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«Social Media Marketing: Measuring Its Effectiveness and Identifying the Target Market Charity Pradiptarini Faculty Sponsor: Stephen Brokaw, ...»

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pradiptarini UW-L Journal of Undergraduate Research XIV (2011)

Social Media Marketing: Measuring Its Effectiveness and Identifying

the Target Market

Charity Pradiptarini

Faculty Sponsor: Stephen Brokaw, Department of Marketing

ABSTRACT

The use of social media sites as part of a company’s marketing strategy has increased significantly

in the past couple years. Regardless its popularity, there is still very limited information to answer some of the key issues concerning the effectiveness of social media marketing, ways to measure its return on investment, and its target market. Twitter activities and sales performances of five companies from the Fortune 500 companies and its competitors were analyzed to identify the correlation between the company involvement on the social media sites and its financial outcomes (ROI). In addition, a survey of 1,000 University of Wisconsin-La Crosse’s students was conducted to determine whether generation Y is the main audience of the social media marketing, and to find the relation between the respondents’ involvement in social media marketing and changes in their buying decisions. The study finds that social media marketing effectiveness is highly influenced by its messages/contents quality, the company’s involvement, and its association with the other marketing platforms. In addition, a complex and detailed analysis of the strategy is needed in order to accurately measure the return on investment of the social media marketing. The study also finds that generation Y might be the main users of social media sites, but they are not the main target audience of the social media marketing.

INTRODUCTION

The social media era was started around ten years ago. It began with LinkedIn, which was launched in 2003, followed by both MySpace and Facebook in 2004, YouTube in 2005, and Twitter in 2006. In less than a decade, its population has grown rapidly, and it has reached billions of people worldwide. Facebook has more than 500 million users worldwide; Twitter has approximately 175 million users; LinkedIn has more than 90 million users; and MySpace has 57 million users 1 (Curtis, 2011).

The popularity of social media sites has also spread to companies and firms as part of their strategies. A study by public relation firm Burson-Marsteller shows that 86% of 100 largest companies on the Fortune 500 list use at least one of the social media sites such as Facebook, Twitter, YouTube or blogs, and 28% of them use all four platforms 2. The study also shows that 65% of these companies use Twitter, which makes it as the most popular social media site among business firms (Burson-Marsteller, 2010).According to Social Media Marketing Industry Report, 64% of marketers spend five hours or more per week on social media and 39% of them spend ten hours or more weekly (Stelzner, 2009). These findings show that more and more companies are becoming actively involved in social media, which also shows the emerging of social media sites as the new marketing/promotion platform that is also known as social media marketing.

A number of businesses have gained some advantages from social media marketing. For example, Dessert Gallery has increased visits by 20% per month after its Facebook fans jumped from 283 to 817 (Woessner, 2011). In addition, a Facebook page with a portfolio of pictures has helped a wedding photographer from Michigan, Aaron Deckrow, get new customers (Yankee, 2009). According to Gary Vaynerchuk, who is the author of The Thank You Economy, social media sites allow companies to enhance the customer interaction that has already been established through traditional media (i.e. TV ads, print ads) to a more personal level. In addition, social media sites have enabled businesses to build closer relationships with their customers, as well as to expand the market to the customers that they could not reach before (Rooney, 2011).

In contrast, Creamer uses SAT test analogy to describe the effectiveness of social media marketing, “SAT test doesn’t measure intelligence. It can't possibly measure your future success in college. The SAT measures one thing, The population declined from its peak at 75 million people.

The data reflects the use of social media between American companies only.

pradiptarini UW-L Journal of Undergraduate Research XIV (2011) and one thing only: how good you are at taking the SAT. The same thing might be said of many current ways of looking at effectiveness on Twitter. They have little respect for how an action on one of those networks might relate to behavior beyond Twitter” (Creamer, 2011). Vaynerchuk (2011) adds some companies are still hesitant to include social media in their marketing program due to lack of solid information about the social media platforms, especially in regards to its effectiveness (Vaynerchuck, 2011, pg. 51). Executives are concerned with their budget justification for a social media plan, when there is lack of supporting materials to confirm the effectiveness of the social media platform (i.e. conversion rate, the relation between buyer-seller relationship and increase in sales), and the rate of return on investment (ROI) that they can earn from this plan (Blanchard, pg.208). Others also believe that their companies’ performances are not affected by their lack of involvement in the social media sites (Vaynerchuk, 2011, pg. 76-77). A study shows that 40% of Fortune 50 companies have accounts on social media sites, but have not integrated it into their company’s websites (i.e. Facebook/Twitter icons are hard to locate on their webpage). The reluctance to promote these sites is mainly due to concerns such as legal and content control issues (Ochman, 2011).





This reluctance is supported by the fact that many examples show little to no relation between brand/company’s activities in social media sites and its business performance. For example, a failed pop star Peter Andre has approximately 450,000 followers on his Twitter (Ritson, 2010). On the other hand, Apple does not have an account on any of the social media sites, but yet it is still one of the most popular brands in the world (Creamer, 2011).

Firms’ executives also questioned the purpose of social media marketing as part of their promotional tools, as well as its relation to the other marketing platforms, such as public relations, sales, and advertising (Vaynerchuk, 2011, pg. 113).

Clearly, the fact that social media marketing is still relatively new among business practitioners and scholars has raised some major concerns, such as its effectiveness (ROI), the main purpose of including social media in a company’s media platforms, its relation to the existing platforms, and the target audience of this strategy. These four major concerns are the issues that the author tries to address in this paper.

