How brands are generating revenue on social

mobile payment payments cashless contactlessConsumers are becoming ever more mobile and increasingly social. As brand advertisers strive to influence their purchase decisions on social media, how can they be sure they’re optimising their efforts?

We recently conducted a study* that sought to size UK consumers’ social media spend resulting from (paid) advertising and (earned) personal recommendations from their contacts. Overall, the study established that in the last 30 days, 14% of social media users had purchased something they initially came across on a social media platform – items that they would otherwise not have bought.

This figure is impressive enough in its own right but the overall incidence is highly likely to grow as younger millennials (16-24 year-olds), who have grown up with social media, were twice as likely (30%) to have made a purchase as a result of an ad or recommendation on the medium.

Interestingly, slightly more people had bought via contact recommendation (9%) than had bought because they had seen something they liked in a social media advertisement (7%) – this is great news for brands like Cadbury, Disney, PlayStation, Nike and Heinz that were rated top in the survey for positive social media influence.

Facebook has comfortably the highest overall usage incidence among the UK population (62% use Facebook on a daily basis). Consequently, Facebook is three times more likely than any other social platform to generate social media purchases.

Clearly, Facebook should be the main focus for brands looking to invest time and money but other popular sites – YouTube, Twitter and Google+ – also afford significant revenue opportunities. Brands should be really clear that their consumers are actively using other, more niche sites – like Instagram and Pinterest – before committing ad revenue or resource to them.

Social media users purchase a wide range of items, with books, music and clothes most popular overall. However, gender stereotypes hold true with video games topping the list of recommended items for men, and clothes comfortably the number one category for women, via social media ads. Other popular items are groceries, cinema tickets, DVDs, electronic devices, tickets for events (sports, gigs, theatre etc) and even lunchbox items.

Social media users who buy things this way spend very significant sums of money – on average around £78 per month on items that originate from recommendations and £80 per month on items seen in advertisements. Overall, men spend more than women on social media purchases and 25-34 year old men really stand out, spending over £120 per month on both methods of purchase.

When these monthly figures are grossed up, total annual spend is £2.4 billion pounds from social media recommendations and £1.9 billion from social media advertisements.

We believe this is the first attempt made to quantify social media spend in this way. Clearly these are very significant numbers that look likely to rocket in this high growth area. Brands across the board need to sit up and take notice.

Lee Langford is research director and social media expert at Harris Interactive

*Harris Interactive interviewed 5,500 UK social media users aged 11+ in May 2014.