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  1. 1. SEARCH AND SOCIAL PLATFORMSHow Facebook and Others Can Steal Dollars from Search SEPTEMBER 2016 Debra Aho Williamson Contributors: Lauren Fisher, Corey McNair, Maria Minsker,Yory Wurmser Read this on eMarketer for iPad
  2. 2. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 2 SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH Everyone’s heard the one about social going afterTV ad dollars. But the social platforms—led by Facebook—are aiming for paid search dollars as well. Can social can be as good as search for some ad objectives? And can it gain a share of search budgets? ■■ Smart advertisers already use search and social together, but new social ad products and changing usage trends are creating fresh opportunities. ■■ Facebook isn’t just for branding; it offers ad products for all stages of the purchase funnel and is publicly comparing the return on investment (ROI) of some of those products, such as Dynamic Ads, to that of search. ■■ Paid search has always been considered highly effective, but in some surveys, marketers rate social advertising even higher. ■■ Attribution in social is improving, helping marketers know whether an ad placed on Facebook resulted in an action or a purchase.The better this gets, the less likely marketers will be to give sole credit to the last click (which often takes place on a search engine). ■■ Budgets aren’t yet shifting from search to social, but emerging trends in search-heavy industries such as retail, travel and automotive are worth paying attention to. ■■ Facebook will eventually start selling search advertising, and clues about what that might look like are starting to appear. WHAT’S IN THIS REPORT? Facebook’s new ad products are aimed squarely at search marketers.This report assesses the growing competition between social media and paid search and discusses what might make ad budgets shift. % of respondents Search Channels Used by US Digital Shoppers During the Purchase Process, by Stage, April 2016 Discovery 71% 64% 20% Consideration/purchase 74% 65% 14% Post-purchase engagement 51% 45% 13% Search engines Search on retailer sites Social search Note: n=999 ages 18+ Source: Catalyst, "Why Search + Social = Success For Brands" conducted by Forrester Consulting, May 3, 2016 211116 KEY STAT: Search engines and search on retailer websites are by far the most common channels used by US digital shoppers. But social search is also being employed, at every stage of the purchase process. CONTENTS 2 Search and Social Platforms: How Facebook and Others Can Steal Dollars from Search 3 The Growing Competition Between Search and Social 8 Social Ad Effectiveness Is Improving 10 At Facebook, Attribution Is a Priority 12 Paid Search Isn’t Feeling the Pinch (Yet) 17 Priming the Market for Paid Search on Facebook 18 eMarketer Interviews 20 Related eMarketer Reports 20 Related Links 20 Editorial and Production Contributors
  3. 3. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 3 THE GROWING COMPETITION BETWEEN SEARCH AND SOCIAL In many respects, social media and paid search are ideal partners. One facilitates branding and engagement, while the other helps seal the deal by driving traffic, leads and sales. This cozy pairing doesn’t end there. When Facebook began selling advertising, it did so through an auction-based ad marketplace that used interest- and demographic-based targeting, which was purposely analogous to the keyword-driven auction marketplace that Google and other search engines offer.That similarity helped Facebook build an enormous advertising business by making it easy for companies to streamline the mechanics of social ad buying. But the close partnership of search and social (at least in advertisers’ minds—Google and Facebook, the primary companies in each of those channels, have never been friends) is about to be tested. In the past year, Google and Facebook have introduced ad products that borrow from each other’s playbook, and both are making mobile the centerpiece of their ad business. In another corner, Pinterest is targeting search advertisers in a bid to expand its revenue base beyond social media budgets. And on the usage side, there is mounting evidence that consumers are using social platforms for research and discovery. While this activity by no means takes the place of search, it represents a new wrinkle for marketers to consider. “Search and social are much more similar than they’ve ever been in the past,” said Chris Haleua, senior product marketing manager for the Adobe Media Optimizer platform. “Many of the tactics you use in one can be applied to the other.” The changing scenario means that using search and social together is more important than ever. And there’s a new pitch marketers must consider: whether social can replace search for some objectives. FACEBOOKAND GOOGLEAD PRODUCTS CONVERGENCE As recently as a few years ago, most marketers believed Facebook was good for branding and engagement—and not much more. In fact, some marketers still believe that’s the case. But the company has added ad products for all stages of the consumer purchase journey. And the more Facebook digs into these lower-funnel objectives, the more options there are for search marketers. Ad executives interviewed by eMarketer uniformly agree that this has been one of the biggest recent changes at Facebook. “Social can work across the entire funnel,” said Sanjay Teckchandani, director of paid social at search marketing agency Elite SEM. “While search can be that last touch to get you that conversion, with social you have the opportunity to do everything from driving awareness to moving people down the funnel to conversion. Facebook has moved very, very fast to meet the needs of clients who are looking for direct response and conversion metrics.” “Facebook has come out with much more compelling and interactive ad types that help marketers drive down to direct response,” saidTiffany Miller, product strategy lead for social advertising at ad tech firm Kenshoo. “Say I’m a Banana Republic shopper. I might see a video ad about their summer collection; that’s the awareness. I might engage with that video, and then I’ll be put into an audience.Then they will show me an ad that has a special offer and drives me to their website to purchase something. So, they’ve taken me through the entire funnel through social.” Four relatively recent ad products form the basis of Facebook’s lower-funnel product set: Custom Audiences.This feature lets advertisers use a list of people, such as website visitors, app users or email subscribers, to target ads on Facebook. Because Facebook has email addresses for its users, it can match (in a hashed, privacy-protected way) its information with the advertiser’s information.
