The effect of Social Media – Should companies abandon Traditional Advertisement? Part 2

October 30, 2014

Written by  Elisabeth Matsson

Part 2- Social Media versus Traditional Advertisement

The benefits of social media

The massive rise of social media has been a phenomenal sensation and has affected our everyday lives (Powers et al., 2012). As mentioned before, social media has not only effected consumers’ way to act but it has also increased the companies’ possibility to gain valuable information about their customers (Brawise & Meehan, 2010). Social media encourage people to share their thoughts and feelings online, which is consider being both positive and negative for the (Tuten & Angermeier, 2013). This has resulted in that transparency and authenticity of companies has become even more vital due to the arena of social media and this must be a priory for every participating company (Scott, 2008). When a customer feels deceived by a dishonest company and spreads the word, there can be devastating consequences for the company which indicates the importance for companies to be honest (Scott, 2008; Vázquez-Casielles et al., 2013). The effect of social media cannot be denied but whether it is the number one marketing activity for companies of today still remains uncertain.

What about traditional advertisements?

As stated before, social media has made it possible for word of mouth to reach a larger audience and is now considered to be one of the most effective communication tools for companies (Vázquez-Casielles et al., 2013). It has also been proven that positive word of mouth has a positive impact on brand-purchase probability (Vázquez-Casielles et al., 2013). Since social media encourage word of mouth, and word of mouth has an impact on increasing sales, should companies then focus more on social media than traditional advertisement?   

Traditional advertisement can be defined as one-way communication where there is no interaction between the company and consumer (Varisha & Vaish, 2013). Communication through social media invites the consumers to discuss, request and share their opinions with both the company and other consumers as well. Social media has the advantage of being accessible for interactions and providing the company with consumer insights and encourage word of mouth (Brawise & Meehan, 2010). However, traditional advertisement has its advantages as well which cannot be ignored. Traditional marketing allows the company to keep control over the message they wish to communicate and it is also easier to measure the outcome of traditional advertising compared to social media (Armelini & Villanueva, 2011).

Traction or just interaction?

There are many ways of how companies can interact with their customers through social media, for instance by creating Facebook pages, blogs et cetera. Nevertheless, it is important to understand the real effect by using these interacting channels. Having a Twitter account, a Facebook page et cetera should not be considered as a billboard, it should rather be viewed as a café where people do not just receive messages from the company, instead they interact with each other and obtain information from others (Armelini & Villanueva, 2011). If a company instead chose to use an advertising banner on a webpage, it works just like a billboard and this is categorized as traditional advertisement since it is one-way communication.

It is important to distinguish what traditional advertisement is in relation to social media since they can both occur on the same arena but in two completely different ways.  Social media does not focus on a specific sales offer, it focus is on creating an engagement with the consumers and encourage them to buy their products when there is an arising need (Trends Magazine, 2012). Traditional advertisement is however famous for targeting a specific segment for a specific product or service offer (Kotler & Keller, 2011).

Social media versus traditional advertisement

To communicate through social media is relatively inexpensive since companies do not have to pay a huge amount for the marketing space (Swilley et al., 2013).  However, it is easy to be fooled to believe that the use of social media in total is a low-cost alternative towards traditional marketing activities. This is only true to some extent. To establish a presence in social media costs relatively little but to generate content can be very costly since it requires time, creativity and qualified talent (Armelini & Villanueva, 2011).

Regardless of the  evidence of social media functioning as a success-maker for companies, Armelini and Villanueva (2011) and Barwise and Meehan (2010) both states that social media should be viewed as a complement to traditional advertisement. It should not be used as a company’s only communication tool. Pepsi learned this the hard way when they put almost their entire marketing budget into social media. The campaign was successful in terms of followers, fans and votes, but in terms of sales, Pepsi fell down from a second place to a third in the US (Armelini & Villanueva, 2011). According to Powers et al. (2012) offline advertising and brand perception are very important components to the media mix which means that without it, social media would not be a success for companies. Further, Barwise & Meehan (2010) argues that it is because of social media that it has become even more vital than ever before for companies to get their basics right and focus on traditional marketing activities. If they do not, the social media will only create buzz, not sales.

Picture: http://www.bet.com/news/fashion-and-beauty/2012/12/10/beyonc-s-beautiful-face-lands-on-pepsi.html

Even though social media is being rewarded for encouraging word of mouth and increasing the possibility to reach a large audience, not all word of mouth happens online. In fact, according to Keller and Fay (2012), most of the word of mouth happens face to face. A company cannot rely on social media to drive conversations, other tools are needed as well. Both online word of mouth as well as offline word of mouth has been proven to increase sales. However it has also been proven that it is the traditional advertisement that actually triggers word of mouth (Keller & Fay, 2012). If companies disregard traditional media, it will simply result in a lack of word of mouth. Keller and Fay (2012) states that companies should focus on the social consumers instead of social media and that the most effective way to increase sales is to use traditional advertising which gets people to start talking about it. Unfortunately, there is no magical solution for how a company should balance social media and traditional advertisement, it has to be judged in every specific situation (Armelini & Villanueva, 2011). The formula that will be ideal for one company will not give the same outcome in another.

