2014 STATE OF

SPONSOREDSOCIAL

#SOSS14

“The future of advertising isn’t digital vs. traditional.

It’s social advertising.”

- Agency Marketer

“Word of mouth is great, but you

only speak to a few people at a

time. If you’re interacting, live

tweeting, or showing people on

social media what you like and

love about a product, you are

showing thousands of people at

once, and it will make themwant it.”

- Brand Marketer

“[Sponsored Social] is a great opportunity that we're just

starting to fully understand and position ourselves to

leverage most effectively.”

- Brand Marketer

The marketing universe has spoken and the message is clear.

IZEA’s 2014 State of Sponsored Social Study Yields the national Marketer and Creator

sentiment about the Sponsored Social industryvia independent metrics and voice.

backgroundMETHODOLOGY

2010 - 2013IZEA fields and analyzes its own North America State of Sponsored Social survey

IZEA elects to underwrite State of Sponsored Social study using independent outside research consultant partner and national survey panel

Halverson Group selected to design and conduct 2014 study

2014

IZEA is continuing its investment in industry intellectual capital through the 2014 State of Sponsored Social Study

Why the Change?

SPONSORED SOCIAL’S EXPONENTIAL GROWTH

!

!DEMAND FOR INDEPENDENT

METRICS TO GUIDE INDUSTRY’S FUTURE

IZEA AS INDUSTRY LEADER

!

!DEMONSTRATE

LEADERSHIP ROLE BYFUNDING THIS EFFORT

INDEPENDENT RESEARCH EXPERTS

!

!BEST PRACTICES IN STUDY

DESIGN, EXECUTION, SAMPLING, AND ANALYSIS

The 2014 Study was Conducted by Halverson in 2 Parts.1. Quantitative National Study

2. Qualitative Online Bulletin Board

marketerRESPONSES

How familiar are you with Sponsored

Social Marketing?

Mean Rating:6.4 out of 10

(1 - 10 Scale)

High Familiarity Low FamiliarityModerate Familiarity

Familiarity with Sponsored Social (1-10 Scale) (Base: Marketers)

42%

8-10

43%15%

4 - 7 1- 3

On average, America’s brand and agency marketers are familiar with Sponsored Social - but do not yet consider themselves “experts.”

Over 50% of the Marketer sample had experience with Sponsored Social marketing in the past year.

3%

29%

15%

53%

Past Year1 - 3 YearsNone>3 Years

Timing of experience with Sponsored Social Marketing (Base = Marketers)

And over 2/3 have had experience in the past three years

But 3 in 10 have not yet had experience with the marketing approach A reflection of the relative youth of this member of the paid media mix.

Sponsored Social Only lags online display advertising by a few percentage points !In contrast, a minority have recent experience with Experiential Marketing or Celebrity Endorsements

Online Display

Sponsored Social

Experiential Marketing

Celebrity Endorsements

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

19%

40%

52%

58%

% Who Used in Past Year (Base: Marketers)

Sponsored Social is nearly as widely used as longer-lived online, display advertising among client and agency marketers.

52%of companies have a stand-alone Sponsored Social budget for their brand48%

52%

Have Sponsored Social BudgetDo Not Have Sponsored Social Budget

25%have an organizational annual budget in excess of $500,000**Excludes the 25% who didn’t know or refused

5% have an annual budget in excess of $5,000,000*

Cash compensation has been the primary form of payment for Sponsored Social and continues to be used most-often.

0%

5%

9%

14%

18%

23%

27%

32%

36%

Cash

24%

36%

Free Product Discount/Coupon Free Service Gift Card Trip/Travel Other None

18%

1%1%

4%5%

9%

13%

23%

1%

7%

11%

18%

22%

33% Used EverMost Often

Type of SS Compensation Used Ever & Most Often (Base: Marketers)

Online Display

Sponsored Social

Experiential Marketing

Newspaper Advertising

Magazine Advertising

Radio Advertising

TV Advertising

Celebrity Endorsements

TV Official Sponsorship

TV Embedded Content

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20%

24%

32%

41%

48%

62%

62%

62%

68%

82%

% Marketers who had direct professional experience with marketing approach

(Base: Marketers)

For these marketers, Sponsored Social offers an affordable means to “level the playing field” amongst brands of all sizes.

Sponsored Social has a great trajectory, significantly out-pacing all tested approaches in Positive Momentum vs. one year ago.