METHODS

There were three different methods of study that were used in this research. First, literature reviews of articles and books on the subject of social media marketing effectiveness, social media ROI, online marketing, and social media marketing demographic, which give basic information to deepen understanding of these issues. In addition, testimonies and information from Mr. Stephen Woessner who is the Outreach Coordinator of the Small Business Development Center at the University of Wisconsin-La Crosse and also a search engine optimization expert are used to solve some unanswered issues about social media marketing effectiveness.

The second method involved analysis of Twitter activities and revenue data for five companies from the Fortune 500 most profitable list (Microsoft, Wal-Mart, P&G’s Charmin, Merck’s Claritin, and AT&T) and then compared this to its main competitors (Oracle, Target, Kimberly-Clark’s Cottonelle, Johnson & Johnson’s Benadryl, and Verizon Wireless). Some variables that are examined in this analysis include: length of Twitter membership; number of follower 3, tweet 4 (and its type), listed 5, following 6; as well as the latest data of the company/brand’s sales revenue or market share. This analysis will help to identify the relation between company’s Twitter activities and its business performance, which ultimately will help to address the issue of social media marketing effectiveness.

Third, an online survey was conducted and sent to 1,000 randomly selected University of Wisconsin-La Crosse’s undergraduate students who were enrolled during spring 2011. The main purpose of the survey is to identify the respondents’ involvement and activities in social media sites, and how it affects their buying decisions.

The result is used to determine whether Generation Y (participants) is the main audience of this strategy. The result is also applied to see the correlation between social media sites’ involvement and changes in consumers’ behaviors, which also related to the issue of social media marketing effectiveness.

RESULT

Social Media Marketing Online Survey A. Sample characteristics. The survey was distributed using survey software (Qualtrics) to 1,000 undergraduate students of University of Wisconsin-La Crosse. This sample was randomly chosen by the University of Wisconsin-La Crosse’s Office of Institutional Research. The survey generated 257 respondents, which showed 3 “To follow someone on Twitter means to subscribe to their Tweets or updates on the site.” (Source: Twitter help center) 4 “A message posted via Twitter containing 140 characters or fewer.” (Source: Twitter help center) 5 “To be included in another Twitter user's list.” (Source: Twitter help center) 6 “the quantity of other Twitter users you have chosen to follow on the site.” (Source: Twitter help center) pradiptarini UW-L Journal of Undergraduate Research XIV (2011) 25.7% response rate. The age of the participants ranged from 18 years old to 33 years old, with 20 years old being the most common age (23.73%). This survey generated 29.57% responses from male students, and 70.43% responses from female students.

B. Social media sites’ activities. The result shows that Facebook was the most popular social media site among the participants (98.83%), followed by Twitter at 17.50%, LinkedIn with 9.73%, MySpace at 15.95%, and 2.72% of the respondents had other social media sites such as Tumblr, YouTube, and Stumbleupon (see Figure 1).

120.00% 98.83% 100.00%

–  –  –

In addition, 65.76% of respondents had one account with a social media site, 25.29% had two accounts, 7.39% had three accounts, 0.39% has four accounts, no respondents had all five sites listed, and 1.17% had no account on any of the social media sites (see Figure 2).

–  –  –

For respondents who were on Facebook, 0.79% had the account for less than one year, 9.49% of them had owned the account for one to two years, 56.53% of the respondents had the account for between three to four years, and 33.20% of them had been with Facebook for more than four years. Among the 45 participants who had Twitter accounts, 61.36% of them had the account for less than one year, 31.81% of respondents had the account for one to two years, and 6.81% of them already had Twitter for three to four years. Only 24 respondents had a LinkedIn account, of which 14 of them had it for less than one year and ten had the account for one to two years. Only 40 respondents had a MySpace account, with 37 of the MySpace users owning their accounts for more than four years, and 2 respondents for three to four years, and only one respondent had MySpace account for one to two years.

When it came to their skills at using social media sites, 63.03% described themselves as average users, 33.85% as expert users, and 3.11% as beginners.

As for their involvement with any brands/companies on social media sites, 71.14% of the Facebook users were fans of brands/companies, but only 38.63% of the Twitter users follow brands or companies. The fact that respondents were loyal consumers seemed to be the most popular reason of why they would follow or become a fan of the brand or company, with 46.73% of Facebook users and 82.35% of Twitter users.

Only 3.28% of respondents who follow or were a fan read all postings or messages from their “favorite” brand, 65.

57% only read the one that they were interested in, and 31.15% never read any of the postings or messages.

Lastly, participants were asked the degree of influence between their social media sites activities/membership and their buying decisions; only 1% of respondents were highly affected, 20% were somewhat affected, 35% were neutral, 12% were somewhat not affected, and 31% were not affected at all (see Figure. 3).

40.00% 35.36% 35.00% 30.94% 30.00% 25.00% 20.44% 20.00% 15.00% 12.15% 10.00%

–  –  –

Figure 3. Respondents’ social media activities and buying decisions relationship Twitter and Revenue Analysis Six variables were used to determine the company’s participation on Twitter, which are number of followers, number of tweets and its subjects, number of being listed by its followers, and number of account follows.

These data were obtained on March 24th, 2011 from the companies’ Twitter account. In addition, a website named whendidyoujointwitter.com was used to determine the length of companies’ Twitter memberships. Companies’ revenue data were obtained from three different sources: MarketLine Business Information Center; Market Share Reporter (2010); and the companies’ websites.



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