So, what does this mean?

Social media and traditional advertisement are two very different things, but still very related. They are both connected to each other and have a mutual effect on each other’s outcome. Traditional advertisement gets people to start talking and by using social media, their thoughts can reach a larger audience. With this said, it is vital for companies to understand the importance of keeping their doors open for both social media and traditional advertisement. Social media is simply depending on traditional advertisement and the effect of traditional advisement is simply depending on social media as well. There is no magical solution on how to balance this in terms of percentages, it all depends on what effect the advertisement should have, the specific brand as well as the consumers the company wants to target.

To sum up, I would strongly recommend managers to participate in the social arena to boost their brand awareness and engaging customers to spread the word. This will be seen as a complement to their traditional marketing activities that should not be ignored. The combination of these two will generate a better outcome and provide the consumers with both the possibility to express their opinions through social media as well the opportunity to receive controlled message from the company’s traditional advertisement. If this is managed in the correct way, it will increase sales and generate a more profitable outcome.

References

Armelini, G. &Villanueva, J. (2011). Adding social media to the marketing mix. IESE insight, no. 9, pp. 29-36

Barwise, P. & Meehan, S. (2010). The one thing you must get right when building a brand. Harvard Business Review, vol. 88, no. 12, pp. 80-84

Bolton, R.N., Parasurman, A., Hoefnagels, A., Migchels, N., Kabadayi, S., Gruber, T., Lourerio, Y.K. & Solnet, D. (2013). Understanding Generation Y and their use of social media: a review and research agenda. Journal of Service Management, vol. 24, no. 3, pp. 245-269              

Dahlén, M. & Lange, F. (2009). Optimal marknadskommunikation, vol. 2, Liber

Deighton, J. & Kornfeld, L. (2009). Interactivity’s Unanticipated Consequences for Marketers and Marketing. Journal of Interactive Marketing, vol. 23, no. 1, pp. 4-10

Keller, E. & Fay, B. (2012). Word-of-Mouth Advocacy: A New Key to Advertising Effectiveness. Journal of Advertising Research, vol. 52, no. 4, pp. 459-464

Kotler, P. & Keller, K. (2011). Marketing Management-Global edition, 14th edition, Harlow: Pearson Education

Persson, N. (2010). An exploratory investigation of the elements of B2B brand image and its relationship to price premium. Industrial Marketing Management. vol. 39, no. 8, pp. 1269–1277

Powers, T., Advincula, D., Austin, M., Graiko, S. & Snyder, J. (2012). Digital and Social Media in the Purchase Decision Process: A Special Report from the Advertising Research Foundation. Journal of Advertising Research, vol. 52, no. 4, pp. 479-489

Scott, D.M. (2008). The New Rules of Marketing and PR: How to Use Social Media, Blogs, News Releases, Online Video, and Viral Marketing to Reach Buyers Directly: John Wiley Sons

Singh, S. & Sonnenburg, S. (2012). Brand Performance in Social Media. Journal of Interactive Marketing, vol. 26, no. 4, pp. 189-197

Swani, K., Milne, G. & Brown, B. (2013). Spreading the word through likes on Facebook: Evaluating the message strategy of Fortune 500 companies. Journal of Research in Interactive Marketing, vol. 7, no. 4, pp. 269-294

Swilley, E., Hill, P. & Hampton, A. (2013). Blog, Pin and Online Review Effects on Advertising Attitudes and Purchase Intensions. Society for Marketing Advances Proceedings, vol. 25, pp. 174-175

Thomsen, D. (2013). Det måste vara nolltolerans. Dagens Media, Available online: http://www.dagensmedia.se/nyheter/dig/article3633541.ece [Accessed 4 February 2014]

Trends Magazine. (2012). Putting Social Media Advertising to the Test. Trends Magazine, no. 116, pp. 22-26

Tuten, T. & Angermeier, W. (2013). Before and Beyond Social Moment of Engagement: Perspectives on the Negative Utilities of Social Media Marketing. Gestion 2000, vol. 30, no. 3, pp. 69-76

Varisha, R. & Vaish, A. (2013). Content Fusion in Traditional and New Media: A conceptual Study. Journal of Internet Commerce, vol. 12, no. 2, pp. 225-245

Vázquez-Casielles, R., Suárez-Álvarez, L. & del Río-Lanza, A.B. (2013). The Word of Mouth Dynamic: How Positive (and Negative) WOM Drives Purchase Probability: An Analysis of Interpersonal and Non-Interpersonal Factors. Journal of Advertising Research, vol. 53, no. 1, pp. 43-60

The effect of Social Media – Should companies abandon Traditional Advertisement? Part 1

October 27, 2014

Written by Elisabeth Matsson

Part 1 – The effect of Social Media

Introduction

Having a strong brand that generates positive associations and that differentiate the brand from competitors is a crucial factor for successful marketing (Dahlén & Lange, 2009). According to Dahlén and Lange (2009), the quality of the product is not the evident factor when it comes to purchasing a product, the deciding factor depends on how the brand is perceived. This demonstrates the important role of the brand and that a good reputation can increase sales (Persson, 2010). But, how can a company of today increase a good reputation and what are the risks of doing so?

