Social Revenue May Be 245% More Than Reported. Here’s Why and What You Can Do to Fix it

New research shows that only 29 percent of brand site social revenue is currently being tracked by typical analytics and reporting tools. This leaves 71 percent of revenue coming from social channels being incorrectly attributed to direct website visitors.

The signs have been there for a while: Consumers are spending on average two-and-a-half hours each day on social media. According to Google, 40 percent of Gen Z consumers search for local restaurants first on Instagram or TikTok. Reuters Institute found that younger consumers are increasingly using TikTok for news content, especially from influencers. These findings mirror our own research, which found 93 percent of Gen Z use social media as part of their buying process. These are significant changes in the way that younger consumers get information and make purchases, with many shopping journeys now starting on social.

Each quarter, we survey online shoppers to track their attitudes on social commerce, publishing the findings in the State of Social Commerce Report. This research consistently shows that about half of all online shoppers think social is a good place to discover new products, but the majority (68 percent or more) prefer to shop on the brand site. Best practice, therefore, is to direct customers to buy on the brand site.

In our latest research, we dug into how and when online shoppers buy on brand sites after discovering products on social. What we wanted to get at is whether customers click through from social to the brand site, or do they leave the social media platform and head independently to the brand site? This is important because web analytics tools rely on customers clicking through to track both the journey and the revenue.

Most Customers Don’t Click Through From Social

What we learned was that in total 71 percent of shoppers buy directly on the brand site without clicking through from social (23 percent do this immediately, while 48 percent will go to the brand site and buy later).

This shows that brand site reported revenue from social is understated by approximately 2.45x. So, for every $1 million in sales that your web analytics tool reports as generated from social, it’s actually likely to be closer to $2.45 million.

For customers clicking through from social to the brand site, only a few do this over more than one session — this isn’t surprising because finding a specific ad or piece of content again on social is nearly impossible. We also know from our research that the experience on clicking through from social is often poor; 86 percent of online shoppers have had bad experiences doing this. If it was bad the first time, customers are much more likely to go straight to the brand site for any subsequent visit. This partially explains why customers prefer to head to the brand site.

The other key reason is trust. In all of our research, a consistent concern with social commerce is the possibility of being scammed by fake or copycat brands. Clicking through to the brand site and hitting a broken link or irrelevant page feels sketchy and isn't reassuring.

3 Essential Fixes for Your Underreporting Problem

It’s always been critical in marketing to measure what works and what doesn’t. Unfortunately, even with digital marketing, it’s still an imperfect world. Therefore, although we may not be able to measure everything, we need to make sure that our data is in the right ballpark in order to be able to understand what the real drivers of revenue are — and make the right investment decisions.

1. Recognize that social revenue is often underreported.

Recognizing that brand site social revenues are underreported is the first step — many marketers probably have a hunch about this already — followed by understanding why they're underreported. This also suggests that reducing spend on social advertising will impact sales from direct traffic as well. While this may be implicitly obvious, having an order of magnitude in mind is really helpful. The inverse is also true — increase social spend and sales will likely increase across all channels, as is often the case with advertising.

2. Survey your customers.

If you want to measure it more accurately, there's no substitute for surveying your customers to understand where they started their journey and how they purchased. This can supplement your web analytics data and at least give you a ballpark figure of how much your social revenue is being underreported.

3. Fix the experience.

All brands want to provide a great experience for customers, and it’s clear that clicking through from social platforms frequently isn’t, resulting in high bounce and low conversion rates and customers going directly to the brand site to buy. This introduces extra friction into the transaction process, forcing the customer to then search for the product that they were originally interested in on social. As we all know, friction like this is a conversion killer. Fixing these experiences has to be a priority as this will boost conversions, make revenue more accurately attributable to the correct channel, and deliver a much better experience for shoppers.

In summary, social is probably driving significantly more of your brand site revenue than your web analytics or attribution software is recording. In our study of 500 U.S. online shoppers, it was a massive 245 percent. Social is also currently where consumers spend the most time and where half of online shoppers think is a great place to discover new products. It’s also one of the most important places for brands to acquire new customers, but as we've seen here, it’s difficult to accurately track the impact of ad spend.

Charles Nicholls is the founding director and chief strategy officer of SimplicityDX, a company that makes any content shoppable, anywhere with Edge Storefronts. He founded SeeWhy, a real-time personalization and machine learning platform, which was sold to SAP.