Social media ad spending continues to grow.


More than 180 retailers and brand marketers from fashion and beauty jammed a ballroom at the Andaz hotel in New York last week to cull insights from L2’s latest Intelligence Report on Social Platforms.

The findings marked a milestone in social media marketing: while advertising dollars dedicated to social and digital continue its breakneck speed, the segment is experiencing maturation, L2 researchers said.

“As brands have opened their pockets, social platforms have raced to capitalize, rolling out new ad offerings,” the report said. “While Facebook and YouTube solidified their roles with advertisers, 2016 marked the maturation of Instagram as an ad platform and the emergence of Snapchat as a serious contender for ad dollars.”

Along with this growth and maturation, challenges are emerging. “The rapid pace of innovation and evolution has only made social platforms more difficult for brands to crack,” researchers noted. “Changes to Instagram’s algorithm have begun to reduce organic engagement, while evidence of ad fatigue exists on Facebook. Brands continue to struggle with content creation for new platforms such as Snapchat and Instagram Stories, while newer platforms like Facebook Live and Messenger seem poised to add more complexity to social advertising.”

L2 added that “underlying all this frantic activity, the key question remains: can social extend its role beyond that of a top-of-the-funnel awareness driver to impact consumers at all points along the customer purchase funnel?” Moreover, L2 researchers pondered if social platforms can drive conversions. Regardless, the push for market share is changing the landscape.

Taylor Malmsheimer, senior associate at L2, told WWD that brands are being forced “to iterate and innovate their social strategies in order to keep up.”

“For example, as Facebook starts to reach ad load limits, the platform will have to continue to iterate on ad formats and capabilities to justify increasing prices and drive revenue growth,” Malmsheimer explained. “This means that brands must be extremely nimble, responding to changes in Facebook offerings while continuing to determine how to leverage Facebook’s audience.”

Malmsheimer noted that L2 has seen “a bifurcation in the past year” between how two types of brands are using Facebook: Mass brands and consumer product goods companies are using it to reach large audiences instead of targeting.

“On the other hand, you have luxury brands who have doubled down on the platforms targeting capabilities to reach affluent consumers,” she said. “Compared to the other channels, luxury brands have traditionally relied on to reach affluent consumers (i.e. high-fashion magazines), Facebook targeting costs are worth it.”

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