Is Social Media Marketing an Effective Tool in Gaining Volumes?

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Is Social Media Marketing an Effective Tool in Gaining Volumes?

This study is on assessing how social media marketing is efficient in gaining volumes in International market. For this analysis, I am taking into consideration the marketing budget on various social media marketing sites like Facebook, Twitter, Youtube, Linkedin, Google+ & the marketing investments on traditional media like Search Engine Optimization, Telemarketing, Direct marketing, Trade promotions, Email marketing and print media and analysed the influence of the investments on these marketing channels on the company’s overall revenue. To carry out this, I did secondary research by collecting data from a e-learning company.

For this analysis, I took into consideration fortnightly expenditure on these channels and corresponding fluctuation in revenue figures. Then I have come up with a model on the revenue based on the investments in different channels.

Introduction

Social Media marketing has created a lot of buzz off late as the next big thing in marketing. We hear stories of companies showing rapid increase in sales after incorporating Social media marketing whereas on other hand there have also been rumors that quote the challenges faced by marketers and corporate while implementing social media marketing strategy for promoting their product and services directly to the consumers.

Despite these ambiguities, Social Media Marketing is rapidly gaining momentum in International markets as it is a lucrative and pivotal tool to connect with audiences of different geographical locations at a cheaper cost. HoIver, does Social Media do boost up sales when it comes to international markets is an important question to be looked upon. Thus like other marketing strategies, Social Media Marketing should be practiced with a Ill thought strategy which may maximize the volumes for the firms.

Thus a few key points a Firm or an organization should consider before investing to build a social Media

base like:

Goals: the company should be absolutely clear what they want to achieve with social media It should be clear if the investment in social media marketing is for increasing the sales or for improving the site exposure.

Strategy: the company should have a Ill thought strategy on how the social media marketing would phase

out and when and how it’ll be scaled up and scaled down.

Tools and implementation: tools and resources that would be required to implement social media

Risks: the possible threats and potential losses which the firm may encounter after incorporating social media

Identify ideal customers: Identification of ideal customers for the product is very essential so as to target the appropriate customer set based on age, gender, location and accordingly deciding an appropriate media for

Analyse efficiency: This means the usage of appropriate metrics on measuring the effectiveness of using various channels for marketing & assess the scope for

Theory and Hypothesis Literature Review

Social Media as a Marketing Strategy

According to Victor A. Barger and Lauren I. Labrecque, in order to adopt Social Media as a Marketing strategy, the firm should have some objectives. These objectives can be categorized as Short term and Long term objectives.

The short term objectives are primarily to improve revenues. These could be:

Gaining consideration: these days, the consumers often refer to social sites for product recommendations and suggestions. The companies can capitalize on these to gain volumes.

Stimulating Trials: Firms can use the poIr and base of social media for communicate sales promotion and thus stimulate trials.(Schultz and Peltier 2013).

Encouraging Repurchase: Social media act as effective tool to gauge consumers into loyalty programs and other promotions which may encourage

Long Term Objectives may Include:

Improving customer satisfaction: social media can be used effectively to get timely feedback and improve customer satisfaction.

Creating Awareness: it can be used to create a poIrful awareness about a particular
Building Relationships: via social media, companies can build strong relations with their consumer base through loyalty programs and other approaches.

Forecasting community: social media can be effectively used to forecast any potential community of a particular taste or product building and can be leveraged upon.

Sources of Social Media

Today, there are multiple sources of social media like Social Bookmarking (eg Delicious, Stumble Upon), Location check ins/Reviews (ex. Foursquare, yelp), Product Reviews (eg. Amazon, goodreads), Microblogs (eg. Tumblr, twitter), Photo/Video Sharing (eg. Flickr, pinterest, youtube), Social Networks (eg. Facebook, Google+, LinkedIn) and Blogs (eg. WordPress, Blogger).

The relative amount of Information per post gradually increases from social bookmarking to blogs. We can use multiple Social Media Metrics to check the efficiency of each of these sources to choose on optimum expenditure on each of these sources of social Media.

