How social media impacts consumer spending

November 17, 2016 by Kevin Manne, University at Buffalo
How social media impacts consumer spending
Credit: University at Buffalo

For businesses using social media, posts with high engagement have the greatest impact on customer spending, according to new research from the University at Buffalo School of Management.

Published in the Journal of Marketing, the study assessed social media posts for sentiment (positive, neutral or negative), popularity (engagement) and customers' likelihood to use social media, and found the popularity of a social media post had the greatest effect on purchases.

"A neutral or even negative social media post with high engagement will impact sales more than a positive post that draws no likes, comments or shares," says study co-author Ram Bezawada, PhD, associate professor of marketing in the UB School of Management. "This is true even among customers who say their purchase decisions are not swayed by what they read on social media."

The researchers studied data from a large specialty retailer with multiple locations in the northeast United States. They combined data about customer participation on the company's social media page with in-store purchases before and after the retailer's social media engagement efforts. They also conducted a survey to determine customers' attitudes toward technology and social media.

Bezawada discusses the study's findings. Credit: University at Buffalo

The study also found that businesses' social posts significantly strengthen the effect of traditional television and email marketing efforts. When social media is combined with TV marketing, customer spending increased by 1.03 percent and cross buying by 0.84 percent. When combined with email marketing, customer spending increased by 2.02 percent and cross buying by 1.22 percent. Cross buying refers to when a customer purchases additional products or services from the same firm.

"The clear message here is that marketing matters, and managers should embrace it to build relationships with customers," says Bezawada. "Developing a community with a dedicated fan base can lead to a definitive impact on revenues and profits."

Explore further: Social media pays off for businesses, study shows

More information: From Social to Sale: The Effects of Firm-Generated Content in Social Media on Customer Behavior. www.ama.org/publications/Journ … -social-to-sale.aspx

Related Stories

Social media pays off for businesses, study shows

January 18, 2013

(Phys.org)—Customers who connect with a business through social media will go to the business more frequently and contribute more to its bottom line, according to a new study from the University at Buffalo School of Management.

Businesses increase revenue with social media

March 25, 2013

Researchers at Aalto University, the University at Buffalo, and Texas A&M University have proven a link between customers' use of social media and higher revenue.

Oracle buying Collective Intellect

June 5, 2012

(AP) — Oracle is buying Collective Intellect Inc. for an undisclosed sum as it expands its social media tracking services.

Recommended for you

Cellular microRNA detection with miRacles

March 26, 2019

MicroRNAs (miRNAs) are short noncoding regulatory RNAs that can repress gene expression post-transcriptionally and are therefore increasingly used as biomarkers of disease. Detecting miRNAs can be arduous and expensive as ...

What happened before the Big Bang?

March 26, 2019

A team of scientists has proposed a powerful new test for inflation, the theory that the universe dramatically expanded in size in a fleeting fraction of a second right after the Big Bang. Their goal is to give insight into ...

Probiotic bacteria evolve inside mice's GI tracts

March 26, 2019

Probiotics—which are living bacteria taken to promote digestive health—can evolve once inside the body and have the potential to become less effective and sometimes even harmful, according to a new study from Washington ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.