Sponsored Social

Experiential Mktg

Online Display Ads

Celeb Endorsements

TV Embedded

TV Official Spons

TV Ads

Radio Ads

Magazine Ads

Newspaper Ads

-60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70

-56

-36

-32

-20

-22

-13

-12

-14

-3

-7

6

4

11

12

20

15

21

40

34

65

BetterWorse

Net Momentum

+58

+31

+26

+8

+2

-1

-7

-21

-32

-50

Over HALF feel better about SS

than YA

Negative Momentum

consistent with market realities

Approach Momentum: Change in Marketer Regard vs. Year Ago (Base: Marketers with Experience with Approach)

Base: IZEA’s 2014 State of Sponsored Social Research Now B-to-B Panel Sample of 304 Client and Agency Marketers. Each marketing approach was rated by respondents who had professional experience with that approach.

In absolute ratings, Sponsored Social sits atop the list of tested approaches in effectiveness ratings among experienced marketing practitioners.

Sponsored Social

Experiential Marketing

Celebrity Endorsements

Television Advertising

Online Display Advertising

Televison Program Embed

Televison Program Official

Radio Advertising

Magazine Advertising

Newspaper Advertising

0 1 2 3 4 5 6 7 8

7.27

4.78

5.34

5.41

6.00

6.27

6.32

6.54

6.87

7.25

Base: IZEA’s 2014 State of Sponsored Social Research Now B-to-B Panel Sample of 304 Client and Agency Marketers. Each marketing approach was rated by respondents who had professional experience with that approach.

Effectiveness of Approach (1 - 10 Scale) (Base: Marketers with Experience with Approach)

Marketers Avg. Dollar Amount Expected to Pay Per Post (Base: Marketers with Past 3 Year Social Sponsorship Experience)

Sponsored Video

Sponsored Blog Post

Sponsored Tweet

Follow a Brand

Sponsored Photo

Sponsored Email

Sponsored Facebook Update

Like a Brand

Sponsored Check-In

Sponsored Twitter Follower

Sponsored Pin

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $600

$120

$140

$167

$187

$210

$259

$273

$277

$331

$384

$554

Three in four Marketers indicate that they are likely to use or recommend Sponsored Social in the future.

Likelihood of using or recommending Sponsored Social in the future (Base = Marketers)

74%

Very Likely Somewhat Likely Not Very Likely Not At All Likely

10%

16%

45%

29%

Content Quality

Traffic

Media Metrics

7.0 7.1 7.2 7.3 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.9 8.0 8.1 8.2

8.20

7.80

8.10

Importance in Choosing Social Creator Partner (Base: Marketer, 1-10 Scale)

(i.e. Raw Traffic to Website, Unique Monthly Visits, Number of Followers, etc.)

(i.e. Cost Per Impression, Cost Per Click, Click Through Rate, Cost Per Acquisition, etc.)

(i.e. Sentiment of Content, Personality of Creator, Relevance to Industry, etc.)

Marketer survey results showed that factors of quality content, audience size and measurement have equally high importance in Creator choice.

2/3 of these cases, Sponsored Social was part of the endorsement effort

About 1 in 4 of our Marketer sample has ever hired or sponsored a celebrity endorser

in

creatorRESPONSES

Food

Lifestyle

Family / Parenting

Beauty

DIY/Craft

Health

Fashion

Social Media

Entertainment

Travel

Technology

Advertising

Music

Pop Culture

Video Games

Business0% 10% 20% 30% 40% 50% 60% 70% 80%

80%

17%

20%

20%

26%

30%

32%

40%

43%

44%

47%

47%

51%

52%

65%

74%

Creators : Focal Subjects

4%

20%

59%

10.0%

7.0%

22-25 26-29 30-4445-54 55-64

Creators : Age

"Like" a Brand

Sponsored Facebook Update

Follow a Brand

Sponsored Tweet

Sponsored Blog Post

Sponsored Email

Sponsored Video

Sponsored Photo

Sponsored Checkin

Sponsored Pin

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65%

6%

9%

22%

25%

30%

35%

39%

54%

56%

63%

Methods used in Sponsored Social Work (Base: Creators)

Facebook and Twitter activities are the most commonly-used Sponsored Social approaches

Social media Creators are using the full range of platforms within the social media universe.

Methods used in Sponsored Social Work (Base: Creators)

TwitterFacebook

Blog

InstagramGoogle+

WordpressYouTubeLinkedIn

TumblrFoursquare

FlickrOther 15%

11%

21%

21%

51%

52%

63%

81%

83%

91%

94%

95%

Big 3 Players

Newer & Showing Strength

Support Roles

72%Share additional posts about their sponsors for free, outside of their contractual agreement.

88%Verbally tell a friend about brands that sponsor them.

77%Say they are more likely to purchase from brands that sponsor them.

Creators’ Sponsored Social engagement has a ripple effect of value to Marketers, as nearly all Creators continue to evangelize for brands beyond the end of their paid projects.

