A new report from Neustar’s Aggregate Knowledge notes the strong performance of advertising in social channels in terms of reach (58% better than exchanges) and the ability to deliver more high-quality buyers than ad portals, networks and exchanges.
According to Aggregate Knowledge President Rob Gatto, this portends a shift in the role of social advertising within the sales funnel.
Traditionally, he said, public exchanges and networks have been better at attracting lower-funnel customers whereas social advertising worked best at the upper end. This is because the reach efficiency of social channels, as noted in the Q3 Media Intelligence Report released today, is better than that of ad exchanges, and the need to log into social media provides richer customer insight and gives the tracking mechanism more longevity than the cookie pools used by exchanges and networks.
But Gatto anticipates that social advertising will increasingly drive activity further down the funnel as consumers remain logged into their social networks for longer periods of time, giving social ads more visibility. “There’s an opportunity for [social ads to] become more static and the reach will be better,” Gatto said. “Networks and exchanges won’t have the same opportunity because there’s no login.”
Yet networks and exchanges will continue to have a role in the purchase cycle. Their value is in the cost efficiency of CPMs, CPAs and CPCs. These avenues, the report concluded, “may be a good option if the focus is solely placed on reaching an audience at a low cost.”
Nevertheless, from a conversion standpoint, the true value for brands is in having a rich dataset through which advertisers can target prospects. The Media Intelligence Report noted a sharp increase in user conversion rates among retail (300%), automotive (410%), CPG (590%) and telecommunications (970%) when advertisers targeted top-performing audiences. The consumer characteristics that determined performance lift varied from vertical to vertical but included elements such as purchase history (all industries), education and income level (automotive) or the presence of children (CPG).
In other words, customer insight drives revenue and, because social media can provide a more reliable, longer-term look at a customer, social advertising is now better positioned than networks and exchanges to attract consumers in all stages of the sales funnel.
And as businesses learn of the role various customer attributes play in their likelihood to convert, traditional KPIs are becoming obsolete.
“The advertising world is moving away from last-click and last-touch, and moving toward conversion and online and offline attribution,” Gatto said. “There’s greater interest in understanding where in the funnel [advertising] touches customers. We see clients trying to match online ad exposure to offline sales. We also see interest in understanding what customers do the entire path before they take an action. Understanding the entire journey of that consumer: What do they see and what device do they see it and was there an online or offline action?”
