Who Pays for Social Media Advertising? The Answer Will Surprise You

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ADOTAS – Yesterday, Alex Funk, Lead Media Specialist here at Covario, and I, did a webinar on how search and social media work together. The webinar was run on Search Marketing Now (SMN) network and had about 250 participants – most of them search practitioners from  various advertisers across the US.  During the webinar, we asked two poll questions, the answers from which were quite interesting.

The first question we asked was “who managed paid social media programs?”  There is an ongoing competition within advertisers over whom should do this.  Should paid social media – buying ads on Facebook, Twitter, Linked In – be done in-house or by an external agency?  And if an external agency, is it the PR agency, the display agency, the paid search agency, etc.  The results of the poll question were these:

  • 57% of respondents say this is done in-house. This is a high percentage and is likely due to two factors. SMN audience can skew toward smaller companies who do not have the budgets to justify agencies expenditures. And social media is still relatively new and budgets are relatively small – so they may be managed by the social media team in-house.
  • Of those outsourcing to their agency, 24% are using their search agency.  This supports our hypothesis that Search Agencies will ultimately control the execution of the social media budgets – because media on social media platforms is very much like bid management on search.  It can all be done through the bid management system, it has similar dynamics from a metrics standpoint, and can be directly compared to the search programs from a performance standpoint.

Source:  Covario, Inc.  July 2011.

Second, we asked “from where does the budget for paid social media programs come?”.  Our goal was to see whether the budgets are independent, coming from search, coming from display, coming from PR, or other. The results here surprised us. Our hypothesis was that social media budgets were independent, and/or coming from the display budget. That is not what we saw.

  • 40% of the respondents said that budgets are independent. We thought the percentage would be higher. We have heard from our advertiser customers that in 2011, they were establishing specific social media budgets on masse – as opposed to last year where they were adjuncts to the search and display budgets or testing budgets. 40% is healthy, just a little lower than we expected.
  • 42% said that  the social media budgets are coming from their search budgets, and only 10% said the budgets are integrated into their display budget.  That was a big surprise.
  • PR budgets are tapped to support paid social media buying slightly less than PR budgets – 8%. Mobile is only 1% of the budget supply.

Source:  Covario, Inc.  July 2011.

This is a key issue. It means that search marketers are driving the execution of the programs and that the budgets for social media are either being integrated into the search budgets or are independent. If they are part of the search budget, then this puts search and social media performance in direct competition with each other and search marketers in the position of arbitrating where the spend will go. It also shows that our hypothesis that search marketers are winning the majority of the assignments in advertisers to run social media execution largely is coming to pass.

ACTIONABLE INSIGHT #1: Paid social media programs are managed in-house for 60% of the advertisers surveyed, however, if the programs are outsourced, they are outsourced to the search agency.

ACTIONABLE INSIGHT #2: The budgets to pay for paid social media programs increasingly are integrated into search budgets (putting them directly in competition with search performance) or are stand-alone independent budgets. They are NOT coming from display budgets, at least not in this survey.

ACTIONABLE INSIGHT #3: Search marketers need to focus on creating the integrated metrics and campaign tactics for managing paid search and paid social since the responsibility for allocating the integrated budgets is falling on them.

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