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A cost benefit analysis of Social Media Marketing

A cost benefit analysis of Social Media Marketing

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Published by Dave Scanlon
A cost benefit analysis of Social Media Marketing (SMM) from the perspective of the Irish
SME is presented. SMM is the process by which a company can enable and engage in
meaningful bi-directional conversations with its customers within an online environment.
High profile examples of SMM include Zappos.com's use of the Twitter micro-blogging
service, Dell's Ideastorm customer forum, and Blendtec's "Will It Blend?" video series on
YouTube.
A review of the literature establishes SMM's position in the continuing evolution of
marketing practices. Further drawing from the literature, the benefits of SMM to a
company's performance are identified, namely: an improvement in customer acquisition
and retention performance; and an improvement in a company's Research and
Development or New Product/Service Development processes.
An online survey of those companies using SMM is detailed, and its findings presented
and discussed. The primary purpose of the survey was to determine the level and nature of
resources being committed by Irish SMEs to SMM, as well as to establish what business
benefits are being realised.
Results indicate that SMEs consider SMM to be more effective than traditional marketing
methods with regard to customer acquisition and retention, and that a significant majority
of respondents are likely to continue to include SMM in their marketing plans in the future.
SMM is also reported as making a positive contribution towards companies' Research and
Development or New Product/Service Development processes. The study concludes by
noting the suitability of SMM for the particular approach to marketing inherent within
SMEs, while emphasising the importance of developing and maintaining a comprehensive
business strategy to guide its use.
A cost benefit analysis of Social Media Marketing (SMM) from the perspective of the Irish
SME is presented. SMM is the process by which a company can enable and engage in
meaningful bi-directional conversations with its customers within an online environment.
High profile examples of SMM include Zappos.com's use of the Twitter micro-blogging
service, Dell's Ideastorm customer forum, and Blendtec's "Will It Blend?" video series on
YouTube.
A review of the literature establishes SMM's position in the continuing evolution of
marketing practices. Further drawing from the literature, the benefits of SMM to a
company's performance are identified, namely: an improvement in customer acquisition
and retention performance; and an improvement in a company's Research and
Development or New Product/Service Development processes.
An online survey of those companies using SMM is detailed, and its findings presented
and discussed. The primary purpose of the survey was to determine the level and nature of
resources being committed by Irish SMEs to SMM, as well as to establish what business
benefits are being realised.
Results indicate that SMEs consider SMM to be more effective than traditional marketing
methods with regard to customer acquisition and retention, and that a significant majority
of respondents are likely to continue to include SMM in their marketing plans in the future.
SMM is also reported as making a positive contribution towards companies' Research and
Development or New Product/Service Development processes. The study concludes by
noting the suitability of SMM for the particular approach to marketing inherent within
SMEs, while emphasising the importance of developing and maintaining a comprehensive
business strategy to guide its use.

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Published by: Dave Scanlon on Aug 20, 2010
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06/13/2013

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A key limitation of this study is the lack of supporting academic research. To date, there
have been very few articles dealing with SMM (or its synonyms) published by leading
scholarly journals. This is most likely due to the short length of time that SMM has been
present in the mainstream business world. SMM itself is a highly volatile area of study,
with new services, "killer applications", and the promotion of vague strategies which
guarantee "instant success" an almost daily occurrence. This inevitably leads to a difficulty
with attempting to effectively define SMM; indeed the Wikipedia article on SMM (see
http://en.wikipedia.org/wiki/Social_media_marketing) which discusses the problems with
defining SMM, is in itself a candidate for merger with a Wikipedia article dealing with
"Social network marketing" (see http://en.wikipedia.org/wiki/Social_network_marketing).
The definition proposed by the author for this study, that SMM is "the act of facilitating
and engaging in online conversation that adds value to a brand for both the brand owner
and the consumer", is based upon both the relevant academic research that defines and
examines the various categories of marketing, as well as the author's own professional
experiences as an eBusiness consultant working with Enterprise Ireland. The author does
not presume, however, that this definition will encompass every interested party's view of
what constitutes SMM.

Two related limitations of this research are the size of the population, and the size and
nature of the sample. The population size was problematic in that the number of Irish
SMEs who have engaged in bi-directional online engagements with their customers within
the past six months is quite small, and there is at present no exhaustive list of these
companies. While exhaustive lists of Irish SMEs do exist (e.g. the Companies Registration
Office's public and Enterprise Ireland's proprietary databases) a lack of time and resources
prevented the author from identifying every SME currently using SMM techniques. A
judgement sampling methodology was adopted to gather potential participants, with SMEs
being invited to complete the survey as the author became aware of their SMM initiatives.
The use of judgement sampling, when combined with the relatively small sample size (n =
48), means that the level of generalisability of the study is quite low, and that the results
cannot be interpreted as being representative of all Irish SMEs. Furthermore, a post-

67

implementation analysis of the survey respondents revealed that many of the SMEs would
be considered to work in the "web-space", e.g., offering online marketing or web
development services. A number of the participating companies would also be considered
to trade exclusively online. It is possible that this has introduced an unconsidered bias into
the analysis, and should be taken into consideration by those basing strategic business
decisions or future academic research on the findings.

Finally, a further limitation of the survey was that it was only possible to complete online,
via the SurveyMonkey survey service. However, given the nature of the topic under
investigation, as well as the demographic profile of the participants, the author believes
that an online survey was the optimal instrument to employ, and that the number of
potential participants who declined to complete the survey as a consequence of the choice
of medium is extremely low.

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