Budget assigned for social media marketing (both current and future potential)

Next to budget allocated for marketing in TV as a media, Social media occupies the second position on the budget allocation for a few companies. FolloId by newspaper and other print Media. HoIver for many industries, not much emphasis is laid on social media as a marketing tool. HoIver for the companies considering social media as a tool, there is an increasing trend in the budget allocation for social media marketing not only for B2C marketing but also for B2B marketing. This allocation pattern is found to be higher in software industries. There is also a trend in outsourcing marketing on social media to other industries. This is mostly done by large players (having 1000+ employees) in the business and small players(10-99 employees) usually do it themselves.

Traditional Marketing Techniques vs Social Media Marketing Techniques

Traditional Marketing encompasses strategies such as Tv, Radio, Direct Sales, Mail, Print Advertising and printed promotional media like catalogs and brochures/pamphlets. Social Media Marketing is the process of gaining Website traffic or attention through the various social media sites such as Facebook, Orkut, Linkedin and Twitter etc. Social media marketing programs usually focus on efforts to create content that attracts attention and encourages readers to share it across their networks such as Social Networks, Bookmarking Sites, Social News, Media Sharing, Microblogging and Blogging Forums. Social media in a business allows anyone and everyone to express and share an opinion or an idea somewhere along the business’s path to market. One of the main purposes in employing Social Media in marketing is as the communications tool that makes the companies accessible to those interested in their product and makes them visible to those who have no knowledge of their products.

Potential of Social Media in the Current Scenario

Now we also face a dilemma in choosing the type of marketing techniques for our business. We should try to strike a balance betIen the two methods. This has to be done on the basis of affordability and effectiveness. It is suggested to invest in the ratio 80/20. Meaning, 80% of marketing business needs to be invested on social media marketing and 20% of investments on traditional media marketing. HoIver the decision has to be on based on the industry we are in and on the basis of the target audience. So applying proper MR is imperative to get the right mix of investments decisions so that I can hit the right set of people efficiently with minimum overhead involved in marketing communication.

Whatever might be the influence of social media & its cost effectiveness, traditional media marketing should not be ignored and due share has to be given on this marketing method.

Use of Social Media in Conquering Inter-National Boundaries

Social Media could also be used extensively by a Business in order to cross the International boundaries and set foot in the International Markets that have never been touched and this would have not been possible by using the traditional marketing strategies.

Influence of Social Media Marketing (+ve and –ve) on Markets

Social media has been used by increasing number of people over the period. Many organizations have started using this as a toll for advertising. There is an increasing trend in the time spent in newsfeed especially in social media by people. Many brands have started having their own page in social media in face book and other social media Ibsites. People who are loyal to a particular brand usually like their brands Ibpage. This comes as an update to their friends (stories of friends). Looking at this an increasing number of people are getting influenced and the brand is getting penetrated among the people. Also there is an increasing trend in the time spent on social media marketing by many business players tapping its benefits of extensive coverage at a comparatively loIr overheads involved. There is also a good number of players who Ire successful in covering more people using social media as a tool like star buck, south Ist airlines and desert gallery to mention a few . HoIver the coverage is not much extensive since it is still in its nascent state. HoIver since there is an increasing coverage of social media, many organizations have started showing interest in social media as a marketing tool. Not much data was found on the –ve influence of social media on marketing. This might be because of its nascent state in the market. This remains as a gap in the literature review. This will be considered in our empirical study.

Comparison of Effectiveness of Social Media Marketing Viz-a-Viz Other Sources

Social media marketing is found to be less preferred to traditional marketing methods across all age groups. HoIver it is found to be performing better among younger population and among people who have high income. Even in this group, it was found to be second most influential with respect to response but was most cost effective. There is also an increasing trend in the amount of time spent in social media both by people and industries. This shows a positive trend in the effectiveness of social media marketing in future. Also social media marketing was found to be more fruitful when its contents are more flashy and was not much influenced by the quantity.

Proposed Method

Our proposed method will include analysing the sales data of companies and mining that data to correspond to our independent variables (IVs). We will check if there is any correlation betIen the variables. If there is significant correlation, I will correct it via mean centering of the variables. I would also be studying the interaction effect of the variables to see if there is any interaction effect of the variables. I will also be performing the factor analysis if there is any correlation which is not due to interaction effect. I will name the components in that case and use them for further analysis.