  4. 4. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 4 Advertisers have used Custom Audiences to retarget website visitors by placing a Facebook pixel on their website (such as on a product page) and then delivering an ad to someone who visited that page the next time they log on to Facebook. “Let’s say we’re running a campaign in paid search and the conversion doesn’t happen for us,” said Vanessa Cooper, search director at performance marketing agency Merkle. “We can remarket to those same people on Facebook using custom URLs to build pools of search traffic and leverage email lists to get back in front of those people—and the conversion happens on Facebook.” uses retargeting within social media to reach consumers who may have started a search for a particular vehicle and then left to visit Facebook or another property. “We still rely on search as the biggest traffic-driving initiative. But we are looking at social to help amplify that and shed light on new opportunities for us to build out those campaigns,” said Greta Crowley, senior director of consumer marketing at Lookalike Audiences.This feature is a prospecting tool that lets advertisers target new potential customers who are similar to ones they already know, such as their email subscribers or fans of their Facebook page.The idea is that these people may be more likely to be interested in a marketer’s products and thus further down the funnel than others would be. One of search and social agency Wpromote’s clients, a specialty shoe company, could use search to acquire potential customers searching for “running shoes,” said Mike Mothner, founder and CEO of Wpromote. But not all of those searchers are the right fit for this client’s particular type of shoe. By uploading a customer list to Facebook, matching to lookalike users and layering on additional targeting, “we can throw spears vs. nets and find ideal customers that are not yet in-market,” he said. After watching Facebook’s success, Google introduced its own version of Custom Audiences in September 2015. Customer Match lets advertisers upload their email lists and then target ads to signed-in users in search as well as on Gmail andYouTube. An add-on feature called Similar Audiences mimics the features of Facebook’s Lookalike Audiences. Dynamic Ads (formerly Dynamic Product Ads).These ads, aimed at retail and travel companies, allow marketers to upload their entire product catalog to Facebook (or in the case of travel companies, a list of hotel properties) and then target ads to people who have browsed or shopped for those products on the retailer’s or travel provider’s website. With these ads, “Facebook can perform some of the remarketing and conversion functions that might lag with search,” said Sean O’Neal, president of media-buying technology firm Adaptly. Facebook is aggressively promoting Dynamic Ads to search advertisers. During the company’s Q2 2016 earnings conference call in July 2016, COO Sheryl Sandberg specifically called them out, saying they offer marketers “search-like ROI.” Dynamic Ads resemble Google’s Product Listing Ads (PLAs), which have been available to all advertisers since 2010 and have proven extremely popular with ecommerce advertisers. In a study conducted in Q2 2014, AdGooroo found that the top 20 paid search advertisers (nearly all were retailers) spent 63% of their desktop paid search budgets on PLAs, with 37% going toward basic text ads. More recently, in Q2 2016, Merkle’s US clients increased spending on PLAs by 43% over the prior year, while clicks increased 73%. Metrics for basic text ads were not nearly as positive. among campaigns analyzed by Merkle US Paid Search Ad Benchmarks: Ad Spending, Clicks and CPC YoY Growth, by Search Engine and Format, Q2 2016 Ad spending Clicks CPC Google 22% 34% -9% —Google Shopping (PLAs) 43% 73% -17% —Google text ads 10% 16% -5% Bing and Yahoo Gemini -17% -19% 2% —Bing product ads -6% 2% -8% —Bing and Yahoo Gemini text ads -19% -21% 3% Total 15% 23% -6% Note: represents activity on the Merkle platform, broader industry metrics may vary Source: Merkle, "Digital Marketing Report Q2 2016," July 26, 2016 213946 Although the ads have somewhat different functionality (Facebook’s Dynamic Ads are retargeting ads, while on Google the ads are triggered by a search), both enable retailers to show specific products to users and drive purchasing behavior.
  5. 5. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 5 Retargeting ads on Facebook “work well and perform very similarly to paid search,” said Jeff Campbell, co-founder and managing director of search and social agency Resolution Media. Lead Ads.These ads help businesses connect with consumers who want to sign up to learn more about products or services. Search marketers can capture live leads without asking prospects to leave Facebook. Google doesn’t have a directly comparable ad product, although it has been testing a format called Home Service Ads in San Francisco.Those ads allow users who search for providers such as housecleaners or maintenance professionals to use buttons within an ad to send a request to a provider. With such similar ad formats, it’s now much more difficult to put Facebook in one box and Google in another box when it comes to fulfilling marketing objectives. Marketers must consider how well each platform works at each stage of the purchase journey— not just the beginning, where Facebook has historically played, or the end, where Google has been (and continues to be) strong. “Marketers and brands struggle to get their search and social mix right,” said Chris Humber, head of the search practice at Catalyst, a search and social marketing agency. “We know that the consumer journey is no longer a straight path; there are endless choices, platforms and outlets, and it’s important that we help marketers understand how to choose the right channels to drive the right results.” PINTERESTAND SNAPCHAT MAKE MOVES IN SEARCH Pinterest has for several years attempted to straddle the line between search and social, but until recently the company had never actively targeted search advertisers. That’s changing, and in June 2016 the company began its first explicit outreach for search ad dollars. Meanwhile, Snapchat in August 2016 was reported to have acquired search app startup Vurb, which helps users find and discover things to do and then make plans with friends. While Snapchat hasn’t said how it might integrate Vurb, it’s possible that Vurb could help the company build a deeper content offering around local search. Another angle could be aroundTV and movie discovery, since Snapchat has advertising and content partnerships in both realms. Pinterest is similarly interested in helping users to find and discover things. “People use this platform in a very different way than they use other platforms that are considered ‘social,’” said Jon Kaplan, head of global sales at Pinterest. “What Google did for information retrieval we’re trying to do for discovery of new ideas.” His goal is to position Pinterest, which has over 2 billion searches per month, as a performance advertising platform with a strong focus not only on search but also on audience-based buying and programmatic advertising. A search ad will look similar to other ads on the platform, but Kaplan said the company plans to add keyword targeting and may also launch its own version of Google’s PLAs. Executives interviewed by eMarketer were generally positive about Pinterest’s prospects. “Pinterest in a lot of ways represents the face of the new search engine. Are they social? Are they search? It’s an intersection of both,” said Adaptly’s O’Neal. The company is “doing some pretty amazing things with image-based search,” where a user can home in on a pair of shoes or a piece of clothing in a photo and see results that match that item, said Humber of Catalyst. “I think that is pretty impressive, and even a step beyond what Google is currently doing with image search.” The challenge Pinterest will face is that it tends to be used primarily when consumers have a major life event (such as a wedding or the birth of a baby) or are planning something (such as a trip or a party). Users visit often during those times, but their usage often drops off once the event has passed.
