Yelp launched a new analytics package this week, letting business owners visualize exactly how much money they can make by buying advertisements. It’s just the latest example of how social networks are having to pour more resources into analytics. The consequence is shifting resources from building new things to selling advertisers on the value of what’s already built.
Image-collection platform Pinterest debuted its own analytics system earlier this month, showing potential advertisers just how much attention and web traffic they are getting from the service. Facebook, meanwhile, is constantly rolling out new ways for advertisers to measure the value of the social network, most recently helping businesses identify how many of the shoppers in their physical stores are active on Facebook.
Advertising analytics have grown more important as social networks proliferate and as social marketing gains prestige inside large companies. The sums of money targeted at social advertising are growing fast, there are more choices than ever over how to spend that money, and advertisers’ goals are increasingly sophisticated, moving beyond mere counts of likes and followers and into measures of how customers recall, interact with, and buy from brands as a result of the ads.The higher stakes and new demands mean that companies like Yelp, Pinterest and even Facebook need to spend more and more resources producing statistics to convince potential advertisers that their platform is worth engaging with and then spending increasing sums on.
“This is about the acknowledgment that social has migrated from novelty to necessity,” says Apu Gupta, co-founder of Curalate, a marketing and analytics firm focused on visual platforms like Pinterest. “Initially, a lot of brands were like, ‘Social, I’m on it, I’m trying to get followers,’ or whatever, and it was vanity metric-centric.
“As social has started to graduate from being run by your 20-year-old intern to something that’s on the plate of a senior VP of digital marketing, vanity metrics just don’t cut it.”
Also fueling the analytics wars is the incredible proliferation of new ad units. Every social network wants to show it has a special relationship with users and that it can deliver unique, incredible performance for advertisers. So they tend to invent their own advertising unit — or, more likely, advertising units, plural.
For large advertisers who have barely adjusted to online banners and Google keyword ads, all these social ad units are baffling and suspect. And for shopkeepers used to simply sticking a sign out on the sidewalk and counting how many people walk in the door, social networks can be equally confusing. Hence the spread of analytics offerings.
“Many of these companies, be it Twitter, Facebook, Yelp, Pinterest or Shazam, are offering a new kind of ad unit and advertisers want to know what they are getting,” says Matt Murphy, a general partner at venture capital firm Kleiner, Perkins, Caulfield & Byers. “They understand online or even static TV ads as best as they can, but how do they measure the efficacy of a promoted tweet, a TV advertisement that is Shazam-able, a Facebook story, etc.? Advertisers will try these new ad units, but to hit large scale, advertisers want data on both ROI and efficacy (cost per view/download/purchase, brand recall, targeting data on users and how those segments performed differently, etc.).”
To help guide advertisers, social startups are offering not just web-based analytics tools but also a human touch. LinkedIn, for example, has a vice president of analytics. Or it did, anyway, until the VP was recently hired away by shopping companion app Shopkick.
Yelp’s new analytics offering this week was unveiled by the company’s own VP of analytics, who explained in a blog post that the tool is based on research by the Boston Consulting Group, which found local businesses gained an extra $8,000 in annual revenue, on average, by signing up on Yelp and an extra $23,000 annually by advertising on the local reviews site. By plugging in information about their own businesses, merchants can figure out how those averages might translate to them.
Such estimates will be a double-edged sword for Yelp; as the company noted in its blog post, they help establish “a revenue baseline for prospective advertisers, from which they can later evaluate the impact of their investment in Yelp Ads.” That’s the thing about numbers: Once you start showing them to people, they’re only going to want to see more.