The Importance of Social Media Advertising for Businesses

Social Media Users Continue to Rise

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As social media users increase, businesses rely more and more on online advertising. Since 2019, social media users have risen by 10 percent, resulting in 3.96 billion consumers as of July 2020 (Kemp 2020). For example, digital marketing can be used to introduce services such as house cleaning, lawn care or car detailing. In addition, users may be noticing local restaurants popping up as a sponsored ad on their timelines; or they may even receive advertisements for products and services they researched throughout that day. Therefore, businesses started to shift their advertising budget from the traditional media (radio, magazine, television) to social media. Hence, many businesses now focus on their online presence and paid advertisements through social platforms such as Facebook, Twitter, Snapchat and Instagram. Consumers are not only able to view and write reviews, but also rate services or products received. Another lucrative method to influence users to buy products is to use social media influencers. Since social media influencers have many followers, companies benefit from paying these internet stars to advertise products on their platform. Social platforms enhance the sales of businesses as they impact consumer buying/spending.

Businesses greatly benefit from online consumer engagement through social media. For example, posting on their social media page can be quite beneficial. In this regard, content with highly interactive responses have shown to have the most impact on consumers’ purchasing behavior. According to a study by the University at Buffalo School of Management, a social media post with a high response rate through likes, comments and shares will lead to more purchase transactions (Manne, 2016). The reason why likes, comments and shares play a major role is due social medias algorithms. For instance, Facebook will prioritize posts which resulted in increased user involvement (Cooper, 2020). Besides the popularity of the post, the algorithm also takes into consideration who the users socialize with and the type of media displayed (Cooper, 2020). A great way for businesses to spark interaction with their posts is to start a conversation. As an example, the business could ask a direct question to the audience. This strategy can be often witnessed on YouTube, Instagram and Facebook. As a result, it increases the likelihood of their posts to be seen by many others. Another reason why social media value consumer engagement is because it increases the likelihood for users to watch advertisements which for example start playing in the middle of a YouTube or Facebook video (Kim, 2017). Exposure to these advertising videos can therefore lead to purchase transactions. In short, businesses can greatly profit from high engaging content and should strive for attention grabbing posts.

Highly Interactive Content Drives Purchasing Behavior

A consumer’s decision-making process can be heavily impacted by experiences and recommendations of other people. These can either come from users’ friends lists or strangers; or as Sârbu, Alecu and Dina (2018) describe “online reviews, friend’s advice, advertisements they have been exposed to or information from other media, all of which can tilt the balance in favour of or against the purchase of a product or service”(p.1018, para. 9). According to a study conducted by Survey Monkey in 2018, 65 percent of Americans’ big purchase decisions were a result of family and friends’ recommendation (Efremova, 2018). For instance, a consumer who sees a family member or friend post positive feedback about a product or service, is tempted to purchase the item or service as well. Friends and family can be viewed as a legitimate and honest source since there is no benefit in promoting a business. Therefore, an open and honest review from individuals, consumers are directly connected with, have a stronger influence on users purchasing decisions. These facts underline the importance of recommendations by people in consumers’ social circle.

Moreover, social media influencers also play a major role in todays’ products promoting methods. Oppose to celebrities, influencers build fame through the internet and are a cost-efficient way for businesses to target audiences instead of paying celebrities large sums of money to do the same (Weismueller, Harrigan, Wang, Soutar, 2020, p. 1). An influencer with a decent sized group of supporters can reach a variety of consumers. They can post tutorials on how to use a product and explain its benefits. In addition, social media stars can show individuals how an item looks like by wearing it (for example clothes and make up). Influencers have followers that view them as a role model. As a result, introducing a product they allegedly use will very likely result in their followers buying them. However, these online influencers can also share experiences of vacations to “promote touristic destinations to a world-wide audience” (Sârbu, Alecu & Dina,2018, p 1022). As customers utilize social media platforms to share their experiences, firms should strive for customer satisfaction. Reviews can not only boost sales but decrease them as well when poor rating are given (Sârbu, Alecu & Dina,2018). Therefore, shared experiences, ratings and recommendations play a major role when it comes to consumers purchasing intentions.

