ROI is the big problem with social media marketing. We can show our bosses that we have plenty of shares and likes, but so what? We’re not using social media to be liked. We’re using social media for the same reason we use TV ads, print ads and billboard ads: to sell.
Up to now, there hasn’t been much research on how social media leads to conversion, i.e. somebody actually buying something. A new study from AOL Platforms may help with this. The firm conducted an analysis in the first quarter of 2014 that covered 500 million clicks, US$15 million in conversions and 3 billion impressions, as well as 13 million unique purchase paths, all to see where social media content—both organic and paid—fits in the purchase path of consumers.
Here are some basic results from the study that may be helpful in guiding your future social media investments.
Social Is the Middleman
To understand the results, it’s best to also understand the basic process. The study identified 4 points in the path to purchase that convert a prospect into a customer.
- First: the beginning, when a product is introduced
- Middle: a point in which advertising impacts customer awareness as they research products
- Last: the last point of contact with advertising before the customer buys
- Only: when only one marketing channel reaches a customer and he or she buys as a result
Social media rarely are the only channel a customer goes through when buying. Instead, social media advertising falls in the middle of the purchase path around 87% of the time.
Now, falling in the middle isn’t exactly uncommon. Here are the rates for other online marketing channels in falling in the middle of the purchase path:
- Display: 89%
- Email: 78%
- Non brand search: 71%
- Affiliate: 69%
- Brand search: 52%
Essentially, this means that social media helps shape a customer’s consideration of a product and offers an opportunity to cement awareness and influence selection to get to the last stage.
Paid Social Leads to More Sales
When AOL compared organic social media marketing to paid advertising on social media, paid social advertising was more likely to generate sales. For example, overall the conversion rate of organic social content was 2.26%, compared to 2.82% for paid social media, an increase of 25%.
The difference between paid and organic content is even more dramatic with individual social networks. On Facebook, here is where organic content ended up on the purchase path:
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Most of the time (84%), it was in the middle. It was rare for organic social content to be on the last point before purchase (9% of the time) or to be the only marketing channel a customer saw before purchase (4%).
But with paid social content, things changed:
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Paid social media content was at the last point of the purchase path 13% of the time. More importantly, 24% of the time it was the only marketing channel a customer saw before purchase. This is a sixfold increase compared to organic, showing clearly that paid social content leads directly to purchases more often than organic content.
Similar results were observed for other major social networks.
YouTube and Facebook Drive the Most Sales from Social
The overall results of the AOL Network analysis showed that YouTube was the strongest at driving sales conversions, followed by Facebook:
As shown by the chart above, 14% of the time Youtube was the only online marketing channel seen by customers before purchase and 10% of the time, Facebook was the only marketing channel seen before purchase. In addition, these two networks tended to be the last online channel seen before purchase, with higher percentages than most of the other networks. In comparison, Twitter and Tumblr were the least effective channels for conversion or for being the last channel seen by customers before purchase.
These results suggest that despite the interest that new social networks pique as they attract users, the more popular, established networks tend to drive purchases.
Subscriptions, Beauty and Services Sell Best with Social
The AOL study also looked at how social media lead to sales of different product types.
For most product types, social media fell clearly into the middle of the purchase path:
- 95% of the time with food and beverages sold via e-commerce
- 87% of the time with apparel and accessories sold via e-commerce
- 85% of the time with home furnishings sold via e-commerce
- 82% of the time with technology products
However, when it comes to subscriptions, health/beauty products and services, social media was the only channel seen before purchase 48%, 29% and 21% of the time, respectively.
Besides leading to what AOL Platforms terms “impulse buys” with these product categories, social media also was the last channel in the purchase path (seen just before the consumer bought a product) a significant amount of the time with certain products:
- 21% of the time with health/beauty products sold via e-commerce
- 18% of the time with services
- 15% of the time with subscriptions
- 13% of the time with entertainment and leisure sold via e-commerce
Contact us to find out more how we can help your agency increase its efficiencies via media services like Facebook retargeting and new technology developed for the Latin American market.