  6. 6. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 6 In addition, Pinterest is more of a planning tool than something used to fill an immediate need (except perhaps in categories such as food, where users can find recipes for dishes they can make on the spot). For advertisers, that means quick conversions may be less likely than on typical search engines. Pins have a longer shelf life, “so you could see conversions happening even 30 and 60 days out,” said Teckchandani. “When we measure success, we’re not looking at a shorter time window; we’re looking at a longer timeframe.” SOCIAL’S ROLE IN ANSWERING QUESTIONS There is no question that search is a powerful signal of intent, and typical social media interactions provide far fewer of these signals. But there are signs that social is playing a somewhat larger role in product research and information-gathering than before. For example, research has found that younger internet users are more likely than older generations to turn to social media interactions with brands when researching a product before purchase. According to a May 2016 survey of US internet users by Salesforce, millennial respondents were five times more likely to tap into their brand connections than were baby boomers (25% vs. 5%). However, only 14% of total respondents said they used social media as a research source, so this is not a major shift in behavior. % of respondents in each group Sources Used to Research a Product/Brand Before Purchase According to US Internet Users, by Generation, May 2016 Online product reviews Retailer's website In-store/in-person Brand website Word-of-mouth News articles on the brand/product Email interactions with brand Social media interactions with brand Other Never research prior to buying Millennials (18-34) 78% 57% 51% 55% 50% 21% 15% 25% 4% 2% Gen X (35-54) 72% 55% 52% 53% 52% 19% 19% 16% 3% 4% Baby boomers (55+) 62% 54% 57% 49% 33% 22% 12% 5% 4% 5% Total 69% 55% 54% 52% 40% 21% 15% 14% 4% 4% Note: among those who purchased consumer goods in the past 12 months Source: Salesforce, "2016 Connected Consumer Goods Report," June 13, 2016 211956 There is also some evidence that social is being used across the purchase journey, not just at the beginning or middle stages. An April 2016 survey conducted by Forrester Consulting for Catalyst found that search engines and search on retailer websites were used by a significant majority of US digital shoppers, but social search also played a role. One in five respondents said they used social search at the discovery stage, 14% did so at the consideration or purchase stage, and 13% turned to social search after they made a purchase. % of respondents Search Channels Used by US Digital Shoppers During the Purchase Process, by Stage, April 2016 Discovery 71% 64% 20% Consideration/purchase 74% 65% 14% Post-purchase engagement 51% 45% 13% Search engines Search on retailer sites Social search Note: n=999 ages 18+ Source: Catalyst, "Why Search + Social = Success For Brands" conducted by Forrester Consulting, May 3, 2016 211116
  7. 7. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 7 The impact of this type of search behavior may be small, but marketers are starting to take notice. “People are going to social to ask their friends and families and others for information on vehicles,” said’s Crowley. “They’re also looking for information on local dealerships, such as who had a good experience at what dealer. I think social media is having a bigger impact than ever before on car shopping and car purchasing behavior.” Social is also playing a larger role in the discovery of news and information. A May 2016 poll of internet users across 11 countries by HubSpot showed that 79% of respondents turned to search engines when they wanted to catch up on articles, but 76% clicked on things they saw in their Facebook feed. % of respondents Digital Sources Currently Used by Internet Users Worldwide to Read Business, Lifestyle & News Stories, May 2016 Search for relevant content via search engines 79% Read my Facebook feed and click on interesting articles/videos 76% Go directly to a publication's website 55% Through mobile notifications 48% Read my Twitter feed and click on interesting articles/videos 41% Go to specific blogs 37% Read my LinkedIn feed and click on interesting articles/videos 36% Through notifications via Slack or other messaging platforms 26% Find content on Medium 22% Find content through an RSS feed 21% Through Flipbook, feedly or another reader app 17% Note: ages 18+ Source: HubSpot, "The Future of Content Marketing: How People Are Changing the Way They Read, Interact, and Engage With Content," June 25, 2016 213786 Consumers aren’t abandoning search engines in any of these scenarios. But social, because of its wide usage and breadth of content, is becoming a venue for people to obtain information that complements what they find in search. A NEW OPPORTUNITY FOR MARKETERS With the growing number of lower-funnel ad products on Facebook, as well as the launch of Pinterest’s paid search product, there are more ways than ever for marketers to not only use search and social together, but compare the effectiveness of each. “We love these overlaps and options,” said Wpromote’s Mothner. “To have multiple platforms for product feeds, dynamic retargeting and customer or CRM [customer relationship management] matching just gives us that many additional levers to pull and optimize within and across platforms.” Facebook is making sure ad clients know exactly how well it plays with search. For instance, its December 2015 report found that mobile ads on Facebook drove a 6.3% lift in unique search traffic for US brands. Lift in Unique Search Traffic due to Exposure* to Facebook Ads and Among US Brands, by Device, July-Sep 2015 Lift in unique search traffic —Mobile 6.3% —Desktop 0.9% Primary device used for search —Desktop 63% —Mobile 37% Primary device on which Facebook ads were delivered —Mobile 70% —Desktop 18% —Both 10% Average number of ads delivered —Mobile 5.5 —Desktop 5.1 Note: among 23 campaigns analyzed; read as brands saw a 6.3% lift in mobile search traffic after exposure to Facebook ads on any device; numbers may not add up to 100% due to rounding; *on any device Source: Facebook, "Cross-Channel Planning: Making Search Work Harder," Dec 9, 2015 202574 “Whenever we run social ads for a product, we see a spike in related searches,” said Steve Carbone, managing director and chief digital and analytics officer at MediaCom. “Social creates interest, then consumers use search to learn more and connect with the advertiser.” Adobe and other companies have developed technology to help advertisers automate the process of running paid search ads and social ads.
  8. 8. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 8 “If they’re running Product Listing Ads on Google search, companies are exploring how can they potentially take those ads and convert them to Facebook [Dynamic] Product Ads,” said Monica Lay, senior product marketing manager for Adobe’s Adobe Media Optimizer. The agency world is adapting as well. Companies that have traditionally focused on the paid search realm are ramping up their services for social media buying. For example, 12-year-old search marketing company Elite SEM last fall brought inTeckchandani, a former social media executive at Razorfish, to run its new paid social arm. “More and more clients are asking for social,” Teckchandani said. “They’ve done search for a long time. But now they’re understanding that they need to expand their horizons and find other touchpoints, too.” Search’s maturity is a positive to many marketers, because it’s reliable and efficient. But that maturity is also a liability. “If you think about search, competition is really high. Costs are high. Keywords are very expensive,” said Miller of Kenshoo. The social platforms also have a leg up on the mobile side, because they don’t have a legacy desktop business that they need to protect, as Google and other search providers do. As companies such as Facebook and Pinterest get serious about targeting search advertisers and proving the effectiveness of their advertising, billions of dollars are potentially at stake. SOCIAL AD EFFECTIVENESS IS IMPROVING Paid search is still considered one of the most effective forms of advertising, but social is gaining. In interviews conducted by eMarketer, it is evident that the work Facebook has done to upgrade advertising measurement is resonating with marketers. Surveys also show improving opinion about the effectiveness of social media advertising relative to search. “Five years ago, it was very difficult to tie tangible business results to Facebook,” said Adobe’s Lay. “Now, the way you measure Facebook [advertising] is very much in line with [how] you measure ROI across any other channel, whether that’s search or display.” Historical data shows how far the social channels have come. When Experian Marketing Services asked marketers worldwide in December 2013 to rank the most effective marketing channel, 45% cited search marketing as their top choice. Only 5% chose social display advertising. Fast forward to February 2016. An Econsultancy survey of senior advertisers in North America found that people-based advertising (a way of delivering advertising, championed by Facebook, in which ads are targeted to real people rather than using cookies) was considered to perform better than most other types of advertising. In the study, 65% of respondents rated it better than standard display, 64% said it was better than email marketing and 59% said it was better than paid search.
