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Study suggests social media marketing hurts business long-term

The Fox School of Business studied the effectiveness of social media marketing.

Researchers in the Fox School of Business are working to uncover the effectiveness of social media marketing and its methods to increase sales for companies.

Management and information systems professor Brad Greenwood said the findings could give business managers understanding of how to be more strategic about timing posts and targeting specific audiences.

Led by Shuting Wang, a third-year Ph.D. candidate in management information systems, the research drew on social data from WeChat and sales data from a Chinese shoe retailer, Greenwood said. He and Paul Pavlou, the senior associate dean of research, assisted Wang on the project.

Wang said while social media posts increase sales in the short term, people will often “get annoyed” by companies’ posts.

“In that case, they will unfollow, which will lead to a long-term decrease in purchases,” Wang said.

The study found that purchases by followers increased by 5 percent on the day of a company’s social media post. But this same post also increased the likelihood of a customer to unfollow by 300 percent. This led to an overall 5 percent decrease in sales in five months and a 20 percent loss of followers in a year.

These numbers change based on contextual factors “like what time of day it is, and where people are located,” Greenwood said.

Greenwood said if you target audiences in larger cities, “people unfollow a lot faster … and if you post during rush hour, people unfollow a lot faster, but if you post at off-peak hours or [target] smaller locations, that effect seems to go away.”

Though the causes behind the findings are not entirely clear, Greenwood said the results may be attributed to customers’ moods at varying times of day or the increased irritability of customers in large cities, who are exposed to more information and media than their rural counterparts.

Pavlou said he thinks it’s a matter of how companies “over-do” social media.

“They see that the more posts they put out there, the more sales they’re going to see,” Pavlou said. “Companies should be more careful with this and focus more on their long-term goals. Social media is so quick, so immediate that companies say, ‘Well, let me leverage this as much as possible in the short term,’ and they may actually miss the big picture.”

The extent of the damage social media marketing can cause businesses isn’t clear in the research yet, Greenwood said. He added that future research needs to address the question of whether customers will go to competing firms or if they will just stop purchasing in general.

Fox students Matthew Brubaker, a junior risk management and insurance major, and Grant McMinn, a junior finance major, see social media marketing as an effective tool for businesses, but an occasional annoyance in their lives.

“I think [social media] is a good way to get your idea or business out initially,” Brubaker said. “I always thought it’d be good both in the short term and the long term.”

McMinn said he enjoys social media advertisements that he can connect with.

“I’ve definitely followed places and then had stuff come up that I don’t relate to and I unfollow them,” he added.

Though the research questions social media marketing as a business method, Greenwood said stopping social media marketing “would be lunacy.”

“What I think this study highlights is the fact that you need to be very careful about where and when you post,” he said.

The paper, which will soon go out for peer review, is a part of Wang’s Ph.D. dissertation in management information systems. The researchers are targeting a journal called Information Systems Research for publication.

Noah Tanen can be reached at noah.tanen@temple.edu.

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