In today’s business world, social media is being discussed on a daily basis. This phenomenon has taken over the marketing and advertising industries and has changed the way they handle their efforts to attract customers. There is a big misunderstanding that social media are only popular networking sites such as Facebook and Twitter, but as defined by the Merriam-Webster dictionary, social media are “forms of electronic communication (as Web sites for social networking and micro blogging) through which users create online communities to share information, ideas, personal messages, and other content (as videos).
The rise of these online communities has given companies an opportunity to engage in conversations with their customers. This in turn has allowed them to better understand what people are looking for, and tailor both their products as well as their marketing efforts accordingly. One of the main advantages that social media has brought to businesses is the opportunity to advertise their products through this media. As a result, advertising through social media has proven to be more effective than that through traditional media outlets such as radio, television, magazines, newspapers etc.
As stated by Stephen and Galak in their article The complimentary Roles of Traditional and Social Media in driving Marketing Performance, “Social media is a relatively new form of publicity, and yet the impact of more traditional forms of publicity on marketing outcomes has received disproportionately less attention…” (pg. #? ). Although Social media is a relatively new way of advertising, companies are finding it to be more lucrative and successful in driving sales than any other media.
In this paper I will examine (i) the financial impact that advertising through social media has on companies,(ii) the targeted demographics for this type of advertising and (iii) consumers’ response to this phenomenon, whether it is positive or negative. Financial Impact of Advertising through Social Media As previously mentioned, businesses are moving away from traditional sources of advertising to more innovative ways that have proven to be more effective.
Using the apparel industry as an example, companies are experiencing increased traffic to their websites thanks to their social media ads. They are taking advantage of these sites to further relationships with their customers: “Apparel brands and retailers that have invested time and resources into crafting a progressive social media strategy have been able to use the medium to further customer loyalty, raise brand awareness, spread advertising messages, create online communities, communicate directly with customers, and in many cases, drive sales” (“Apparel Industry” 1).
Apparel retailers are only one example of an industry that has taken advantage of the reach that social media has. Research conducted by Swedish economists Dahlen and Colliander, on the effectiveness of blogs versus online magazines proves that blogs “generated higher brand attitudes and purchase intentions” than magazines did (pg. #? ). Their experiment was based on posting the same exact text on seven different blogs as well as seven different online magazines and testing their effectiveness in a scale of consumer response and purchases.
The fact that blogs were proven more effective proves that even online traditional ads have lost their power. It is not a matter of posting an ad online, but rather building a sense of trust in costumers’ minds that will drive them to purchase form you. Customers today are faced with more options than ever before, that is why companies strive to maintain close relationships, to make it that much harder for customers to switch to another competitor.
Social Media however is not only used to introduce a new product or advertise an existing one, it has also helped companies to regain their reputation after a scandal. After Toyota had to face their decline in sales because of the safety recalls, the company used a combination of Facebook pages and videos on YouTube to promote a “cool” couple that despite other’s beliefs drove Sienna cars and felt better than anyone else. The combination of these social networking efforts resulted in approximately 2,000 Facebook fans and 15,000 views on YouTube.
Within a couple of weeks Toyota experienced an increase in sales, especially in their Sienna model (Taylor, 258). Toyota is a clear example of a company facing both a financial and reputation crisis that with the help of social media was able to regain some of their lost sales as well as their trust amongst its costumers. Clearly social media can have a direct impact on consumer purchasing patterns, and it has increased the amount of online shopping for several companies.
Authors Chung and Austria examine in their article Social Media Gratification and Attitude towards Social Media marketing Messages, the effect that this phenomenon has had on online shopping value: “According to the “2010 Social Media Report” from ForeSee results, 69% of online shoppers use social media. Fifty-six percent of shoppers indicate that they visit e-retail websites on a social networking site and that website visiting affects consumer purchase intention” (? ). Costumers find it convenient to visit a company’s Website after seeing an ad in any popular social networking site. It requires minimal effort form the customer and it signifies an important portion of sales to a company.
However, Social Media has not only had a positive financial impact on a company, but as it rapidly grows it has now also become a cost for many businesses. Chung and Austria argue how marketers have noticed the increased importance of social media on the marketing mix (product, place, promotion and price). Companies are now opening jobs that focus exclusively on social media. This is an increased labor cost as well as an extra effort for the marketing department, however its proven effectiveness in driving sales outweighs the cost of implementing this department. Targeted Demographics
The essence of Social Media is how it’s easily accessible to everyone, thanks to the Internet. It is a 24-hour business that runs in every part of the world. Although many professionals in the field have argued its acceptance and effectiveness, many could not help but notice that there is an age and demographic aspect of it. Not every potential costumer has access to the Internet as well as not all customers feel comfortable purchasing things online. Social Media is targeted to those generations who were born with technologies like this, and are comfortable using them.
There are conflicting opinions in this matter, authors Stephen and Galak argue that social media has grown to be widely accepted amongst many age groups: “Furthermore, while social media was once the domain of younger, tech- savvy consumers who were faster to adopt new technologies, it is now generally considered to have entered the mainstream and covers a broad demographic spectrum with 75% of Internet-using adults in the United States using such social media” (? ).