  9. 9. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 9 % of respondents Performance of People-Based Advertising* vs. Select Formats According to Senior Advertisers in North America, Feb 2016 Email marketing 28% 36% 31% 5% Paid search marketing 20% 39% 34% 7% SMS marketing 19% 38% 40%4% Much better Somewhat better About the same Somewhat worse Note: n=184; numbers may not add up to 100% due to rounding; *a strategic discipline that targets ads at real people rather than cookies across devices and channels Source: Econsultancy, "People-Based Advertising: Evaluating the Impact and Future of Addressable Media" in partnership with Signal, April 12, 2016 208452 Standard display advertising 17% 48% 33% 2% A June 2016 survey of US marketers by the Direct Marketing Association (DMA) and Demand Metric found the median ROI of social media advertising (28%) to be slightly higher than paid search (25%), though both trailed email advertising by a wide margin. Median ROI for Select Channels/Formats According to US Marketers, June 2016 Email 122% Social media 28% Direct mail 27% Paid search 25% Online display*18% Note: *return on ad spending Source: Direct Marketing Association (DMA) and Demand Metric, "2016 Response Rate Report," July 28, 2016 214049 Studies that looked at smaller segments of the marketer universe also show generally positive attitudes toward social media advertising in comparison to search. ■■ An August 2015 survey of UK content marketers by Content Marketing Institute (CMI) and Lionbridge showed that 56% of those polled found search engine marketing effective for promoting their content, only slightly higher than the 50% who considered social ads effective. ■■ In a February 2016 survey by Street Fight of US “national-to-local” advertisers—referring to large national brands that focus on local marketing—22% of respondents said social media advertising was their most effective marketing channel, tied with national TV and ahead of search engine optimization (chosen by 15%) and paid search, cited by just 10%. “We are seeing customer acquisition ROI in social, which used to lag way behind search, showing ROI similar to search for lots of advertisers,” said Wpromote’s Mothner. In some cases, social ROI is better than search, he added, such as when new brands use social to introduce themselves to potential users.
  10. 10. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 10 AT FACEBOOK, ATTRIBUTION IS A PRIORITY One thing that will help social to build business with search advertisers is improved attribution— the practice of assigning credit to any advertising- or marketing-driven interaction or other brand-imposed touchpoint. Facebook is very heavily focused on attritbution.The better the company gets at helping marketers know whether an ad resulted in an action or a purchase, the less marketers will need to rely on last-click attribution— which overwhelmingly favors search engines. In the past, “search was getting a ton of credit,” said Sarah Baehr, executive vice president and managing partner for digital investment at Horizon Media. “What we have found through various attribution studies is that it was totally getting over-credited.” Attribution is a top concern for marketers. Mixpo found in an April 2016 study that 69% of US digital ad professionals polled were either extremely or very concerned about it. When the DMA and Winterberry Group surveyed US marketing professionals in April 2016, 81.4% said they were extremely or somewhat likely to prioritize marketing measurement/attribution in the coming year. % of respondents Likelihood of Prioritizing Marketing Measurement/Attribution According to US Marketing Professionals, April 2016 Extremely likely 42.1% Somewhat likely 39.3% Neither likely nor unlikely 10.3% Not very likely 6.2% Not at all likely 0.7% Unsure 1.4% Note: in the coming year Source: Direct Marketing Association (DMA) and Winterberry Group, "Quarterly Business Review Q1 2016," June 13, 2016 211831 “It’s very difficult to tease out what one piece of the funnel is doing or what one tactic is doing, vs. the myriad other tactics that are also going on,” said Ed Gold, advertising director at State Farm Insurance. For example, a consumer might have been exposed to State Farm TV ads, radio ads and display ads before doing a search. “From an attribution standpoint, it’s very difficult to tease out what is the true driver” of that search action, he said. The increasing importance of mobile makes attribution even more challenging. A March 2016 survey of client-side advertisers and agencies worldwide by ClickZ Intelligence and Search Optics showed that about three in 10 respondents in both groups said attribution was a barrier for putting mobile at the center of integrated marketing. % of respondents Most Significant Challenges of Putting Mobile at the Center of Integrated Marketing According to Client-Side Advertisers vs. Agencies Worldwide, March 2016 Client-side advertisers Agencies Lack of resources/lack of budget 53% 50% Disparate data sources 33% 26% Meaningful marketing attribution 30% 29% Channels treated separately 30% 21% Lack of marketing knowledge 26% 41% Poor marketing technology 25% 31% Agency ownership of activities 13% 16% Other 1% 4% None of these 9% 6% Source: ClickZ Intelligence and Search Optics, "The State of Mobile Advertising," April 12, 2016 208526 Cross-device measurement is a key feature of Facebook’s attribution work. Because of the way Facebook is designed, it can track a user’s ad exposures and interactions on mobile and desktop. Attribution models that rely on cookies have a hard time following users between desktop and mobile. Facebook’s other work in attribution includes: Chain-length modeling.The company has researched ways to line up all the advertising touchpoints leading up to an action. Instead of focusing on a chain length of one (which simply looks at the last touchpoint before an action), Facebook has focused on accurately building longer chain lengths. “No matter what model you use, if you can get the chain length accurate, you’re way better off,” said David Jakubowski, head of ad tech at Facebook.
