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Paid social and A/B testing

1. Paid social and A/B testing

Welcome back. In this video, we’ll learn more about paid social marketing as well as tools that can be used to optimize the channel, like A/B testing.

2. Paid social marketing: value

Paid social marketing is a type of paid marketing that involves running ads or sponsored marketing messages on popular social media platforms. It is particularly valuable today because it allows for easy audience targeting. That means you can reach people who are more likely to buy from your business. Here's an example of a paid social ad as seen Instagram.

3. Paid social marketing: costs

Most paid social advertising is billed in one of two ways: CPC (Cost per click): the company pays a specific rate every time the ad is clicked. Or CPM (Cost per thousand impressions): the company pays a specific rate based on how many people see the ad. Costs vary by industry and different target demographics like location. While the average CPC is around one dollar, competitive CPCs can be as high as $5. Many social media platforms use an auction bidding system to decide which ad to run, taking a number of factors into account. Billing methodology varies based on your goals; do you want users to buy immediately? Or just follow your account? We’ll examine both outcomes in upcoming exercises.

4. A/B testing: creatives

Social media advertising also allows for splitting tests, known as A/B testing. A/B testing is an important part of modern digital marketing; it allows for real-time experimentation by changing one element of an ad to generate data for future decisions. Let’s say I want to run an ad for my custom dog collar business. I have two images, but I can’t decide which one to use. I can run an A/B test where a social media platform will automatically show half of users one image, and half of the users the other.

5. A/B testing: creatives

Once the ad reaches enough users, I can begin to compare the two image options. Which one had a higher click-through rate? Which one had more users send it to their friends? Based on the goal of my marketing campaign, I can then select the best image, called a creative, for future ads. A/B tests are a core part of modern marketing, and marketing analysts are often the source of recommendations for A/B tests and responsible for analyzing results using statistical techniques. Some companies run thousands of tests each year; smaller companies may run fewer as they have a smaller digital presence to experiment with.

6. A/B testing: all ad components

A/B tests can experiment with aspects of marketing beyond just creatives. In order to understand which change drove a performance improvement, only one component of an ad can be changed per test. Instead of the creative, an A/B test could change the call-to-action. Should it be “buy now!” or “see our dog collars?”. A/B testing can also be used to evaluate aesthetic choices like fonts or logo designs. It can even be used with pricing: do customers stop buying if the price rises from $10 to $11? Will they buy two of your product if you sell one for $10 but two for $18? Or do they only want to buy one at a time? Beyond creative optimization, you can A/B test target audiences and bidding strategies as well.

7. Let's practice!

Now that we’ve reviewed how paid social marketing works, what its goals are, and why its so important, let’s practice!