeal to advertisers — the ability to target users geographically.

social media

Geographic targeting is available not only at the country level but also at the state, city and zip code level.

Social media companies are able to target down to the zip code level because they encourage users to provide personal information in order to maximize the usefulness of their accounts.

Again, mass reach provides great value. Having 10,000 users at zip code 55555 is more attractive to a Lowe’s store located in that zip code than a network with only 50 users in the same zip code.

Some users provide more information than others. So they don’t have a complete profile on every one of them. But knowing the zip code of a user is only the start.

The networks also gain an understanding of age and sex. They track and grasp users’ interests based on the social network groups they join or the comments they post.

That means advertisers can target geographically, demographically and psychographically.

Targeting Increases ROI

Any form of targeting potentially increases the return on investment for the advertiser because it is cost efficient.

An advertiser can spend $10,000 in a mass marketing campaign to reach 10,000 people, of which 9,900 aren’t interested in that product or service. In reality, that advertiser has spent $10,000 to reach only 100 people who do have an interest.

The cost to reach that entire group is $1 per person, but the cost to reach the target is $100 per person.

With targeting, that same advertiser might spend $2,000 to reach that same audience of 100 people.

The cost to reach the entire target is $20 person — much higher per person than the first example — but the total cost is much lower. The campaign also reaches only the audience that matters. The cost to reach the target is usually higher per person with targeting because of the costs that go will developing a targeted solution.

Best Uses of Social Advertising

OK, social media advertising has the ability to target in a cost efficient way. It has wide reach and rapidly growing acceptance.

Why should a business use it?

All advertising provides either branding, response or a combination of both. Ads on these platforms serve three primary purposes. They:

  1. Promote the business’ brand.
  2. Promote the business’ social media presence.
  3. Send social media users to the business’ Web site.

The ultimate goal of course is generating new clients and new revenue.

So it is up to the business to decide if a social media advertising campaign is beneficial. Then the business must decide how the campaign should be used to get the best return on investment for the expenditure.

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