  11. 11. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 11 Self-service tools. Facebook has introduced a set of self-service tools based around attribution models including last-touch, three-back, even credit and time decay, according to Jakubowski. Advertisers can choose which tool they want to use and compare them against each other, as well as compare chains derived from cookie-based measurement to those derived from people-based chains. Conversion lift measurement.Tools introduced in 2015 help marketers compare the conversions that happen when someone sees a Facebook ad vs. someone who does not see a Facebook ad, as well as the relative conversion among several different Facebook ads. Facebook considers lift measurement a key part of the attribution puzzle. Offline conversion measurement. In June 2016, Facebook introduced tools including the Offline Conversion API that enable retailers to measure store visits and in-store sales stemming from a Facebook ad campaign. Executives interviewed by eMarketer were generally positive about Facebook’s work. “Facebook is evolving its capabilities a lot and they’re moving very, very fast,” saidTeckchandani. “They are aware of the attribution issue and are trying to not just make sense of it, but to actively solve for it.” And as Facebook gets closer to figuring out attribution, that will help marketers better understand where to place their ads. “As ad strategies across those two channels increasingly converge, it’s becoming more and more important to get measurement and attribution together, so we can give deserved credit to those channels and optimize budgets accordingly,” said Lay. But there are still roadblocks for Facebook to overcome, chief among them the complexity of attribution.The sheer number of channels, data sources and systems required to feed attribution models can make implementation of any attribution model frustrating. “It’s hard for brands and for agencies to understand how [social] plays together with other marketing channels like search or display,” saidTerrence Lai, group director of analytics at Deep Focus. [Editor’s Note: Lai has since joined Coach as director of global customer intelligence and data science.] “So for social specifically, yes, I think attribution has improved, but it hasn’t gotten to the point yet where we can look at it across the full marketing mix.” That’s partially because Facebook’s tools don’t play well with other well-known analytics services. “Some clients live and die by Google Analytics, and some of the conversions that are happening from social channels are not being tracked accurately, or they’re not being attributed accurately to Facebook,” saidTeckchandani. And Facebook faces competition from several corners, including major measurement players such as Nielsen and comScore Inc.; probabilistic playersTapad and Drawbridge, which can approximate identities using publicly available data; and Google itself. In summary, attribution remains a difficult problem, and Facebook is working hard to try to solve it. Advertisers feel positively about this work, but there is still a long way to go before truly reliable attribution models are common. Learning when and how much to credit social media will give advertisers a better understanding of how well their campaigns are working vs. search, and will play a role in future budget decisions. For more on attribution, see eMarketer’s July 2016 report, “Cracking Cross-Device Attribution in 2016: Data Quality, Blended Models and Merging Online-Offline Data.”
  12. 12. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 12 PAID SEARCH ISN’T FEELING THE PINCH (YET) Despite the developments highlighted above, search budgets have yet to shift to social. Search ad spending is still rising (as is Google’s revenue), and most executives interviewed by eMarketer said that while their social spending is growing more quickly, it’s not at the expense of search. “We are not shifting away any of our budgeting from paid search,” said Beth Monda, vice president of ecommerce atTeleflora. “We are expanding our budget to test new ideas or expand our reach in paid social, but not at the expense of paid search. It still performs well for us.” “I would say budgets are shifting [toward social], but I wouldn’t say that they’re necessarily shifting from search,” said Humber. “I would say that budgets are shifting from other channels—in some instances, display.” However, it takes a while for budget shifts to become apparent. Consider how long the industry has been speculating about social’s impact onTV spending. Reading the tea leaves from three perspectives sheds light on what might happen in the future: ■■ Forecasts for ad spending on search, social, Google and Facebook from eMarketer and others do not yet show any shifts in budget, but they do show that social and Facebook will grow faster than search and Google. ■■ Quarterly analyses from ad industry companies Kenshoo, Merkle and IgnitionOne show year-over-year declines in the growth of search ad spending among clients. However, these three firms attributed it to marketers shifting spending from desktop to mobile, where costs per click (CPCs) tend to be lower. Social ad products such as Dynamic Ads are gaining traction, but they are not yet pulling money from search spending. ■■ Spending trends for retail, travel and automotive companies may provide the best insight into whether ad budgets may shift. Industry data and interviews indicate dollars are moving from search to social on a case-by-case basis.These trends will bear further watching. AD SPENDINGTRENDS As a mature business, search advertising is forecast to grow at a slower pace than social in the next few years. ZenithOptimedia, in a June 2016 report, said it expects social ad spending worldwide to grow 24% per year on average between 2015 and 2018, compared with an annual average growth rate of 13% for paid search. Search ad spending is still substantially larger than social spending. According to ZenithOptimedia, search ad spending will reach $102.2 billion worldwide in 2018, vs. $38.4 billion for social. While the spending gap between search and social has narrowed over the years—mainly thanks to Facebook’s rapid growth—it is still substantial. ZenithOptimedia expects social media advertising in the US to increase 27% in 2016 to $10.4 billion, while paid search will grow 12% to about $20.8 billion. At least one company, investment bank Nomura Securities, believes social ad spending will get much closer to search expenditures within a few years. In a report issued in March 2016, Nomura estimated that the gap between search and social ad spending in the US will be roughly $3 billion by 2020, down from nearly $18 billion in 2014. Google Search Revenues Google’s search business was looking somewhat shaky until Q2 2016, when parent company Alphabet surprised most by reporting better-than-expected results. Advertising revenues increased 19% year over year to $19.1 billion and paid clicks on Google websites (including AdWords on as well as revenues from YouTube, Gmail, Finance, Maps and Google Play) grew 37%. Alphabet attributed the results to its focus on mobile and on video. Meanwhile, CPCs in Q2 2016 continued to trend lower, due mainly to advertisers’ greater use of mobile search.