They argue that it is a mistake to believe that only tech avy customers would be influenced by social media, since now more than ever anyone with access to a computer has found it inevitable to come across advertising in popular networking sites. However in their article Friends, Fans and Followers: Do Ads work on Social Networks, authors Taylor et al. argue that “age and gender shape receptivity” (? ). They state: “As more advertisers integrate SNA [social networking ads] into their promotional mix, the need for these questions to be answered becomes apparent.
Particularly with members of the 18- to 34-year-old demographic, whose digital-video recorder usage and aversion to print media make them an increasingly elusive target, SNA can be a highly effective channel of engagement” (? ). The effectiveness of an ad is not only based on where it is posted but also on who is looking at it. Companies have to pay attention to where they post their advertising based on aspects such as age, gender, location, etc. An ad for dentures that appears on an 18 year old kid’s Facebook page will most definitely not be as effective as an ad for a popular apparel brand.
Although there might be certain demographics that affect the effectiveness of advertising through social media, it is inevitable to admit that social media users are a lucrative market that companies need to reach: In 2009, Facebook and Twitter both posted triple-digit growth in the number of users (comScore, 2010). Users appear to be spending more time on social networking sites as well, growing from an average of 3 hours per week in December 2008 to more than 5. 5 hours in December 2010 (Nielsenwire, 2010).
To tap this growing market, advertisers spent an estimated $1. billion on SNA [social networking ads] in 2009, with totals for 2010 expected to grow by more than 7 percent (Williamson, 2009). During a single month in 2009, SNA accounted for nearly 69 billion advertising impressions, with 129. 6 million unique users (comScore, 2009). (Taylor, 260) Facebook and Twitter are only a few of the most popular networking sites, and these numbers reflect only the results from these two sites. If all social media outlets would be taken into account the market is even bigger, with more customers to reach. Consumer Response
In addition to all the good things that have been attributed to advertising through social media, studies have shown that there is a percentage of customers who have stopped using social media in part because of the amount of advertising that fills these sites. It is impossible to open a popular social media site such as YouTube or Facebook and not feel bombarded by advertising. Most of these ads are trying to sell consumer products, but there is also an increase in the selling of services or the advertisement of not for profit organizations that are looking for support.
Marketers have argued that as much as advertising through social media is effective, there is a fine line between effectiveness and annoyance: “according to one industry-sponsored study, only 22 percent of consumers had a positive attitude toward social media advertising—and 8 percent of consumers studied had abandoned an SNS [social networking site] because of what they perceived as excessive advertising (AdReaction, 2010)” (Taylor, 258). As costumers we all feel constantly approached by companies through their advertisements.
It is not only online, but on a daily basis you will encounter companies’ marketing efforts all around. The initial intention behind social networking sites was giving people a chance to build online communities and share content with each other. However this has dramatically changed since now it is impossible not to feel attacked by all the ads. Another growing concern in the minds of consumers is privacy issues. The ads that appear on your personal Facebook page are carefully chosen by a system based on your age, gender, location and past “click-ons”.
These ads are perfectly tailored to those targeted consumers to be more effective. However, having your information available to everyone and anyone is becoming an important issue for social network users. Brad Stone, columnist for the New York Times quotes: “‘When it works, it’s amazingly impactful, but when it doesn’t work, it’s not only creepy but off-putting,’ said Tim Hanlon, a principal at the consulting firm Riverview Lane Associates of Chicago. ‘What a marketer might think is endearing, by knowing a little bit about you, actually crosses the line pretty easily’” (? . It’s one thing to come across ads that are targeted to everyone and might or might not have an impact on you, but when you see something that looks like it is talking directly to you, it might have a negative impact. The increase in sales through the use of social media has also been attributed to the fact that customers feel like they are engaging in a conversation with other customers when they receive recommendations through social networking sites.
Colliander and Dahlen quote: “In a 2009 article, The Economist reported that contemporary consumers use social media to help make purchases because they rely on “recommendations from friends” (The Economist, 2009). The word “friends” seems to indicate some sort of PSI. Are bloggers really friends, however? ” Para-social interaction (PSI) refers to the illusion of a face-to-face relationship that is created online. Social media allows these kind of interactions. When reading a blog you might come across a recommendation of where to purchase certain products.
These recommendations seem to come from a friend, since in blogs you will most often find the blogger’s name and other credentials. The question is however, are these people really bloggers? Or are they employees of that same company that are using social media to reach potential customers. Are they hiding behind another customer’s face? It is undeniable that people have begun to generate a negative response to advertising through social media for this exact reason. It has lost the essence of being an online community, to being another source through which companies look to improve their sales digits.
Looking at all the aspects that deal with advertising through social media, I can’t help but ask myself a question: How much advertising is too much? When will that thin line between annoyance and effectiveness be crossed, and consumers will find themselves walking away from these online communities? Consumers have clearly manifested their discontent towards companies taking over their social network sites. It is an increased concern that information is available for everyone and anyone, and therefore consumers are more apprehensive to sharing their credentials as well as their thoughts online.
Should companies start thinking of the effect that their excessive ads will have, and the negative response they might get. I personally believe that ads are unavoidable, however there is a need for stronger rights that protect customer privacy. Companies should not only make an effort to get to know their costumers by engaging in online conversations, but they should also respect the privacy of consumers’ information and refrain from over-advertising in popular social media sites.