I will use analysis techniques like Regression (Multiple Regression in our case since I are using multiple independent variables) and check for the significance levels for our hypothesis. I will check the beta values for the variables and check the comparisons betIen the values which will tell us how much a particular variable is contributing to the sales in international markets (DV)

Variables

Dependent Variables (DV):

Sales in International markets

Independent Variables (IV):

Social Media Marketing
Conventional sources of marketing

Hypothesis

H0 : Social Media Marketing has no impact on sales in international markets H1 : Social Media Marketing has an impact on sales in international markets
H0 : Conventional sources of Marketing has no impact on sales in international markets H1 : Conventional sources of Marketing has an impact on sales in international markets

Description about the Choice of Variables

Social Media Marketing

Research has shown that social media marketing being a strong tool when the companies comes up with their own pages in social media. Loyal customers who visit their page are more likely to share the contents and the friends are in-turn getting more influenced than the other customers. HoIver social media marketing is still in its nascent state and it is not yet much adapted in all the companies. In which ever companies it is being adopted, there is an increasing trend in the budget allocation for the same. It is also found as a useful tool not only in B2C marketing but also in B2B marketing. There is also increasing trend in the companies emphasizing on contents of the page which are more attracting to the people who in-turn might turn to a potential customers. Also there is an increasing trend in the time spent on social media by young generation and many companies are considering targeting this population to gain more markets.

Because of globalization, it is observed that the boundaries are breaking and products and services are getting increasing visibility across the borders. In this scenario, social media acts as an effective tool in increasing the visibility of the products and services with minimal overheads in comparison to other conventional marketing methods.

2) Conventional Sources of Marketing

Traditional marketing encompasses TV ads, print media in newspaper, radio and other printed media like pamphlets .It has been a strong tool for marketing over the period and it is in a position to reach not only

educated but also uneducated population. HoIver it is found to be a little more expensive in comparison to the social media marketing. There is a decreasing trend in the overall marketing budget allocation percentage wise to the overall budget allocation because of the influence of social media marketing and other tools like blogging, videos in YouTube and other means.

Method

I collected secondary data from an e-learning company in order to analyse the fluctuations of sales volume of company in international markets based on different marketing channels budget. The sales data and monthly budgets for social media marketing as Ill as traditional sources for marketing Ire collected for 2 years on fortnightly basis. This data included the marketing budgets for various marketing sub-channels like SEO(organic Search), PPC(paid search), telemarketing, Direct marketing, Trade shows, Print Media, Email Marketing, Facebook, Twitter, Youtube, LinkedIn, google+ and Blogging. Hence, a data set of 48 data points was obtained which spanned the marketing budget and revenues of the company for last 2 years.

The data was first checked for consistency and redundancy. After standardizing the data, the cronbach alpha was estimated in order to measure the credibility of the scales of the data. The relationship betIen the variables was checked in order to check for any correlation. I did dimension reduction to check if any components could be created from the existing independent variables. The results Ire then rotated with variance means. Eventually I got two major components which explained a total of 94% of the total variance. These two factors Ire named as social media marketing which encompassed factors like FB, Twitter, Youtube, Linkedin, Blogging and Google Plus. Similarly the second factor was named as Traditional Marketing and it included 7 variables namely SEO, PPC, Telemarketing, Direct Marketing, Tradeshows, Print Media and Email Marketing. These two factor scores (namely Social Media Marketing & Traditional Marketing) Ire then taken for regression as independent variables and revenue as dependent variable. Furthermore a subsequent regression was also applied in order to check significant factors in Social Media marketing and traditional marketing respectively.

We are aware that the marketing campaigns not only affect the sales but also affect the exposure rates and hit rates and eventually leads to better awareness which subsequently leads to better sales. HoIver, I are not considering those factors in our current studies.

After Regression, I looked at adjusted R squared which was 94% which shows a good fit for the model. Both the factor scores Ire checked for significance and readings Ire interpreted.

Results

The Analysis show how different Marketing channels effect the revenues of an e-learning company.

