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Businesses are constantly striving to expand their customer base and increase profitability. This statement holds true in the e-business environment where business owners are aiming to increase their visibility and attract more clients. Over the course of the past decade, Social Networking Sites (SNSs) have emerged as a novel means for e-businesses to connect with customers and expand their customer base.
This prominence of SNSs has been caused by their popularity since the sights attract millions of user all over the world. These sites are the fastest growing segment on the web and their potential for ecommerce is great. Even so, the implication that SNSs have for business still remains unclear. Some authors such as Weber (2009) declare that marketing in SNSs will result in development of client base and help a person to build their business.
Others such as Clemons et al (2007) view the potential of SNSs in building business as overstated. Considering this varied opinion concerning the impact of SNSs on business, this paper will set out to discuss whether SNSs such as Facebook and MySpace are good for supporting business. The paper will delve into the potential threats as well as benefits that are associated with using SNSs to support business.
SNSs for Marketing Support
The primary means through which businesses get customers is by advertising themselves. Traditional advertisements make use of mass media devices. However, there has been a notable change in customer response towards advertisement over the last decade. As a result of the huge volume of information on products that people are getting from mainstream media, a vast majority of people are losing trust in conventional advertisements.
In its place, people are not using the internet which provides an individual with a huge amount of information. The customer is now able to compare prices, discover discounts and discover a diverse option of attributes for similar products. As a result of this, today’s consumer is far better informed about their options and this informedness has significantly altered consumer behavior.
Research indicates that the availability of information via SNSs results in changes in the shopping habits of customers even for purchases that are made via traditional physical facilities. It is estimated that up to 90% of consumers perform some type of online comparison shopping before visiting a car dealer (Clemons et al. 2007). These findings suggest that to a great extent, informedness is replacing paid corporate promotions.
Ecommerce has therefore had to move from transaction based to social network based forms of advertising. SNSs are built around relationships and interactions within groups of individuals with shared interests or activities. These relationships play a role in the spread of information and influence among the members.
SNSs sites demonstrate phenomenal amounts of traffic online. Stroud (2008) reports that as of 2007, social networking websites accounted for over 7% of all internet visits. This huge online presence can be used to increase the visibility of a business and its products. In addition to this, some of this traffic can be redirected to ecommerce websites with huge benefits being obtained by the ecommerce site.
While there are many SNSs available, MySpace and Facebook are important in the context of ecommerce since they attract over 70% of all US advertising revenues in the SNSs category (Stroud 2008, p.281). Businesses can participate in these two websites in a number of ways to market themselves to their prospective customers.
The most elementary manner is by becoming friends with users which allows the business to communicate directly with the user (Fatimah & Murphy 2010). This method will enable the business to communicate with SNSs members and therefore create product awareness and brand loyalty. Businesses can also pay to have their advertisements or link to their pages appear on the profile of a user. A user can then be redirected to the ecommerce website on clicking on the link provided.
Benefits of Using SNSs
SNSs can be used to provide important information to assist the business formulate effective strategies. For example, e-commerce websites can use SNSs to collect useful data for predictions of market trends and customer behavior. By doing this, the company can realign its products so that they are in line with the current market trends.
For example, user-generated content was able to persuade Cadbury to reintroduced a discontinued chocolate bar since data from Facebook revealed that almost 14000 users were petitioning for the bar to be returned (Fatimah & Murphy 2010).The comments that the business receives through MySpace and Facebook can be used to give insights to improve services as well as create a positive word of mouth for the business. This will help the business to gain a competitive advantage and hence increase its profitability.
The potential of SNSs for ecommerce especially among the youth is significant. Jansen, Sobel and Cook (2011) reveal that teenagers spend over 80% of their money on themselves which makes the youth market a crucial demographic. While teenagers do not spend a lot of money online since many do not have credit cards, they use the internet to consult about products. Many youths use SNSs to seek advice on shopping from their friends.
This is a critical matter for marketers since research indicates that people aged 21 and below influence “81% of their families’ apparel purchases and 52% of their car choices” (Jansen et al. 2011, p.122). Weber (2009) declares that a business has a natural advantage when presenting its products on SNSs since it is the most trusted source of official information about the products in question.
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SNSs can be used to formulate highly personalized advertisements for the potential client. MySpace and Facebook enable companies to target their advertising in such a manner that they are appropriate to the particular user. This will help to improve profitability by increasing the effectiveness and efficiency of the business’s advertising efforts.
In addition to this, Social networking users are a heterogeneous group and there is an increasingly diverse range of people using SNSs (Stroud 2008). There is therefore a high probability that the customer and potential customers of a business are already using SNSs.
The user-generated content on SNSs can be used to identify audience for on-line brand advertizing. Provost et al. (2009) reveal that unlike direct-marketing-style online advertising, online brand advertising relies on more than just click generation. Instead, it focuses on getting a brand-oriented messaged to an audience of interest. Provost et al. (2009) report that there is a correlation between seeing online brand advertising and an increase in online and offline purchases.
Facebook and MySpace can be used to as tools to contact potential business partners. Fatimah and Murphy (2010) demonstrate that through MySpace, small business can come into contact with like-minded businesses and form partnerships which will be beneficial for both parties. Weber (2009) states that small business owners can easily tap into a global network of peers and advisers by using social networking tools that such as Facebook and MySpace.
