Why Are Retailers Spending So Much More on Social Media Advertising These Days?

Retailers, like businesses in any other industry, have had waning success in reaching consumers through traditional advertising and marketing channels. And so they have turned to newer, tech-driven solutions. Digital advertising — specifically social media advertising — is one of the hot spots we’re currently seeing retailers pour their money into.

But why this specific advertising niche? What’s so great about it that it’s causing social media advertising budgets to double globally from $16 billion in 2014 to $31 billion in 2016?

The Old Way of Marketing and Advertising No Longer Works

In the past, retailers might invest in coupons or flyers to entice shoppers to stores. But consumers have come to ignore these. Also, retailers invested a lot of resources into designing and printing marketing collateral, and it was difficult to track results.

Even when they moved into digital advertising, there became hoops to jump through. An ad had to be approved for an ad network to run it, and changing it meant more work. Advertisers needed something more nimble, more responsive to lightning-fast changes. That’s when social media advertising appeared on the market.

Advertisers can easily manage their ads and get them running in minutes. No layers of approval needed. They can tie the social media ad campaigns into what they’re doing elsewhere, both on and offline. Need more reasons why social media ads are the retail industry’s darling?

The Audience is Particular About What it Responds To

Advertising as a whole has had to make some pretty big adaptations in strategy over the past few years. No longer are consumers responding to generalized commercial-style ads scatter-shot with the hopes that at least a fraction will convert.

Technology has created the ability to drill down to a very specific niche with advertising, and social media ads are no different. And for retailers looking to reach Millennials and Gen Z, this is the perfect platform to do so. By engaging with social influencers and trending content, retailers are finding great success through social media advertising.

And this audience, the under-35 set, has huge future potential. Over the next few years, their earning potential and disposable income will increase, making their value to retailers all the more tangible.

Social Media is Where People Get Informed

Why scour the web for the latest products when you can discover them inside your favorite social media platform? Even though they have the option of turning off ads on Facebook, most don’t, and 25% of Facebook users, after viewing an ad there, visit the website. And 14-17% will actually convert. It’s hard to ignore that kind of power found in discoverability.

It’s One of the Most Affordable Advertising Options

When it comes to packing more punch, social media ads are so attractive because of their affordability and success rate. A business with any size ad budget can afford to test out a campaign and then get detailed analytics to determine how well it did in reaching a goal.

And because you can specifically target the audience that fits your customer demographic, it’s easier to see high conversion rates for very little investment.

It’s Mobile-Friendly

As marketers turn an eye toward mobile (38% plan to spend more time and money developing mobile ad strategies), they’re glomming onto social media advertising that plays nicely with mobile marketing. Twitter is currently one of the forerunners of the mobile advertising game, with 86% of total ad revenue for the brand coming from mobile ad campaigns.

Instagram, too, is attracting not only millions of active users, but also satisfied advertisers. Ad revenues have doubled since the brand launched mobile advertising in 2015, and now is estimated to be around $1.53 billion.

Ad Recall is High

You don’t hear high statistics about ad recall with pay-per-click or even banner ads quite like you do social media ads. Instagram is driving this trend: sponsored Instagram posts have a 2.9x higher ad recall than other online ads. If you’re trying to brand yourself and take up space in your audience’s head, this is one fantastic way to do it.

Video Ads Engage Your Audience

One on-the-rise social media ad formula comes in the form of video, especially via Facebook. Brands are moving away from YouTube ads in favor of Facebook video ads simply because of the opportunity to really engage an audience. Plus, the fact that it’s easy for a viewer to share that video gives it even more potential reach.

It appears that social media advertising is no flash in the pan. It’s proven to work across industries, but particularly well for retail, and across social platforms. The fact that social media brands are investing more R&D dollars into developing more innovative ad tools should tell us that there’s more to come in the near future.