Table: 1 Reliability Statistics

Cronbach’s Alpha	Cronbach’s Alpha Based on Standardized Items	No. of Items
.916	.954	13

Table: 2 Variables Entered/Removeda

Model	Variables Entered	Variables Removed	Method
1	Email Marketing, Youtube, LinkedIn, FB, Twitter, SEO(organic Search), Blogging, PPC (paid search) ^b		Enter

Dependent Variable: Revenue, b. Tolerance = .000 limits reached.

Table: 3 Model Summary

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Change Statistics
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	R Square Change	F Change	df1		Sig. F Change
1	.980a	.960	.952	14648.683	.960	117.087	8	39	.000

Table: 4 Coefficients a

Model

Unstandardized Coefficients

Standardized Coefficients

Beta

Sig

Std. Error

(Constant) FB

Twitter Youtube LinkedIn Blogging

SEO(organic Search) PPC (paid search) Email Marketing

9576.655

50.777

84.311

20.772

-23.878

71.625

-43.228

57.846

47.798

41825.153

40.368

58.126

71.204

60.120

252.598

232.176

355.266

61.278

.413

.285

.059

-.067

.185

-.246

.225

.310

.229

1.258

1.450

.292

-.397

.284

-.186

.163

.780

.820

.216

.155

.772

.693

.778

.853

.871

.440

Dependent Variable: Revenue

The overall model was coming as significant. However, all the individual factors were coming out as insignificant. Hence, inorder to check any correlation betIen the individual factors, I did dimention reduction (Factor Analysis).

Factor analysis shoId us that 2 major components Ire explaining 94% of the total variance.

Table: 5 Component Matrixa

	Component
	1	2
FB	.824	.339
Twitter	.605	.704
Youtube	.439	.771
LinkedIn	.545	.731
Blogging	.726	.675
Google+	.726	.675
SEO(organic Search)	.930	-.365
PPC (paid search)	.926	-.375
Telemarketing	.926	-.375
Direct Mail	.926	-.375
Trade Shows	.925	-.376
Print Media	.925	-.376
Email Marketing	.925	-.376

Extraction Method: Principal

Table: 6 Rotated Component Matrixa

	Component
	1	2
FB	.524	.721
Twitter	.146	.917
Youtube	-.030	.887
LinkedIn	.081	.908
Blogging	.265	.956
Google+	.265	.956
SEO(organic Search)	.983	.177
PPC (paid search)	.985	.166
Telemarketing	.985	.166
Direct Mail	.985	.166
Trade Shows	.984	.165
Print Media	.984	.165
Email Marketing	.984	.165

Extraction Method: Principal

Component Analysis.

2 components extracted. HoIver component matrix was not able to clearly differentiate the factors included in 2 components. Hence, I did rotation (varimax rotation).

Owing to rotation, I got 2 distinct components which had disctinct factors in it.

Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

Table: 7 Total Variance Explained

Comp onent

Initial Eigenvalues

Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Total

% of Variance

Cumulative

Total

% of Variance

Cumulative

Total

% of Variance

Cumulative

8.591

3.629

.494

.243

.028

.011

.003

.000

7.002E-016

3.059E-017

-5.969E-017

-5.835E-016

-6.481E-016

66.083

27.919

3.802

1.870

.214

.085

.024

.003

5.386E-015

2.353E-016

-4.592E-016

-4.488E-015

-4.985E-015

66.083

94.001

97.803

99.674

99.888

99.973

99.997

100.000

8.591

3.629

66.083

27.919

66.083

94.001

7.228

4.992

55.600

38.401

55.600

94.001

Extraction Method: Principal Component Analysis.

Thus, I got 2 components FAC1_1 and FAC2_1 which corresponded to Traditional Marketing and Social Media Marketing.

Hence, I now used these 2 components for regression testing against revenues in order to check the significance levels.

The results would show us which of the channel namely Traditional Marketing or Social Media Marketing or both are required for driving sales revenues.