Threats of Using SNSs
Many of the SNSs are considered by the individual user to be personal spaces and they are primarily used to enhance friendships and relationships. Jansen et al (2010) asserts that MySpace and Facebook are used primarily to keep up with friends and less than 10% of the users use the site to meet new people.
This thought is corroborated by Ellison et al (2007) who reports that most people use SNSs primarily to contact friends. Attempts by businesses to use SNSs as platforms to market themselves may therefore be counterproductive. Advertisements on SNSs may be a complete failure since it may be perceived by the SNSs user as offensive or as an intrusion of their privacy.
For example, the use of friends like from Facebook for direct marketing has received a lot of criticism due to privacy concerns (Provost et al. 2009). Clemons (2007) rightfully asserts that if brands chose to clutter SNSs with advertisements, users will avoid them in the same way they avoid pop-ups and view them as intrusive and annoying.
While it is possible to issue targeted advertisement through SNSs, the uses typically ignore these advertisements (Urstadt 2008). Users do not go to SNSs for advertising-based content about a range of products. MySpace and Facebook are not seen by the typical user as the platforms from which to go looking for presentational advertising messages. Urstadt (2008) states that it is therefore likely that the intended audience for a business’s message will not view, much less respond to the advertisement.
SNSs may also have a negative impact on a business since they may attract negative responses. A case study on Go Workabout (GW), a Small Australian Company, revealed that there are some setbacks to using MySpace to promote a business. These setbacks are in the form of parasitic friends who feed off their friendship for unfriendly pursuits.
This include posting misleading comments that my hurt the business (Fatimah & Murphy 2010, p.706). A business will therefore be required to constantly monitor its SNSs activities and remove unsolicited or unproductive messages.
The huge optimism held about the potential of SNSs to help business is on the assumption that they actually replicate in crucial ways face-to-face networks. Clemons et al. (2007, p.268) suggests that online communities are at best “truncated networks, lacking in depth and intensity”. Facebook allows a user to add others to their network of “friends” therefore building a community.
However, the friendship relationships mostly lack any corresponding basis in contact, shared experience, or shared values. This means that online “friends” are not necessarily trusted. It is therefore not apparent that the online network members will solicit advice on products from one another (Clemons et al. 2007). A business should therefore approach SNSs with caution since the people who participate in these networks seldom look to other participants as valid sources of information.
As has been noted, it is the decreasing trust in traditional advertisements that has made people to opt for other means of information to guide their purchasing habits. The trust in social networking advertisements is therefore crucial for the success of ecommerce advertisements. Business models for advertising in SNSs are based on the presence of trust among members and the transfer of trust from the online relationship to the owner of the website.
Jansen et al (2011) reveals that while people might trust their social network, they do not extend the same trust to the sponsored information that appears on the social networking platforms themselves. The setback facing traditional advertisement media might therefore face ecommerce if they are unable to obtain the trust of the potential customers in social networking.
The desire for people to network online is not a fad that will go away with time. Marketers can therefore with great certainty project that websites like Facebook and MySpace are here to stay. Social Networking Sites as a mean of supporting business is important since the public is showing distrust for advertising messages.
However, care should be taken to ensure that trust is maintained in the social network setting. Actual face-to-face networks create trust and credibility and it is these traits that are likely to be lost by a business which engages in push advertising in the SNSs. A business should therefore take care to balance the advantages of SNSs with the potential threats that are inherent.
While it is possible that social networking is irrelevant to some business, it presents an opportunity for many ecommerce enterprises. Businesses should be willing to invest some time and effort to their social networking efforts. It takes some resources to maintain a following since users stay with businesses whose profiles are dynamic and enjoyable. The business therefore needs to have interesting input and ensure that the interests of the target audience are the main focus.
This paper has noted that trust is a major factor in the success of failure of SNSs to assist businesses. Research should be undertaken to establish how SNSs can commercialized trust without destroying that trust. Research also needs to be undertaken to determine if social networking sites actually move businesses.
This will assist to propose whether it is practical for a business to pay the SNSs for the advertisements. While the data on click-through supports the use of SNSs for ecommerce, it would be more useful to determine how many click-through ultimately translate in sales for the business. Research could also focus on whether the presence of a business in SNS communities translates to increased sales.
SNSs are changing ecommerce by giving it an opportunity to grow at a significant rate. This paper set out to discuss whether Facebook and MySpace are good for supporting business. To this end, the paper has documented the rise of SNSs as the preferred means of advertisement and proceeded to offer the benefits and threats that these sites may present to e-commerce.
It has been shown that businesses can use these SNSs to gather information that can be used to predict or understand consumer demands. The sites can also be used to expand the market base of a business. The potential to market products through SNSs is very enticing since these sites have the capability to reach most potential customers. Even so, this paper has demonstrated that the use of SNSs presents both an opportunity and challenges for marketers.
Clemons, EK Barnett, S & Appadurai, A 2007, The Future of Advertising and the Value of Social Network Websites: Some Preliminary Examinations, Minneapolis: ACM.
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