The article starts with a preview of the social networks and the enhancements that comes with social networks. The use of social networking sites such as Facebook and Twitter has overtaken the use of traditional advertising strategies. Advertising agencies view social networking marketing as a revolutionary trend that held companies keep customers.
Social marketing has rapidly risen to become the preferred marketing tool among consumers and companies at the expense of traditional methods. According to the author, statistics from ComScore reveal that 84 percent of European Internet users use at least one of the social networking sites and the growth is increasing exponentially.
Social networking competes directly with traditional advertising methods for resources and time. But the shift from traditional media to social media is gaining momentum meaning that future advertising using traditional media will fall significantly.
The Oscars is a good example. With over four million views less than the previous year the 2011 Academy Awards shifted to the social media. Users especially in the 18-49 age range used Twitter to view the ceremony live. Social media preferred the dialogue mode of communication at the expense of the monologue messages delivered via traditional advertising media.
The article continues to highlight similarities and differences between the traditional advertising and word of mouth. First, the traditional media has a wide coverage that reaches a massive audience. WOM, on the other hand, has a limited one to one communication. However, the use of social networks has immense benefits to the marketing initiatives. Recommendations are no longer tied to one-to-one interactions alone but are far reaching. Large number of people can decide to build the brand of a company through social media campaigns. A successful example of such as campaign involves Uniqlo Twitter campaign.
Secondly, WOM is the best tool in terms of persuasion power and consumer influence. It is a credible tool that provides unparalleled reliable source of information. An anonymous advertising message will not provide the same level of credibility and trust that word of mouth will provide. Examples of large companies that have utilized word of mouth recommendations include Google, Amazon, Mercadona, Zara and e-Bay. The article highlight that according to InSites Consulting, 38% of social network users pointed to other consumer recommendation as the most reliable source of information about a product or brand.
Conventional advertising media control the messages to be conveyed to the audience. In WOM people cannot be controlled in what they say about the product whether good or bad.
Electronic WOM is more effective than online advertising in terms of interactivity and the instance of response. Intervention mechanisms are easy to implement and the conversations and amendments can be changed in real time. However, WOM require a sustained commitment of resources and time. Traditional WOM is relatively cheap but in order to be effective, the company should dedicate resources and time to the talking process in order to built the brand name or the products.
In building a company name through brand image, reputation and recognition, traditional and WOM advertising function in the same manner. However in the case of WOM, user comments cannot guarantee favorable progress. Good comments have the effect of enhancing brand but bad ones can do considerable damage to a company.
Although WOM advertising is voluntary and consensual, saturation of e-WOM messages sent over social media can be intrusive and a nuisance if not carefully considered.
In terms of sales, empirical evidence suggest that there is a low impact of advertising on the elasticity of sales. Advertising is considered to affect brand name and price sensitivity. However, research suggested in this literature pointed to the fact that the volume of conversation about a certain product is directly and immediately correlated with sales. The effect of WOM is seen to last longer than conventional systems.
Products and services and the context of communication determine the amount of WOM generated. Some products are naturally talked about while others are not. Factors such as functions, place of use, tangibility, and price determines whether conventional or e-WOM initiative is adopted. Society also dictates the behaviors of WOMs. Collective and highly hierarchical societies with greater power distance present more WOMs than those with less social inequality.
In most instances, social media is termed as a low-cost alternative to conventional advertising but this assertion is not true. The initial social media investment is low but the cost of generating content is high since it requires creativity time and quality. However in situations where companies are looking for methods of cutting down offline advertising in expense of social networks, the results are always favorable. The case of Subaru in Chile illustrates this point. The use of social media delivered more revenue with a third of the investment needed for traditional advertising.
The rule of the thumb is to integrate e-WOM and advertising in an amicable way that benefits the company. Companies such as Coca Cola are using this trick to remain relevant in the market. The effectiveness of this method depends on the company’s brand among other factors. As such, there is no magic formula that is recommended for all companies. In some instances, e-WOM is substituting traditional advertising for small companies which needs to build a brand with no additional budget for advertising.
A social media plan can be developed by taking into consideration outlined in this literature. This includes;
- Brand auditing
- Target setting
- Choose the right matrix
- Content and tone
In order to decide the choice taken for advertising, it is important to realize that the decisions rest with the consumers and users. In social media, it is the consumers and users who dictate whether a certain brand is talked about or not.
Armelini, Guillermo and Julian Villanueva. "The power of word of mouth: Adding social media to the marketing mix." IESEInsight 9 (2011): 29-36.