Until recently, companies used to launch an advertising campaign in traditional media when they wanted to reach the public audience. Today, according to Armelini and Villanueva (2011) you do not exist in the consumers‘ mind unless you communicate with them through social media. Social media has become a powerful arena for consumers to share their thoughts and opinions about a company’s brand and products. Companies all over the world have started to take part in this increasing trend hoping to become even more successful. However, is social media really effective when it comes to increasing sales and if so, should companies put all their efforts into the arena of social media? – The answer to this question will be discussed further in these two posts.

The rise of social media

Social media is not as new as people may think but it was not until ten years ago that it was widely adopted (Bolton et al., 2013). Social media can be defined in many different ways but it will here be defined as ”any online service through which users can create and share a variety of content” (Bolton et al, 2013, p. 248).  It includes blogs, discussion forums, social platforms, news-, photo-, and video-sharing sites that provide networks, interactions and relations, and it is up to every company to decide on what social media forum to use (Singh & Sonnenburg, 2012). Social media has made it very easy for word of mouth to travel and for example, just liking or sharing a post on Facebook increases the audience size tremendously (Swani et al., 2013). This indicates that social media can increase the awareness for companies as well as the brand.

There is no doubt that social media is powerful and that it influence consumers in their everyday life, and, as a matter of fact, many researchers have praised social media for benefiting companies and strengthening their brand qualities (Brawise & Meehan, 2010; Powers et al., 2012). The explosion has been massive and has captured the attention among all kinds of companies and consumers which has led to a change in consumption habits (Armelini & Villanueva, 2011). However, there are differences in opinions on what social media really brings to the table and whether a company should focus more on either social media or traditional advertisement. So the question arises, can social media really benefit a company by increasing sales?

There are many advantages of social media, it can for instance increase the brand awareness, reputation et cetera. Nevertheless, social media does not only generate knowledge about the company to the consumers, the companies can also get valuable insights about the consumers (Brawise & Meehan, 2010). Deighton and Kornfeld (2009) argues that social media has increased the power of the consumers instead of the marketers, which can also be very dangerous. Consumers like to share their joy when making a good purchase, but they are also eager to share their negative experience of a product or brand (Powers et al., 2012).

The danger in use of social media

Social media encourage people to spread their thoughts and experiences, but just as quickly as positive word of mouth can spread, negative has the same speed (Tuten & Angermeier, 2013).  Consumers enjoy ventilating their opinions about the company and those opinions are not always too optimistic. Social media has made it possible for word of mouth to travel faster and reach a larger audience than ever before. This emphasize how important it has become for a company and its brand to be authentic and transparent (Scott, 2008). A company or brand should never pretend to be something they are not. If it fails to accomplish this criterion the consequences can be very harmful once it has been exposed and an unhappy consumer spreads his/hers dissatisfaction virtually (Scott, 2008).

The social arena is becoming problematic to handle and consumers of today demand a lot. It is not only important for a company to take responsibility for the content they are providing on their digital networks. They also must take responsibility for what others do that can be associated with the company. The Swedish fashion company H&M learned this the hard way when they didn’t take actions against the online expression of hatred that one writer had to suffer when sending a comment to H&Ms Facebook page. The critics against H&M were massive and everyone agreed that it was H&Ms responsibility to maintain a respectful tone in the comment section on their Facebook page (Thomsen, 2013).

Critic against H&M for not maintaining a respectful tone on their Facebook page”

Picture: http://nyheter24.se/nyheter/inrikes/738173-kunder-rasar-mot-hm-pa-facebook

Social media as a sales increaser?

Social media has been acknowledged for being both a success as well as a danger for a company today. Nevertheless, according to Vázquez-Casielles et al. (2013) word of mouth has been recognized to be one of the most effective communication channels today. Vázquez-Casielles et al. (2013) conducted a study to investigate whether word of mouth has an impact on the probability to make a purchase or not. The study showed that word of mouth in fact does influence brand-purchase probability. It also proved that a positive word of mouth has a larger impact on a positive brand-purchase probability, than a negative word of mouth has on a negative brand-purchase probability (Vázquez-Casielles et al., 2013). This indicates that the benefits outweigh the risks of using social media since the result imply that the positive effects are much stronger than the negative effects.

To conclude, social media facilitate word of mouth since it is an arena for sharing thoughts, expression and opinions. It has been shown that positive word of mouth has a strong connection to brand-purchase probability which means that social media is effective to increase sales. With this said, there is no doubt that social media is attractive for companies since the benefits by being a part of the social arena is evident. However one question still arises, since it has been established that social media is a successful arena for companies to take part in, should companies simply concentrate on social media activities or should they balance this with traditional advertisement? – The answer to this question will be discussed further in part two “Social Media versus Traditional Advertisement”.