An Exploratory Study of Metrics Used to Measure the Impacts of Social Media Utilization on Business Performance

An Exploratory Study of Metrics Used to Measure the Impacts of Social Media Utilization on Business Performance

Celeste See-Pui Ng (Yuan Ze University, Taiwan)
Copyright: © 2015 |Pages: 11
DOI: 10.4018/978-1-4666-5888-2.ch275
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In recent years, many firms have started using social media to enhance their business (Ferrell & Ferrell, 2012). In an IBM global study of Chief Executive Officers (CEOs) conducted in 2012, 15% of the 226 mid-market CEOs were using social media as a key tool for engaging customers. Moreover, 50% of the 15% who were already using social media expected to make a significant shift from traditional media to social media to reach more customers within three to five years (IBM, 2012). Interacting with customers on brand pages of social media sites enables companies to: identify their customers’ needs regarding products or services, as in the case of AT&T; increase traffic to their online web-store (Adidas being an example); drive in-store sales (Diageo being an example); and build awareness of a new brand (for example, Kia Soul). In addition, some firms are evolving brand pages into brand communities wherein customers and others can share their interest and knowledge about a particular brand with each other (Zaglia, 2013). Companies can maintain relationships with customers and potential customers within brand communities, and provide incentives to fans/customers that support the brand community (Laroche, Habibi, Richard, & Sankaranarayanan, 2012).These activities increase customer loyalty (Sherry Jr., 1983). Moreover, purchasing decisions result from visits to social media brand pages (Jooa, Kima, & Yang, 2011).

A business can expect to experience various improvements in its performance from utilizing social media. However, results can vary from one company to the next. The 2012 Social Media Marketing Industry Report (Stelzner, 2012), which was based on a survey conducted with 3,813 participants, mostly from the United States, found that one of the top 10 social media questions posed by marketers was how to measure the effect of social media on their businesses. Before identifying a solution to this practical issue, we must first investigate the common metrics used for measuring the impacts of social media utilization on businesses, and then identify the specific metrics that are useful for measuring the effects of social media on business performance. This article attempts to provide some clarifications on this issue. Quantitative content analysis of 126 publicly available case studies, including both successes and failures, was carried out to identify the outcomes, benefits, and aspects of business performance that can potentially be realized from the use of social media in advertising.

Key Terms in this Chapter

Benefits: Business impacts and improvements resulting from one or more outcomes of an IT project or investment.

Brand Page: A Facebook webpage created by a brand to communicate, interact, manage relationships, advertise, market, and attract and accumulate fans.

Soft Disbenefits: Intangible disbenefits that are difficult to quantify but may have significant adverse effects on a business’s image and reputation (for example, customer dissatisfaction, vulnerability, and bad brand reputation).

Hard Benefits from Social Media Advertising: Tangible business benefits resulting from advertising on social media sites that are easy to convert into monetary value (for example, online sales, revenue, more customers, and conversions to purchases).

Outcome: The effect, change, and difference (depending on the context) that occurs before and after implementation of an IT project or investment.

Soft Benefits from Social Media Advertising: Intangible business benefits resulting from advertising on social media sites that are difficult to convert into monetary value (for example, number of fans, brand engagement, click through rate, and company website traffic).

Social media: Online media, such as Facebook and Twitter social networking sites, which are specifically meant for social interactions, communication, relationship management, and contact management with friends, relatives and fans, either publicly or privately.

Brand Community: A group of people, who are fans of a particular Facebook brand page and have some interests and likes in common.

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