New Research Shows Customer Acquisition Cost Crisis Caused by Dark Social
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Ninety-seven percent of brands are unable to accurately measure revenues from social media advertising because of Dark Social traffic.
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Customer Acquisition Costs are driven up by the disconnect between Dark Social and ecommerce experiences
SimplicityDX, the edge commerce company, announced a new research report, “The State of Social Media Advertising” which highlights the impact of Dark Social on Customer Acquisition Costs. Dark Social is where traffic that originates from social media is incorrectly attributed as ‘direct’ traffic by web analytics tools because campaign tracking codes are no longer present.
“Sending paid traffic from social media to standard ecommerce pages is incredibly inefficient, and yet this is what almost all brands do, leading to very high bounce rates, which double Customer Acquisition Costs. Dark Social traffic needs different treatment which recognises the diverse nature of intents that this traffic has.”
The report shows that almost all merchants struggling to measure the effects of social media advertising due to Dark Social patterns.
The SimplicityDX in-person research conducted in conjunction with eTail East, surveyed 110 brands, retailers and digital agencies and found that only 3% could measure social ad revenues accurately, and on average they estimated that they could measure only 44% of total social revenues.
“Tracking shoppers from the ad through to the actual purchase has become near impossible. Apple’s Do Not Track, data privacy regulations, the use of in-app browsers, and social sharing all break link tracking. To make it even harder most consumers prefer to discover on social, but buy on the brand site. All of these create a huge proportion of traffic which is dark and untrackable,” explained Charles Nicholls, industry veteran and analyst at SimplicityDX Academy.
Prior research by SimplicityDX highlighted that Customer Acquisition Costs rose by 222% over the prior eight years, and that brands are losing $29 for every order, leading to a string of consumer brand failures.
Of the 110 merchants surveyed, SimplicityDX researchers found that almost all brands (91%) are advertising on social media, primarily to acquire new customers (39% acquire new customers, 39% an even balance of customer acquisition & existing customers). Two thirds are spending a quarter of a million dollars or more annually despite not being able to measure its effects accurately.
- 91% of merchants advertise on social media
- 67% spend at least $60,000 per year on social advertising
- On average brands believe they can only measure 44% of social revenues
Read More: SalesTechStar Interview with Kevin McWey, Chief Revenue Officer at DataVisor
Ecommerce sites are unsuitable for Dark Social Traffic
The research found that 71% of brands are sending social traffic to standard Home, Category or Product Detail pages, with Product Detail Pages being the most popular. Over half of the respondents (52%) reported bounce rates in excess of 50%.
Prior first party research from SimplicityDX “The Cost of Bounce” found that the bounce rate on social traffic landing on product detail pages typically ranges between 70-90% and the conversion rate is in the region of 0.5%.
Charles Nicholls commented, “Sending paid traffic from social media to standard ecommerce pages is incredibly inefficient, and yet this is what almost all brands do, leading to very high bounce rates, which double Customer Acquisition Costs. Dark Social traffic needs different treatment which recognises the diverse nature of intents that this traffic has.”
Priorities for Brands – Social to Brand Site Journey
71% of brands reported that achieving consistency from paid social to the brand site and making it easy for visitors to find promoted content is the key factor they’d like to improve, demonstrating the disconnect between social and the brand site.