  13. 13. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 13 among campaigns analyzed by Google Google Ad Benchmarks Worldwide: Paid Click and CPC YoY Growth, by Site Type, Q2 2015-Q2 2016 2015 2016 Paid clicks —Google websites* —Google network members' websites** Total CPC —Google network members' websites** —Google websites* Total Q2 30% -9% 18% -3% -16% -11% Q3 35% -5% 23% -4% -16% -11% Q4 40% 2% 31% -8% -16% -13% Q1 38% 2% 29% -8% -12% -9% Q2 37% 0% 29% -8% -9% -7% Note: represents activity on the Google platform, broader industry metrics may vary; *includes AdWords, Google Preferred,YouTube ads (e.g., TrueView) and other owned and operated properties such as Google Finance, Gmail, Google Maps and Google Play; **includes non-Google properties participating in AdSense for content and search, AdExchange, AdMob, all DoubleClick-related revenues and other network products Source: Alphabet, "Second Quarter 2016 Results," July 28, 2016 214012 With that strong result, eMarketer expects Google’s net ad revenues worldwide will hit $63.11 billion in 2016, up 19.0% from last year. billions and % change Google Net Ad Revenues Worldwide, 2015-2018 Google net ad revenues —% change Google net mobile internet ad revenues —% change 2015 $53.05 15.0% $24.31 49.4% 2016 $63.11 19.0% $37.57 54.5% 2017 $72.69 15.2% $49.72 32.3% 2018 $82.58 13.6% $61.26 23.2% Note: net ad revenues after company pays traffic acquisition costs (TAC) and content aquisition costs (CAC) to partner sites; excludes SMS, MMS and P2P messaging-based advertising; includes ad spending on tablets Source: company reports; eMarketer, Sep 2016 215582 Google’s US search revenue growth is expected to slow this year, but not substantially. eMarketer anticipates Google’s search ad revenues to reach $24.77 billion in 2016, up 21.0% year on year.That’s down from 25.8% growth and $20.47 billion in 2015. Meanwhile, few of the largest US search advertisers have decreased their search spending in recent years. Between 2014 and 2015, only one company among the top 10 tracked by AdGooroo—InterActiveCorp—reduced paid search spending. Most increased search ad spending by double digits. millions and % change Top 10 US Paid Search Advertisers, Ranked by Measured Search Ad Spending, 2014 & 2015 % change 1. Amazon 12.2% 2. InterActiveCorp -32.3% 3. Expedia 30.9% 4. 34.7% 5. AT&T 7.8% 6. Wal-Mart 3.4% 7. Blucora 90.4% 8. Target 27.3% 9. Comcast 2.1% 10. Sears 15.6% Total (billions) 2014 $323.2 $342.6 $127.4 $93.7 $108.7 $106.2 $57.1 $77.7 $92.5 $76.9 $16.49 2015 $362.7 $232.1 $166.7 $126.2 $117.2 $109.9 $108.7 $98.9 $94.4 $88.9 $18.27 10.8% Source: AdGooroo as cited by Ad Age Datacenter, July 1, 2016 213641 FacebookAd Revenues Facebook still trails Google in ad revenues, but the gap is narrowing. It had a strong Q2 2016 as well, reporting $6.2 billion in ad revenues, up 63% from the same quarter last year. Mobile represented 84% of the total. eMarketer expects Facebook’s worldwide ad revenues will reach $25.94 billion this year, up 51.9% from $17.08 billion in 2015. US ad revenues will grow 48.6% to $11.93 billion. In 2015, Facebook had about one-third of Google’s ad revenue worldwide. But by 2018, the gap will close considerably: Facebook will take in about half as much ad revenue as Google, according to eMarketer. QUARTERLYANALYSES Companies that track trends in their clients’ use of paid search and social advertising provide an additional level of insight about budgeting.Two such companies, Merkle and Kenshoo, reported slowing growth in paid search spending, while IgnitionOne recorded actual declines in search spending in recent quarters. At the same time, Merkle and Kenshoo reported strong increases in social ad spending among clients. But they didn’t go as far as to say that social’s growth was causing search spending growth to slow. Instead, they cited marketers’ shift to mobile. Mobile search advertising tends to be less expensive than desktop, and marketers have been steadily increasing their usage of it.
  14. 14. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 14 Merkle reported in its Q2 2016 client spending study that US paid search spending growth was at a four-quarter low, although still up 15% year over year. Spending on Google search ads climbed 22% year over year, down from 25% growth in Q1 2016. Meanwhile, Merkle clients in North America increased spending on Facebook by 121% year over year in Q2 2016.The company attributed the growth to increased brand ad investment as well as newer products such as Dynamic Ads. At Kenshoo, the trend was similar, albeit with lower growth rates for search and social. Spending worldwide on paid search increased 10% year over year in Q2 2016, driven by increases in mobile search spending and use of shopping ads (aka Product Listing Ads). Social spending grew 47% in the quarter. At IgnitionOne, clients’ US paid search spending fell 1% in Q2 2016, shrinking for the second quarter in a row. Spending fell 5% in Q1 2016, the first drop in six years, according to the company. The data from these companies doesn’t yet offer any proof of budgetary shifts, but this is an area that will be worth monitoring as these and other companies issue additional quarterly analyses in 2016 and beyond. THREE CATEGORIESTOWATCH:RETAIL, TRAVELANDAUTO Although the previous two types of data don’t show social gaining from search, a closer look at ad spending within three industries—retail, travel and automotive— provides more clarity. Industry data and anecdotal interviews indicate that some money is moving from search to social on a case-by-case basis. The retail and travel industries are heavily weighted toward search advertising over display, according to eMarketer. It is no coincidence that they are the sectors Facebook has focused its attention on with Dynamic Ads. The auto industry is more evenly divided between search and display, but given its focus on generating leads, promoting dealership foot traffic and (ultimately) selling vehicles, search is an important component. billions US Digital Ad Spending, by Industry and by Format, 2016 Display* —Video Search Other** Total Display* —Video Search Other** Total $3.92 $1.37 $3.93 $0.86 $8.71 $2.00 $0.72 $1.70 $0.35 $4.05 $2.44 $0.67 $2.35 $0.42 $5.21 $6.46 $1.95 $7.22 $1.42 $15.09 $4.06 $1.05 $1.56 $0.35 $5.97 $3.70 $1.08 $3.23 $0.62 $7.55 $2.31 $0.76 $0.84 $0.14 $3.29 $1.95 $0.61 $3.12 $0.62 $5.69 $3.68 $0.95 $3.96 $0.73 $8.37 $1.57 $0.46 $1.22 $0.17 $2.96 $0.92 $0.21 $0.84 $0.16 $1.93 $32.99 $9.84 $29.99 $5.84 $68.82 Note: includes advertising that appears on desktop and laptop computers as well as mobile phones, tablets and other internet-connected devices on all formats mentioned; numbers may not add up to total due to rounding; *includes banners, rich media, sponsorships, video and ads such as Facebook's News Feed Ads and Twitter's Promoted Tweets; **includes classifieds and directories, email, lead generation and mobile messaging Source: eMarketer, April 2016 207075 Automotive Entertainment Financial services Healthcare & pharma Retail8 Media7 Telecom9 Travel10 Other11 Total12 1 Computing products & consumer electronics 2 CPG & consumer products3 4 5 6 1 2 3 4 5 6 87 9 10 11 12 Retail eMarketer forecasts US retail advertisers will put 47.8% of their $15.09 billion in digital ad spending toward search this year, while 42.8% will go toward display. Among ecommerce clients of advertising automation firm Nanigans, Facebook’s Dynamic Ads “continue to see roaring adoption,” according to the company’s Q2 2016 Facebook ad spending report. Spending was up 14% in the quarter compared with Q1 2016. When it comes to customer acquisition marketing, social media marketing is more likely to be used than search and display ads, according to Campaigner’s June 2016 survey of digital retail marketers in North America.
