SOCIAL MEDIA ADVERTISING, HOW TO TURN YOUR ACCOUNT INTO A PROFITABLE SALES UNIT

Social media advertising, to this day, is included in any digital marketing strategy. We are all aware of the infinite number of existing platforms and the segmentation and customization possibilities they offer.  So, at the marketing level, working Social Ads is a very good option to quickly reach the audience that interests us.

We know many projects where they use investments in social networks only to do Branding, leaving aside the sales possibilities. All this, justified by getting leads, likes and long-term loyalty because it is a channel where ads bring you more, you can share, work in SEO, etc.  A series of intangibles that do make your brand or product known and that in the very long term report followers, brand knowledge and profit, but the question we ask ourselves is: At what price? Can you afford it?
 

Most importantly, be clear about the goal

The goal of every ecommerce is to sell, we agree on that. And to sell we must publicize the brand or product, loyalty and budget to achieve it, we also agree. But are we all clear that the goal is also profit? 
 

Our duty as a marketing department is to be able to measure those tangible and intangible, and most importantly, to have them balanced. We cannot start from a blank check on Branding-oriented strategies.  We must set limits within social media advertising in order to achieve a strategic and economic balance in the short to long term.

Before going any further, we would like to clarify a couple of sometimes confusing concepts, ROAS and ROI: ROI is the total return on investment, a metric that measures in % the total profitability of a business, measuring costs and benefits. The ROAS is the total return on advertising investment, it is a metric that measures the profitability of digital marketing campaigns.

An example of balanced distribution in Social Ads investment could be broken down into:

MODEL A: Short- and medium-term balance

• Branding: 20% of investment
• Conversion: 80% of investment 
• Target: 800 per cent minimum ROAS

MODEL B: Balance in the medium and long term

• Branding: 40% of investment
• Conversion: 60% of investment
• Target: 500 per cent minimum ROAS

MODEL C: Long-term objective

• Branding: 80%
• Conversion: 20%
• Minimum ROAS target 200 per cent

Practical example. Advertising development in a hotel
We own a hotel, which already sells all its stock by OTAs (Booking, Expedia, etc.),  and the OTA stays minimum 16% of the sale of each transaction.
For a hotel to make money from an OTA, selling on its own website or over the phone, the agency spending + spending on digital advertising investment needed to get those sales, should not exceed that 16%, should even be below.

Example:

• €1,000 Investment in monthly advertising
  
  Model A

  • 800% ROAS

  • >12,5% distribution cost (16%-20% OTAs)

  • More cost of execution (agency fee or internal department)

• Model B

  • 500% ROAS

  • >20% distribution cost(16%-20% OTAs)

  • More cost of execution (agency fee or internal department)

• Model C

  • 200% ROAS

  • >50% distribution cost

  • More cost of execution (agency fee or internal department)

If we are overwhelmed by investment in networks, what is costing us the sale of each room? Is it worth the effort? Remember that the OTA sells on its own (at 16%).

Benefit of having balanced network advertising strategy

At Emexs Marketing we believe that the investment in advertising on social networks should be fully balanced between branding campaigns and conversion campaigns. Achieving averages of not less than 700% /800% ROAS in projects that do not want to neglect the short and medium term. In addition, with the support of other advertising channels (in Google Ads, for example, we get ROAS higher than 2,000%) and constant data analysis we can balance the entire advertising investment to reach a maximum profit and perfectly balanced.  

Having a balanced investment in social networks will allow you to invest in other channels and work a 360º strategy.  Otherwise, we can damage the entire budget without ever exploring the benefits that investing in other digital media can give us.

If you think you need help with your digital advertising investments, do not hesitate to contact us, we will be happy to help.

Raquel Fuentes