Business impact of social media

The business impact of social media: Then and now

It’s hard to imagine where brands would be without social media today. Social allows brands to craft closer connections with their audiences. It also allows targeted advertising in ways marketers could only dream about a few decades ago. In Q4 2021 alone, median monthly ad spend among Brands reached over $4,500, according to Emplifi’s social media benchmarks.

But it hasn't always been this way.

One of the best ways to understand the business impact of social media today is to look back at how we got here in the first place. In this post, we take a stroll down memory lane to do just that.

Let’s start at the beginning

In the early 2000s, when social media was just beginning to take off with Facebook and YouTube, businesses were still spending much of their marketing budgets on traditional advertising and PR – and they relied on these strategies to drive brand awareness and sales revenue.

In a 2006 report from Ad Age, social media was nowhere to be found in the US marketing mix or ad spending (figures shown below in $ billions):

  1. Direct mail ($52.19)

  2. Newspaper ($46.61)

  3. Broadcast TV ($46.26)

  4. Cable TV ($21.53)

  5. Radio ($19.58)

  6. Yellow Pages ($14.00)

  7. Consumer magazine ($12.25)

  8. Internet ($6.85)

By 2010, marketing strategies were shifting – and ad spending on new media looked a lot different. As reported in VentureBeat at the time, eMarketer was projecting that US advertisers would spend an estimated $1.7 billion in ads on social networks, accounting for 6.7% of all online ad spending.

This infographic from Visual Capitalist also offers a great illustration of how social media spending began to rise around 2008, and quickly overtook traditional media including radio, newspapers, and magazines by the mid-2010s. You can see how this translated into advertising revenue for Facebook in this chart below from Business of Apps.

So, brands began to spend more of their marketing budgets on social platforms. But did it work? Did they see an impact on their bottom line?

Social media’s contribution to business objectives

With the quick rise of social media ad spend came a need to measure not just its popularity, but its business impact. Marketers wanted to know if social media ads were delivering a return on investment and how they were performing compared to traditional or other media investments.

The evolution of social media performance metrics was born of a need to answer questions like these. Let’s take a closer look at the progression.

Early stage (2000s): All about vanity

In the early stages of social media marketing, key performance indicators (KPIs) were mostly superficial – also known as “vanity metrics.” Vanity metrics focused on the number of fans/followers, comments, and impressions that a post attracted.

These indicators are dubbed vanity metrics because while they can make a brand look good to anyone following, they don’t measure bottom line impact for the business. It was impossible to attribute the number of fans or followers to sales numbers. Although many brands saw the benefits of social media marketing, return on income (ROI) was hard to prove.

Rapid growth (2010): The gold rush

Social Media Today called 2010 “The Year of Social Media ROI.” Until this point, social media had been viewed by marketers primarily as a fun and alternative way to drive brand awareness. However, when Facebook began to roll out a series of ad formats based on audience insights and technology like the Facebook Pixel, as well as multi-level advertising campaign structures, social media became serious business.

With the ability to allocate budgets to different campaigns, access to more advanced analytics and real time campaign tracking, businesses began to create ROI frameworks for their social media investments. This presented a challenging question: is social media driving real business results?

The reality was that an ability to accurately measure ROI was still evading marketers. A 2015 study by TrustRadius had found that 60% of marketers were still struggling to measure return on investment for their organic social media advertising efforts.

Maturing metrics (late 2010s to present): Tracking success

Today, thanks to the advancement in social media analytics and the functionality of social media platforms like the Emplifi Social Marketing Cloud, social media professionals can tie concrete metrics to the work they do and show how their efforts directly support business objectives.

Here are some of the key performance indicators that marketers now use to measure business impact.

Sales

Many businesses have found new ways to promote their products and services – replacing emails and outdated snail mail campaigns with social media efforts. Sales are generated from consistent engagement, leveraging third-party endorsements, paid ads, and more recently – from live stream shopping. As reported by Social Media Today, one survey found that 67% of people have bought a product after seeing it on social media. Sales are so wrapped up in social media efforts now that the role of a social media manager has become one of the most crucial roles in a company.

Conversions

With the ability to set clear calls-to-action (CTAs) and direct an audience from a social platform to a landing page, social media is the number one way that brands are bringing in conversions. Popular forms of social media conversions include content downloads, newsletter sign-ups, webinar registrations, and more. With the average consumer spending three times more time on social media than reading emails, it’s no surprise that marketers are prioritizing conversions on their social channels.

Traffic

Traffic is one of the many benefits of a strong social presence. Almost 90% of marketers believe that social media is very effective in bringing in traffic. Through thought leadership and enticing messaging, businesses can easily direct traffic from social to their website. The best results are not overly "sales-y", as trust and expertise needs to be established before a consumer visits a website. Luckily almost every business in the world now has a social media manager working to “warm up” their audience and help drive traffic to their website.

Loyalty

Social media allows businesses to interact with both new and returning consumers. 71% of consumers who have had a positive experience with a brand on social media are likely to recommend the brand to their friends and family. Now more than ever, consumers crave a connection with the brands they buy from, and have the ability to make these connections on social media. Consistent engagement, acknowledgment of audience, and offering exclusive deals via social media, all go a long way to building brand loyalty with your customers.

Report: 7 key consumer expectations impacting social media success today
Article CTA Cloud Image

Brand awareness

Consumers seek out product reviews and recommendations from their peers via social media. And 54% of users turn to social media to research new products. One popular way to ramp up brand awareness on social media is to partner with influencers who can tell their audiences about a brand.

Customer experience

Customer experience (CX) has evolved from one-off messages to a holistic online presence. A key piece of fostering a positive CX on social media involves being authentic with an audience. Social media has opened up the door for two-way communication and businesses have a lot of tools at their disposal to delight their customers and move them along the buyer’s journey. With Emplifi research finding that more than 60% of consumers currently using (or wanting to use) social media platforms to engage with brands at key moments throughout their customer journey, it’s a trend that can’t be ignored.

Lead generation

Social platforms have come a long way when it comes to displaying CTAs for lead generation. B2B companies especially love this functionality as they team up with social media managers and promote a landing page with a lead capture form. Currently, 66% of marketers use social for lead generation, and we expect this number will continue to grow.

Business insights

With social listening, also known as social media monitoring, allows businesses to gather actionable insights about their brands, their audiences, and their products. Social listening insights can be used to inform your content strategy, product development, campaign effectiveness, how to engage with prospects and customers as well as understanding how your competitors are operating in your industry.

One of the most important aspects of Social Listening is understanding how your brand can provide better customer experiences customer care on social media and ultimately, drive loyalty to your brand.

Final thoughts

Business impact measurement is crucial to business success, and the measurement of social media ROI – for both organic and paid advertising – has seen a great evolution in response to the growth and complexity of social networks.

As Facebook advanced ad formats, audience targeting and ads objectives, marketers become smarter about tracking business impact. Social media professionals are no longer concerned with vanity metrics. Now their focus is on delivering real business results. That’s the key to becoming a social media superstar today.

One of the best ways to measure impact is to use robust and ever-evolving analytics technology like Emplifi’s Social Marketing Cloud – where both organic and paid efforts are tracked in real time, delivering business intelligence and insights.

Want to see how Emplifi Social Marketing Cloud can help you measure the business impact of your social media efforts and take them to the next level? Book a demo today to speak with an Emplifi expert.

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