  15. 15. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 15 % of respondents Leading Areas in Which Digital Retail Marketers in North America Plan to Focus Their Customer Acquisition Marketing, June 2016 Email marketing 61% Social media 44% Search and display ads 35% Direct mail 13% Event sponsorship7% Note: respondents chose their top 2 Source: Campaigner, "Internet Retailer First Impressions Survey," June 28, 2016 212899 Another trend that may benefit social is that some retailers are starting to assign one internal person or group to oversee digital ad spending. Instead of having separate groups for search and social, for example, they would be under the same umbrella. In the past, “you had the ecommerce group on one side of the building and then the brand awareness marketing side and the traditional media group on the other side,” said Campbell of Resolution Media. “Now this world of biddable or programmatic is coming together, so it’s a single person that’s managing search and social and display and saying, ‘Based on my goals, I want to fluidly move this budget from here to there.’” If Facebook can solve the attribution puzzle,Teleflora, a heavy search advertiser, would feel more comfortable shifting budget, according to Monda. “We will put money behind the efforts that can help us gain customers and drive orders at a cost that’s effective for us,” she said. “If we can understand exactly who that consumer is in a consistent way—maybe they started looking 18 days ago and they’ve jumped between devices and they’re eventually going to close somewhere—we could see a lot of growth for social.” Travel Travel industry spending is also ripe territory for Facebook, at least potentially. eMarketer forecasts that 54.9% of the $5.69 billion spent on US digital travel advertising this year will go toward search, while 34.3% will go toward display. One factor working in social’s favor is its pricing. Kenshoo found that between Q1 2015 and Q1 2016, CPCs for travel ads in social were about half of those for search advertising. among ads tracked by Kenshoo Paid Search Travel Ad Benchmarks Worldwide: CTR and CPC, Q1 2015-Q1 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 CTR 3.7% 3.4% 3.7% 4.5% 4.5% CPC $0.57 $0.65 $0.58 $0.54 $0.56 Note: represents activity on Kenshoo's platform, broader industry metrics may vary Source: Kenshoo, "Digital Travel Transformation: ImprovingYour Marketing in Today's Changing Travel Landscape," June 15, 2016 213694 The CPC for travel advertisers in search was 56 cents in Q1 2016, while the CPC for travel ads in social was 27 cents. among ads tracked by Kenshoo Social Travel Ad Benchmarks Worldwide: CPM and CPC, Q1 2015-Q1 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 CPM $2.84 $2.37 $2.94 $2.50 $2.47 CPC $0.28 $0.28 $0.35 $0.30 $0.27 Note: represents activity on Kenshoo's platform, broader industry metrics may vary Source: Kenshoo, "Digital Travel Transformation: ImprovingYour Marketing in Today's Changing Travel Landscape," June 15, 2016 213695 Facebook’s newly introduced Dynamic Ads for travel are a key innovation to watch. Deutsche Bank, in a July 2016 research note, asserted that “nearly all major [online travel agencies] and hotel chains are up and running on travel-customized” Dynamic Ads on Facebook, which it considered a strong sign of success, given that the ads had only become widely available to travel advertisers in Q1 2016. Expedia, the top paid search advertiser in Q1 2016 according to AdGooroo, was a launch partner for Facebook’s Dynamic Ads for travel. When Expedia president and CEO Dara Khosrowshahi was asked about those ads during Expedia’s Q2 2016 earnings conference call in July 2016, he said: “As far as Facebook, the Dynamic Ads go, we’re experimenting and really starting to scale up with Facebook across our brands on a global basis. ... All of the brands are experimenting with Facebook and finding veins—traffic and conversion veins—that are awfully interesting. So our spend is up significantly.”
  16. 16. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 16 Auto US automotive advertisers are split evenly between search and display advertising, with about 45% of industry spending going to each category this year, according to eMarketer. Auto advertisers will spend $3.93 billion on paid search and $3.92 billion on display in 2016, with display climbing nearly 25% and paid search rising 18%. There is anecdotal evidence from eMarketer interviews and elsewhere that indicates auto companies are looking closely at results from search and social campaigns and making case-by-case adjustments. According to a July 2016 article in Automotive News, auto dealer groups are among those that have started to shift ad budgets to Facebook after Google earlier this year changed the way ads were displayed on desktop search results pages. (Among other things, Google removed most text ads from the right sides of pages and added an ad to the top of organic results. It also reduced the total number of ads that can appear on a search results page to a maximum of seven.) Todd Cahan, managing partner of a Chicago-area dealership group, told Automotive News that it is taking more ad dollars on Google to get the same visibility for his two stores. “Google probably has far greater exposure to a greater number of people,” he said in the article. “But Facebook is probably going to start closing the value of that gap with the quality of people they’re communicating with.”’s social ad budget has grown upward of 50% in the past couple of years, according to Crowley. And while the company still relies on search to drive traffic, “we are looking at social to help amplify that and shed new light on new opportunities for us to build out those campaigns,” she said, adding that retargeting is a key part of that. At least one auto marketer has found better success with social than with search for some objectives, and has shifted budgets. When Chevrolet was looking to increase market share from competitors, which it calls its “conquest” strategy, it learned that social worked better than search, according to Doug Peeples, digital media manager for the General Motors brand. “We were heavily invested in conquest within search,” he said. “We saw that social was a better play, so we shifted from search into social. We try to actively look at our channels to make sure that we keep our finger on the pulse of what’s performing and optimize accordingly. And that’s definitely one of those instances where we’ve done this.” It’s too early to call these examples a trend, but it is definitely not too early to at least pay attention to what companies like Chevrolet are doing—and if their budget shifts become more frequent.
