In the last years, social media advertising has been understood as a channel that drives short-term sales. At Nepa, we think this is misleading. In fact, there is clear evidence that social media advertising drives long-term sales as well.

Our research is based on over 1600 retail social media campaigns and includes direct access to data from Google, Facebook, Snapchat, and offline media channels. The results show that online channels are on average the second most efficient advertising force of short-term, but also the most efficient media for long-term sales.

How should brands allocate their media budgets?

By assessing the ROI of media investment in all media, we discovered that retailers allocate on average only 6% of the media budget and 18% of the digital media budget to social media advertising. We identified that if retailers want to optimise the media mix to drive both short and long-term sales, most of them should increase their social media spend by +30%.

Allocating the right budget is, therefore, the first step to maximise social media potential. It’s also vital to assess the strength of each media channel to maximise your marketing ROI. However, there isn’t a “one size fits all” formula.

The second step brands should pay attention to is execution. Our research shows that advertisers should focus on spreading brand awareness and set a clear business objective for each campaign. In the following paragraph, we will explain what brands should engage in to achieve lasting brand-building results.

Three key elements of efficient online campaigns

There are three key elements of every successful social media strategy: audience, campaign frequency, and duration.

  • Audience

To reach the sustainable ROI peak, social media should target a broad audience and create frequent and longer campaigns. We found that targeting broad audiences is 75% more efficient than taking a narrow approach.

  • Frequency

High-frequency campaigns perform better, as persistent exposure allows messages to sink in. Therefore, campaigns we see more than three times per week perform four times better than those with lower frequency. Currently, around 60% of investments go to campaigns with low frequency showing there is untapped potential in gaining efficiency.

  • Duration

When it comes to duration, longer campaigns (capturing one purchase cycle or more), are at least twice as efficient as campaigns with shorter duration.

Brand-building creative as a fourth element to success

The fourth element that can play a role in long-term sales is brand-building creative. When we compared static and video content, we found that the former is about 60% more efficient than the latter. This sounds counterintuitive as we would assume video to be driving brands forward.

We are currently working on a follow-up study to check the study relevance. Our assumption is that the video requires more efforts from creative and this leads to poor performance and efficiency. The social media videos need to be optimised to successfully display the brand clarity. Across media channels, video formats turn to be crucial for long term sales, because they tell a story and build up your brand image at the same time. As such, we recommend brands to keep investing in static but explore different video formats, to foster their brand visibility.

Final thoughts

What if brands want to drive short-term sales? In this case, they still need to increase the frequency of campaigns and make the most of the social media environment. If companies want to drive sales in digital channels, we encourage them to narrow down the audience segments. This will maximise their social media potential.

Advertisers shouldn’t underestimate social media. This channel is surprisingly versatile and relatively unexplored. Once you’ve identified the right channels to maximise your marketing ROI, you shouldn’t hesitate to invest in a social media strategy to drive long-term sales.

This article was written by Lindsay Parry, Managing Director Nepa UK and Kalle Backlund, R&D and Head of MMM Nepa.

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