Are marketers spending too much on social media?

A recent analysis by EssenceMediacom using GroupM and Ebiquity data argues media buyers may be spending too much money on paid social channels — up to three times more than the ideal amount for growth.

Some industry leaders quickly pushed back, advising marketers to take a breath before revising their budgets.

Still, the hubbub raised significant questions about prioritizing paid social at all costs: Now that people are spending more of their time on open internet channels like connected TV (CTV) and audio than on social media, should marketers shift their spend too?

“Larger brands or those with niche targeting might risk hitting diminishing returns without even realizing it,” says Anna McIvor, biddable business director at Havas Media Network, on hitting the paid social ceiling.

She adds that a combination of marketing mix modeling, attribution methods, and test-and-learn activities help identify “when a channel’s impact has peaked and when it’s time to explore new options.”

The report’s warning comes as several social media platforms meet scrutiny from government, the marketplace and consumers. TikTok faces a legal battle threatening its existence in the U.S.; X has all but lost the confidence of major advertisers; and Meta’s Facebook and Instagram are repeatedly under fire for their alleged effects on users’ mental health.

All of this adds up to uncertainty about the future value of social media investments. Some marketers are looking beyond the confines of social channels. In a recent campaign, Pepsi went omnichannel to spread the word about a major rebrand. The drinks giant used display, video and digital out-of-home to reach 4.6 million additional consumers beyond social media ads. Kraft Heinz saw similarly impressive results with its own recent omnichannel campaign across Southeast Asia.

“The most effective channels are dependent on factors specific to each campaign,” says Zoe Osinnowo, head of influencer and social at FCB London. “It can be easy to pay for reach, but to generate successful results and incrementality, it is key to diversify across relevant platforms and to tailor the content to fit each channel’s unique benefits and user behaviors.”

Dig deeper

The EssenceMediacom analysis relies on a media planning tool hosted on Thinkbox, a TV industry trade body. It’s not surprising, then, that it argues for more investment in linear TV, even as it sees a decline in viewership with people flocking to streaming and CTV.

But tweaking the tool to create the most social-friendly scenario possible still reportedly showed that spend on social should be cut by at least half across all brands in the study.

To be sure, judging from TikTok’s explosive popularity and Reddit’s recent rise to prominence, social media is far from losing its appeal.

“While we may have reached peak time spent for the total population, this still varies by audience. The opportunity for planners comes from understanding where incremental audiences can still be found on platforms such as TikTok and Reddit,” says Libby Darley, head of planning in the U.K. at iProspect.

But cracks are becoming visible.

Research from GWI shows that last year, U.S. consumers already spent 61% of their online time on the open internet, and 39% on walled gardens like Facebook and Google.

Nearly half of Gen Zers surveyed in a recent poll say they wished that platforms like TikTok, Snapchat and X were never invented. Whether that’s in spite or because of the hours spent on those platforms is up for debate. What’s telling, however, is that only 17% say they wished the same on another platform where people sometimes spend countless hours: Netflix.

As for marketers — they may be aware of streaming and CTV’s importance, but their ad spend allocation often doesn’t yet reflect that.

A recent Mediaocean report found that more than half of respondents thought CTV to be “the most critical consumer technology and media trend.” Yet, while U.S. adults spend 17.9% of their media time on CTV, the channel will only take up 7.4% of media spend this year, according to Emarketer projections.

“Focus on the channels that capture the most attention,” says Havas’ McIvor. “Connected TV and digital audio are particularly noteworthy based on recent studies.”

Looking ahead

Time spent on social media’s big three — Facebook, Instagram and TikTok — is going down irrespective of generation, according to Comscore data. Even Gen Z darling Snapchat saw a 26% reduction in time spent year on year compared to June 2023. Reddit was the only major social platform that saw increased engagement..

“Marketers are more enthusiastic about social media than consumers are,” wrote Emarketer analyst Ethan Cramer-Flood in a recent report. “Ad dollars are heavily overinvested compared with user time spent. Furthermore, social is taking an ever-higher share of ad spending, whereas consumer time with the medium is set to decline.”

Still, Kashif Dalvi, head of strategy at Assembly Europe, thinks marketers shouldn’t just focus on time spent or ad-spend levels. Instead, he argues it’s about “whether that investment is leading to profitable growth, both long and short term.”

The core challenge for brands investing in paid social, then, is measurement, Dalvi says. “Investing in social media appears to be the ‘safe’ choice for large brands, thanks to its instant reporting capabilities and the abundance of metrics available, which simplifies the justification of the investment. However, without a robust measurement framework in place, accurately measuring the true impact becomes a daunting task.

Recent innovations within social platforms and the focus on AI continue to pose challenges to measurement and therefore investment, Dalvi adds.

Beyond social media, Fabian Kietzmann, chief products and services officer at GroupM Germany, says he sees strong results from integrated video campaigns, such as those combining linear, addressable and connected TV as well as online video. He also sees out-of-home and digital out-of-home “growing strongly in terms of reach generation.”

“Our clients are demanding these cross-channel solutions more and more. Because planning and activation in silos is not state of the art,” says Kietzmann.

“We’d recommend focusing on the business challenge first,” adds Assembly’s Dalvi. “The dynamics of how individuals engage in the journey are evolving, and ultimately, you need to be where your audience is most active.”

The Current is owned and operated by The Trade Desk, Inc.