Creators often carry on the conversation online and offlineand adopt the sponsored brands themselves.

4% 11%

22%

63%

Sponsored SocialDisplay AdsOtherNone of the Above

CREATORS: Where has the majority of your 2014 revenuecome from?

More than once a week

Once a week

Two or three times per month

Once a month

Every couple of months

A few times per year

About once per year

Less than once per year

0% 5% 10% 15% 20% 25% 30%

3%

1%

6%

8%

16%

25%

16%

24%

Sponsored Social programs have become a monthly part of the professionalportfolio for 4 in 5 Creators - and weekly for nearly 1 in 4.

Frequency of Sponsored Social Projects (Base: Creators)

81%

71% of Creators said that they spend more than 40 hours per month creating social media content.

1-39 Hours Per Month

29%

40-79 Hours Per Month

25%

80-124 Hours Per Month

18%

125+ Hours Per Month

28%

Hours per month spent creating social media content (Base: Creators)

Sponsored Social is a source of income for 9 out of 10 Creators.

#sponsored #sponsored #sponsored #sponsored #sponsored

#sponsored #sponsored #sponsored #sponsored

Sponsored Social is outpacing Display Ads by a 2 to 1 margin in its Net Increase vs. Year Ago as a Creator income source.

Sponsored Social

Display Ads

-20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55 60

-17

-13

38

56

MoreLess

Net Momentum : Change in Source of Income vs. Year Ago (Base: Creators)

+43%

+21%

0%

13%

25%

38%

50%

63%

75%

88%

100%

Cash

90%

Free Product Discount/Coupon Free Service Gift Card Trip/Travel Other None

1%7%

32%

74%

62%

49%

89%

Form of Sponsored Social Compensation Received (Base: Creators)

Cash is the main form of Sponsored Social compensation provided and received. Cash is often used in combination with a free product or service and is not mutually exclusive.

How important is factor in considering Sponsored Social program?

(Base = Creators - 1-10 Scale)

Audience finds interesting/relevant

Fit with content/proud to represent

Compensation fits needs

Ease of process

Ability to screen/ID opportunities

Timing fits needs

7 8 9 10

7.8

8.3

8.4

8.8

9.1

9.1

Creators clearly place primary importance on protecting their personal brand and audience !Compensation is an understandable, next-level consideration !Process-related factors are important - but lag these other primary considerations

AWARENESS OF FTC GUIDELINES

Compensation for content can be in the form of cash, free product or service, experiences, discounts,

coupons or other special incentives. !

If it is compensated, it is sponsored and must be disclosed.

!

Not Aware Aware / Not Familiar Aware / Somewhat Familiar Aware / Understand

10%

25%

29%29%

63%

24%

30%

8%

CreatorMarketer

FTC Guideline Awareness/Familiarity (Base: Creators vs. Marketers)Two of three Creators

claim understanding, the majority of remainder are somewhat familiar !!!!!!!Marketers with past three year Sponsored Social experience tend to lack strong familiarity – or having only basic awareness, if any.

2%4%

94%

YesNoOther

CREATORS: Do you typically include disclosure in Sponsored Social Content?

0%

10%

20%

30%

40%

50%

60%

70%

In-Post Disclosure Policy Both Other

20%

49%49%

63%

Creator Disclosure by Type

The vast majority of Creators do adhere to FTC guidelines in some way.

summary& IMPLICATIONS

SENSE OF PARTNERSHIP

MUTUAL UNDERSTANDING,

RESPECT FOR BRAND VALUES

RELEVANT, ENGAGING,

& AUTHENTIC PROGRAM

+ =

Leveraging Sponsored Social’s potential requires executing against the right value equation.

Transparency and clear disclosure should be a part of every Sponsored Social program, regardless of the form of compensation.

‣ Marketer experience with Sponsored Social is growing.

‣ 52% of marketers have a stand-alone Sponsored Social budget.

‣ Once Sponsored Social is tried and used, marketers appear to embrace it as a highly effective member of the marketing/media mix that exceeds or equals established go-to-media in marketer regard.

‣ Social sponsorship campaigns are becoming more sophisticated and being executed through a variety of mediums and platforms.

key takeaways

‣ Compensation for social media posts is becoming expected.

‣ Creators have integrated Sponsored Social programs into their monthly activities.

‣ 81% of creators produce a Sponsored Social post at least once a month, and 40% do one or more project per week.

‣ Sponsored Social represents a major sourceof their focus and income, beating out display advertising as a percentage of income.

‣ Creators are dedicated to developing transparent, ethical sponsored content.

key takeaways

#sponsored

2014 STATE OF

SPONSOREDSOCIALShare your thoughts #SOSS14