Study: Most retailers will boost ad spend on Facebook next year

Brief:

Most retailers plan to increase their media spending on Facebook next year. About three quarters (76%) of retailers will boost advertising on Facebook, ahead of Twitter (44%), Instagram (38%), LinkedIn (38%), TikTok (10%), Pinterest (8%) and Snapchat (5%), per survey results by Smarly.io, a social media advertising automation platform.
The portion of marketers who said they see the best return on ad spend (ROAS) from Instagram, the photo-sharing app owned by Facebook, doubled to 42% this year from 21% a year earlier. Despite the better results from Instagram, 36% of retailers are spending more on Facebook than they did last year, Smartly.io found.
Two-thirds of retailers have a marketing budget of $20 million or more, while 74% currently allocate at least 31% of their marketing budget to social media advertising. Just 12% of retailers put more than half of their media budgets into social ads, per Smartly.io's survey. The company partnered with WBR Insights and eTail in October to ask 300 retailers worldwide about their 2021 marketing plans.

Insight:

Retailers facing continued disruptions from the pandemic plan to ramp up their spending on social media next year to reach consumers who are expected to spend a significant amount of time online, Smartly.io's survey of marketers indicates. While medicine researchers this month offered encouraging results from tests of several possible COVID-19 vaccines, distributing the treatments will take time and it's not clear how quickly and how many people will return to their former shopping habits of visiting stores. E-commerce is likely to remain a priority for retailers in the near term, especially as the virus continues to spread and reach record levels.

Currently, retailers are spending heavily on social media, with Facebook being the most popular platform despite an ad boycott against it over the summer. Almost all (93%) of retail brands buy ads on the leading social network, followed by Instagram (90%), Twitter (83%), LinkedIn (63%), TikTok (34%), Pinterest (21%) and Snapchat (17%). Because Instagram is image-centric, almost half of apparel retailers plan to boost their spending on the photo-sharing app next year, the survey found.

Instagram may overtake Facebook as the most popular ad platform for retailers next year because its ROAS is the best among social media companies, Smartly.io's data suggests. With 42% of retail respondents saying Instagram delivered the best ROAS, the photo-sharing app performed better than all other social sites, indicating that retail marketers may prioritize the popular app when considering budget allocations for next year.

While retailers plan to ramp up spending on social media come 2021, they will make adjustments to their broader media budgets and cut back on some platforms that resonate less with target consumers or show meager engagement. Almost a quarter (24%) of retailers said they'll reduce spending on Twitter and Instagram, making the apps more likely to see cuts for those retail brands than LinkedIn (18%) and TikTok (12%), Facebook (8%), Pinterest (8%) and Snapchat (8%).