Advertising Through Social Media

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.
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