Besides providing high engagement content, organizations can impact users’ purchasing intentions with social media ads including qualitative information. Social media users utilize the search engine to research products they are interested in (Ali, 2018). Therefore, it is imperative that businesses provide potential buyers with good product information. For instance, if someone is looking to purchase a facewash to treat acne, the potential buyer will want to know why he or she should buy a specific product over another one. It is the firm’s responsibility to provide the details of the products for the consumer to make an informed decision. Regarding the facewash, the consumer will more than likely want to know the active ingredients which help to treat the acne. Also, they may want to know what other benefits it may contain and how often to use it. Consequently, a study with 437 participants conducted by Al-Balqa Applied University, Amman College of Banking and Financial Science showed advertisements with detailed product information to be the “second strongest factor predicting customers’ purchase intention” (Ali, 2018, p. 72). This proves that firms can benefit from providing potential buyers with as much product information as possible. Additionally, thoroughly describing a product and how it can benefit buyers, can also be a great way to convince consumers to purchase the item. Since including relevant product information has shown to have a positive impact on sales transactions, this strategy should not be neglected.

Consumer Decision-Making is Influenced by Social Circles

Social media is important to improve customer satisfaction. According to Coen (2016), online interchanges amongst customers and businesses increased by 70 percent between 2013 and 2014. Nowadays, consumers want fast and convenient solutions. With the increasing number of social media users, online platforms are the perfect way to contact a business. For instance, a customer who is having a hard time contacting a brand can send them a message on Instagram or Facebook. Some consumers even go as far as commenting on the businesses’ posts. To avoid bad reputation and other potential buyers to change their minds, companies will most likely answer to these comments and direct the buyer to message them privately to resolve these issues as soon as possible. Therefore, Cerchia (2020) describes social media as “a new era revolutionizing tool that allows communication between individuals, companies, different groups from all around the world. Sharing and exchanging information and ideas in an interactive way” (p. 786). Customer Relationship Management (CRM) refers to strategies, techniques, tools and technologies used to help enterprises manage contacts, relationships and sales. With the large number of social media users, companies are starting to transition from the traditional customer relationship management tools (emails, call centers, direct phone calls) to placing their focus on the internet. Consequently, Social Customer Relationship Management (SCRM) was designed to help firms with marketing, sales, and service. Providing customers with fast and efficient responses, can help businesses “create a loyal customer base” (Harrison, 2019, para 5). According to “Convince & Convert, 42% of consumers expect a response to a complaint on social media within 60 minutes” (Harrison, 2019, para 9). In addition, it is important to pay close attention to customers’ needs. To ensure customer satisfaction, businesses should pay close attention to buyers and future buyers’ complaints and requests. This will lead to increased sales and consumers buying more products in the future. In conclusion, social media is an important tool to interact with customers and address their needs. Moreover, keeping customers satisfied increases loyalty which is vital for business success.

Consumers are more likely to buy products shown in targeted social media ads. Social platform users are more prone to buy products from personalized advertisements corresponding with their lifestyle, wants and needs. A research published in “the Journal of Consumer Research” in 2016 showed that participants’ self-perception plays a major role in terms of targeted ads (Reczek, Summers & Smith, 2016). Hence, social media platforms such as Facebook form partnerships with data brokers. According to Kim (2020), these firms manage to collect trillions of data transactions annually. Additionally, data brokers such as Axciom claim “their databases contain information of about 500 million active consumers worldwide, with an average of 1,500 data points per person” (Kim, 2020, para. 4). Social media uses this information to show consumers personalized ads based on their current wants and needs. For example, consumers who had recently gotten engaged are more likely to see wedding-related ads. Another example could be for internet users to repeatedly see vacation ads on social media, after researching hotel and flight information through Google. This phenomenon is caused by Facebook Dynamic Ads for Travel. As the authors Sârbu, Alecu & Dina (2018) describe “Whether someone has browsed hotels, but didn't book, or bought a flight, but didn't make a hotel reservation, Facebook dynamic adverts for travel let you target that person with relevant adverts based on the specific dates, destination and other details about the trip” (p.1023). While this marketing may cause some privacy concerns, a poll conducted by Digital Advertising Alliance (DAA) in 2013 showed that almost 70 percent of U.S respondents preferred at least some personalized ads to their lifestyle; on the other hand only 16 percent would rather see generic ads (Marotta, Zhang & Acquisti, 2016). As a result, consumers are more prone to buy products corresponding with their interests. Therefore, targeted ads on social media are more likely to positively impact consumers’ buying decisions.