Programmatic Can Finally Prove the ROI of Social Media Investment

Considering all the hype surrounding social media platforms in recent years, it may be strange to think that the services get a bad rap. But, when it comes to advertising, that’s sometimes the case. To this day a lot marketers still think about social platforms only in terms of earned media. And when marketers do invest in paid social campaigns, they’re often disillusioned by the results or find that it’s impossible to measure the return on investment (ROI). They think social inventory is overvalued and that it can’t possibly back out into their strict key performance indicator (KPI) goals – hence General Motors’ famous exit from Facebook last year.

It’s a shame that these views on paid media and social continue to exist because, frankly, they’re out of date. Thanks to advances in programmatic marketing, it’s now possible not only to bring the power of real-time bidding (RTB) to Facebook and Twitter, but also to measure its huge effect.

Facebook took the leap first in September of 2012, introducing FBX, an advertising exchange that allows marketers to bring their own data to the table. With FBX, it’s now possible to target Facebook users in real time based on their behavior across the Internet.

FBX was an instant success, accounting, by some estimates, for $1 billion in revenue per year. Twitter, not wanting to be left out of the fun – and riches – followed suit last year with the introduction of Tailored Audiences, a program that allows marketers to use their own data to target Promoted Tweets.

Still, if you’ve only heard the news that RTB-style targeting has come to social, you haven’t heard the full story. Because when RTB arrived on social, it also brought with it the latest metrics for measuring display campaigns, metrics that actually speak to the effectiveness of social ads.

After all, the problem with Facebook campaigns was largely that people were measuring them by the wrong standards. If you’re focused on click-throughs, social media ads are bound to disappoint. Facebook and Twitter campaigns aren’t likely to ever see the click-through rates that have made Google’s search units so profitable. Study after study reveals that the vast majority of people never click on a display ad. Meanwhile, those who do click tend to be less educated and have lower household incomes.

But, and this is the key point, just because people aren’t clicking doesn’t mean the ads aren’t having an impact. After all, you can’t click on ads in magazines or on your TV, but no one doubts such ads can be effective. That’s why it makes much more sense to measure social campaigns the way we now measure other programmatic display campaigns, that is, with sophisticated metrics, such as view-through attribution, and tracking dashboards that are capable of determining the real ROI of social campaigns.

“The industry has been measuring success on social all wrong,” says Katie Holdsworth, account director at Booyah Online Advertising. “Why are we talking about click-through rates? The conversation should be around precision targeting and ROI.”

If your social team doesn’t understand all of this, then it’s time to join the social team with your paid media team. Chief marketing officers (CMOs) and chief financial officers (CFOs) need to understand that earned social media and paid media are no longer separate. Says Holdsworth, “The paid media team knows much more about site pixeling, building successful audience models, finding the right targets, optimizing toward site conversion, and tracking and reporting meaningful metrics.”

In other words, the paid media team is more likely to know how to use the techniques of programmatic marketing both to make social campaigns more effective and to demonstrate that effectiveness with reliable metrics.

So, sure, there are still plenty of things to complain about when it comes to social media. But, so long as you have the right people doing the tracking, figuring out the ROI of your social campaigns no longer needs to be one of them.

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