  17. 17. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 17 PRIMING THE MARKET FOR PAID SEARCH ON FACEBOOK What is notable in all of this is that Facebook has been able to start targeting search advertisers without even having a paid search ad product.These efforts will pave the way for marketers to feel more comfortable using Facebook when it eventually starts selling paid search. During Facebook’s Q2 2016 earnings conference call, chairman and CEO Mark Zuckerberg explicitly called out statistics about the company’s search usage, saying users were conducting 2 billion searches per day. And in response to a question about search advertising on Facebook, Zuckerberg said the company is in the second of three phases on a path toward monetization. First comes building a consumer use case, he said, followed by the development of tools for consumers to engage organically with businesses. “Once there’s a large volume of people interacting with businesses, [we] give businesses tools to reach more people and pay, and that’s ultimately the business opportunity,” said Zuckerberg. “I’d say we’re around the second phase of that in search now.” Facebook experimented with a search ad product a few years ago but killed it shortly afterward. Now, as the company looks more seriously toward a future launch of paid search, a few details of its game plan are starting to emerge. WHAT PAID SEARCH MIGHT LOOK LIKE It may not look all that different from other types of search advertising. “The business model for search is pretty well understood,” saidTom Stocky, vice president of search at Facebook. “I don’t think there’s any reason for us to think of some new way to monetize search.” It may focus on content search behavior, rather than product search behavior. “One of the big growing use cases that we’re investing a lot in is [searching for] content in the ecosystem,” Zuckerberg said during the Q2 2016 earnings call. “There’s a reasonable amount of behavior in there, which is looking for things that, over time, could be monetizable or [show] commercial intent.” Video search could be one of the first paid opportunities. “Facebook has been very explicit that they see the future of Facebook being a list of videos. So as that continues happening, that’s when Facebook search gets more interesting,” said Victor Pineiro, vice president of social media integration at agency Big Spaceship. “Now, most of the video you’re served is in the context of who you follow, and I’m hoping that there’s going to be more in terms of searching for videos.” Ad industry executives say they would like to see better ways to promote videos to users who are looking for them. Social media already serves as a strong discovery engine for video. In a March 2016 survey of US digital video viewers conducted by the Interactive Advertising Bureau and GfK, 41% of respondents said they discovered original digital videos on social media sites, double the percentage who found such videos in search (20%). % of respondents Ways in Which US Digital Video Viewers Discover Original Digital Videos*, March 2016 Friends/relatives/word-of-mouth 54% Social media sites (Facebook, Twitter, etc.) 41% Ads 29% Clicking on links that I stumble upon 28% Recommendations on websites/apps offering original digital video 22% Search results 20% The news/I read about it 19% Note: n=407; ages 18+; among those who watch original digital video at least monthly; *professionally produced video for ad-supported online distribution and viewing only (not TV); excludes original digital video that is not ad-supported (e.g., Netflix original series) Source: Interactive Advertising Bureau (IAB), "2016 Original Digital Video Study" conducted in partnership with GfK, May 11, 2016 210253 There won’t be search ads until Facebook can quantitatively show intent.The main drawback industry executives see when it comes to comparing Facebook to paid search is that Facebook users don’t show intent the way they do in search. But there’s no reason to think Facebook won’t use its enormous database and analytical prowess to figure this out.
  18. 18. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 18 Facebook’s head of search basically said as much: “I think as soon as you can target intent within Facebook search, that’s something that’s going to be of interest,” said Stocky. Proving that Facebook users show intent will give advertisers more reason to consider paid search advertising there. “I could imagine a scenario where somebody has posted to their own Facebook feed some beautiful flowers that they have received and they’re super excited about it,” saidTeleflora’s Monda. “And then somebody that they know is searching [on Facebook] and they realize that oh, Susie received great flowers fromTeleflora, I should look them up. So I could see a really nice marriage for us in social and search when that starts happening.” EMARKETER INTERVIEWS As Lines Between Branding and Direct Response Blur, Social and Search Advertising Cross Paths Greta Crowley Senior Director, Consumer Marketing Interview conducted on July 12, 2016 For GoDaddy, Social Media Marketing Expands Search Reach Renee’ Dornan Director, Digital Advertising GoDaddy Stacie Hull Senior Director, Marketing GoDaddy Interview conducted on July 14, 2016 When It Comes to Advertising, Search and Social Complement Each Other Ed Gold Advertising Director State Farm Insurance KellyThul Digital Director State Farm Insurance Interview conducted on July 8, 2016 Social’s Next Evolution? Pinterest Begins to Monetize Users’ Searches Jon Kaplan Head of Global Sales Pinterest Interview conducted on June 28, 2016 Social AdvertisingWorks for Impulse Buys, Teleflora Says Beth Monda Vice President, Ecommerce Teleflora Interview conducted on July 19, 2016
  19. 19. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 19 How Chevrolet Allocates Its Budget Across Search and Social Advertising Doug Peeples Digital Media Manager Chevrolet Interview conducted on June 30, 2016 Sarah Baehr Executive Vice President and Managing Partner, Digital Investment Horizon Media Interview conducted on June 21, 2016 Jeff Campbell Co-Founder and Managing Director Resolution Media Interview conducted on July 20, 2016 Steve Carbone Managing Director and Chief Digital and Analytics Officer MediaCom Interview conducted on June 27, 2016 Vanessa Cooper Search Director Merkle Interview conducted on July 1, 2016 Chris Haleua Senior Product Marketing Manager, Adobe Media Optimizer Adobe Interview conducted on June 30, 2016 Chris Humber Head of Practice, Search Catalyst Interview conducted on July 1, 2016 David Jakubowski Head of AdTech Facebook Interview conducted on July 8, 2016 Terrence Lai Group Director, Analytics Deep Focus Interview conducted on June 23, 2016 Monica Lay Senior Product Marketing Manager, Adobe Media Optimizer Adobe Interview conducted on June 30, 2016 Noah Mallin Head of Social, North America MEC Interview conducted on June 22, 2016 Tiffany Miller Product Strategy Leader, Social Advertising Kenshoo Interview conducted on June 30, 2016 Mike Mothner Founder and CEO Wpromote Interview conducted on July 17, 2016 Rory O’Flaherty Senior Director, Media Services Merkle Interview conducted on July 1, 2016 Sean O’Neal President Adaptly Interview conducted on June 22, 2016 Victor Pineiro Vice President, Social Media Integration Big Spaceship Interview conducted on June 23, 2016 Tom Stocky Vice President, Search Facebook Interview conducted on July 11, 2016 SanjayTeckchandani Director, Paid Social Elite SEM Interview conducted on June 27, 2016
  20. 20. SEARCH AND SOCIAL PLATFORMS: HOW FACEBOOK AND OTHERS CAN STEAL DOLLARS FROM SEARCH ©2016 EMARKETER INC. ALL RIGHTS RESERVED 20 RELATED EMARKETER REPORTS Cracking Cross-Device Attribution in 2016: Data Quality, Blended Models and Merging Online-Offline Data The US Auto Industry 2016: Digital Ad Spending Forecast andTrends The USTravel Industry 2016: Digital Ad Spending Forecast andTrends The US Retail Industry 2016: Digital Ad Spending Forecast andTrends RELATED LINKS AdGooroo Alphabet Campaigner Catalyst ClickZ Intelligence Content Marketing Institute (CMI) Demand Metric Deutsche Bank Direct Marketing Association (DMA) Econsultancy Experian Marketing Services Facebook Forrester Consulting GfK HubSpot IgnitionOne Interactive Advertising Bureau Kenshoo Lionbridge Merkle Mixpo Nanigans Nomura Securities Salesforce Search Optics Street Fight Winterberry Group ZenithOptimedia EDITORIAL AND PRODUCTION CONTRIBUTORS Cliff Annicelli Managing Editor, Reports Michael Balletti Copy Editor Joanne DiCamillo Senior Production Artist Dana Hill Director of Production Stephanie Meyer Senior Production Artist Kris Oser Deputy Editorial Director Heather Price Senior Copy Editor John Rambow Executive Editor, Reports Allie Smith Director of Charts
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