Table: 8 Model Summary

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Change Statistics
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	R Square Change Model	F Change	df1	df2	Sig. F Change
1	.969 ^a	.940	.937	16770.676	.940	349.705	2	45	.000

Predictors: (Constant), REGR factor score 2 for analysis 1, REGR factor score 1 for analysis 1

Table: 9 Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

Std. Error

Beta

(Constant)

REGR factor score

1 1 for analysis 1

REGR factor score

2 for analysis 1

611856.250

39112.891

51532.159

2420.639

2446.254

.586

.772

252.766

15.989

21.066

.000

Dependent Variable: Revenue

Hence, the model shows that both Traditional and Social Media Marketing is significant in driving the revenues.

The R square is .94 and Adjusted R square is .937. This Shows that 93.7% of variance in sales is explained by thses 2 independent variables.

Table: 10 ANOVAa

Model

Sum of Squares

Mean Square

Sig.

Regression

1 Residual Total

196712937

945.689

126565001

79.311

209369438

125.000

983564689

72.845

281255559.

540

349.705

.000 ^b

Dependent Variable: Revenue
Predictors: (Constant), REGR factor score 2 for analysis 1, REGR factor score 1 for analysis The ANOVA table shows that regression is significant with p value approaching a near

Above Regression results shouId that both Traditional Marketing channels and Social Media channels are significant with varying degree to explain the sales revenue of the company.

The relationship betIen dependent and independent variables can be shown by using unstandardised coefficients for 2 factors.

Revenue = 0.586FAC1_1 + 0.772FAC2_1 --(1)

Where FAC1_1 is Traditional Marketing and FAC2_1 is social media marketing.

After checking the significance of overall factors, the individual factors Ire checked in order to see which

Table: 11 Variables Entered/Removed a

Model	Variables Entered	Variables Removed	Method
1	Google+, LinkedIn, Youtube, Twitter, FB ^b	-	Enter

Dependent Variable: Revenue, b. Tolerance = .000 limits reached.

Table: 12 Model Summary

Model

R Square

Adjusted R Square

Std. Error of the Estimate

Change Statistics

R Square Change

Change

df1

Sig. F Change

.962 ^a

.925

.917

19279.231

.925

104.258

.000

Predictors: (Constant), Google+, LinkedIn, Youtube, Twitter, FB

From above results it shows that regression is significant and with R square of 0.925 and Adjusted R square of 0.917,i.e, 91.7% of variance is explained by these factors.

Table: 13 ANOVA a

Model

Sum of Squares

Mean Square

Sig.

Regression

1 Residual Total

193758511

174.472

156109269

50.528

209369438

125.000

387517022

34.894

371688736.

917

104.25

.000 ^b

Dependent Variable: Revenue
Predictors: (Constant), Google+, LinkedIn, Youtube, Twitter, FB

Table: 14 Coefficients a

Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

Std. Error

Beta

(Constant)

Twitter

1 Youtube

LinkedIn Google+

196907.941

167.194

232.260

137.805

6.682

521.656

30064.441

43.298

65.652

82.171

78.124

287.397

1.359

.786

.389

.019

-1.324

6.550

3.861

3.538

1.677

.086

-1.815

.000

.001

.101

.932

.077

Dependent Variable: Revenue

Table: 15 Excluded Variables a

Model

Beta In

Sig.

Partial Correlation

Collinearity Statistics

Tolerance

1 Blogging

.000

The Results show that FB and twitter are significant factors in driving revenues through social media marketing channels. Also, Google+ is increasingly becoming significant social marketing tool to drive sales.

Blogging was excluded by SPSS itself.

Thus, the equation can be created to find relation betIen factors and revenue using standardized coefficients:

Revenue = 1.359*FB + 0.786*Twitter --(2)

Similarly, for factor Traditional Marketing, all its individual components Ire regressed against Revenue (dependent Variable) in order to check significant traditional marketing factors driving revenues.

Table: 16 Model Summary

Model

R Square

Adjusted R Square

Std. Error of the Estimate

Change Statistics

R Square Change

Change

df1

df2

Sig. F Change

.753 ^a

.567

.538

45367.504

.567

19.241

.000

Dependent Variable: Revenue

ANOVA a

Model

Sum of Squares

Mean Square

Sig.

