Transfer Pricing Associates

Costly Social Media Advertising Fails to Provide Returns to Companies

post Saturday November 3, 2012



In a recent study performed by two prominent social media marketing groups, We Are Social and Socialbakers, there is a significant decline of approximately 50% since August of the average number of fans a brand’s Facebook post will reach. Facebook claims that on average 70% of brand marketers see a return of at least three times their investment. Facebook’s 1 billion active users give it an advantage over other social media platforms, such as Twitter, which has 140 million users. The prospect of a brand reaching half of a billion people every day through Facebook is certainly alluring. Many of the brands who attracted millions of Facebook fans are now learning that their posts and photos are rarely seen for free. Facebook’s algorithms that analyze posts and reward the most engaging content, groups a friend’s vacation photos and a brand’s ads all together, forcing marketers to buy the “Sponsored Stories” ads to cut through the noise. It’s not just Facebook. Google’s ranking system and intense competition for showing up at the top search results also forces advertisers to invest in Google’s sponsored results and search-engine optimization tactics.


Social media’s advertising war has also intensified. Different social media platforms are shutting down channels of data sharing and cross-promotion and copying each other’s features. Facebook has introduced a “want” button in an apparent attempt to compete with Pinterest while Twitter has disabled Instagram’s function of ‘finding Twitter friends’. It also blocked LinkedIn from reposting Tweets on its site. Sites are trying to protect their own territory today by closing doors to the sharing formally encouraged in the social media environment. How will the changing dynamic of social media space influence brand’s advertising strategy is something that will certainly influence the amount of investment in social media marketing.



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