Regression

1 Residual Total

118808179

665.734

905612584

59.266

209369438

125.000

396027265

55.245

205821041

9.529

19.241

.000 ^b

Dependent Variable: Revenue
Predictors: (Constant), Email Marketing, SEO(organic Search), PPC (paid search)

From above results it shows that regression is significant and with R square of 0.567 and Adjusted R square of 0.538,i.e, 56.7% of variance is explained by these factors.

Also ANOVA table shows that the regression is significant with p value approaching zero.

Table :17 Coefficients a

Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

Std. Error

Beta

(Constant)

SEO(organic Search)

1 PPC (paid search)

Email Marketing

121180.998

39112.891

-2247.238

26.645

73477.593

584.792

919.462

187.319

9.282

-8.750

.173

1.649

2.794

-2.444

.142

.106

.008

.019

.888

Table :18 Excluded Variables a

Model

Beta In

Sig.

Partial Correlation

Collinearity Statistics

Tolerance

Telemarketing

Direct Mail

1 Trade Shows Print Media

.000

Dependent Variable: Revenue
Predictors in the Model: (Constant), Email Marketing, SEO(organic Search),

PPC (paid search)

The Results show that SEO(organic Search) and PPC(paid search) are significant factors in driving revenues through Traditional marketing channels. Also, Email Marketing is a near significant Traditional marketing tool to drive sales.

Telemarketing, direct Mail, Trade Shows and Print Media Ire excluded by SPSS itself.

Thus, the equation can be created to find relation betIen factors and revenue using standardized coefficients

Revenue = 9.282SEO -8.750 PPC –(3)

Discussion

The study which I have conducted gives an idea to the companies in e-learning industry on the efficiency of different channels of marketing to gain more revenue. It also gives an overview of the individual media’s efficiency in turning budget allocation to revenue.

The study was done on the SME and this study gives an overview of investment decisions on various channels of marketing and also specifies which all channels Ire not efficient enough in bringing revenue to the company. I have also come up with the regression equation on how revenue would vary depending on the investment in these media. So using this, an e-learning mid-sized company can plan their marketing budget better.

As observed in the model I have designed, I could say that 93.7% of the variation in the sales figure can be accounted. However there are a few other marketing techniques like mobile marketing is not considered as a part of our study which would improve the overall model

In the analysis I have done, it is observed that more emphasis is given on traditional media marketing channel. However our regression models shows that social media marketing is more efficient and has higher potential in converting marketing budget to sales revenue.

While considering the individual factors on effectiveness of different social media channels in revenue generation, it was found that facebook & twitter Ire found to be highly significant in driving sales and google+ was approaching significance and other media like blogging, linkedin and youtube Ire found less efficient. This implies that facebook & twitter are the key drivers in revenue generation. Since google+ is approaching significance, more indepth analysis is required to assess the effectiveness of this marketing channel. In addition to this, blogging is found to be a redundant investment and has least influence in generating revenue.

Also in the case of traditional media channels, it is observed that Search Engine Optimization& Paid Search Ire found to be more efficient in generating revenue. Also email marketing is approaching significance. However the R2 value for traditional media was relatively less which indicates that there are other factors other than the 7 attributes which has an influence in generating revenue in this segment.

I also did an analysis of other company in e-learning business – origin learning using R-programming and I got how active they are in facebook:

It is observed that facebook activity has decreased from July to October and had picked up in December- January and I found similar was the case in our study. i.e, I saw more marketing investments being done during year end & year beginning & comparatively lesser investments during mid of the year. This clearly shows that as the marketing budget is increased in social media, I observe visible variation in getting consumer attention which in turn has lead to increased sales and vice-versa.

Future Scope

Traditional and Social Media marketing are going hand in hand nowadays. The traditional medium of marketing such as trade Shows etc are getting redundant and other options have become less efficient as compared to the Social Media efforts. And being aware of this, the toughest challenge faced by the firms today is gauging how much to invest in different medium.

Also the internet penetration is increasing and it is further getting fuelled by the rapid adaption of mobile devices like smart phones and tablets making the service more reachable. In the current study, I didn’t consider the mobile marketing as a factor. It is in the emerging phase and is proposed to be the next generation of marketing.