A cost benefit analysis of Social Media Marketing

A COST-BENEFIT ANALYSIS OF SOCIAL MEDIA MARKETING FROM THE PERSPECTIVE OF IRISH SMALL-TO-MEDIUM ENTERPRISES Is Social Media Marketing a cost-effective tool for Irish Small-to-Medium Enterprises?

David Scanlon

A dissertation submitted to the University of Dublin in partial fulfilment of the requirements for the degree of M.Sc. in Management of Information Systems

2009

Declaration

I declare that the work described in this dissertation is, except where otherwise stated, entirely my own work, and has not been submitted as an exercise for a degree at this or any other university.

Signed: ___________________

David Scanlon August 13th 2009

Permission to lend and/or copy

I agree that the School of Computer Science and Statistics, Trinity College may lend or copy this dissertation upon request.

Signed: ___________________

David Scanlon August 13th 2009

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Acknowledgements I would like to express my thanks to the individuals who participated in this research, with special regard to those who partook in the pilot questionnaire and provided such instructive feedback. I also wish to thank my employers, Enterprise Ireland, for the sponsorship and support afforded to me during the course of my studies. I particularly wish to thank my colleagues in the eBusiness Unit for their support and encouragement, and the staff in the Client Knowledge Services department for their help in sourcing articles for my research. I would like to thank my parents and family for their invaluable suggestions and proofreading efforts, as well as their continuing support at each stage of my life-long journey in education. I wish to thank my supervisor Barry Collins for the guidance and feedback he provided during the course of my work. Finally, a very special word of thanks to my wife Sinéad, who now knows far more about social media than she would ever have wished to. Without her endless patience, advice and inspiration this research would likely not have reached completion - an achievement made all the more remarkable given the wonderful job she has done in raising our newborn son Fionn.

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Abstract A cost benefit analysis of Social Media Marketing (SMM) from the perspective of the Irish SME is presented. SMM is the process by which a company can enable and engage in meaningful bi-directional conversations with its customers within an online environment. High profile examples of SMM include Zappos.com's use of the Twitter micro-blogging service, Dell's Ideastorm customer forum, and Blendtec's "Will It Blend?" video series on YouTube. A review of the literature establishes SMM's position in the continuing evolution of marketing practices. Further drawing from the literature, the benefits of SMM to a company's performance are identified, namely: an improvement in customer acquisition and retention performance; and an improvement in a company's Research and Development or New Product/Service Development processes. An online survey of those companies using SMM is detailed, and its findings presented and discussed. The primary purpose of the survey was to determine the level and nature of resources being committed by Irish SMEs to SMM, as well as to establish what business benefits are being realised. Results indicate that SMEs consider SMM to be more effective than traditional marketing methods with regard to customer acquisition and retention, and that a significant majority of respondents are likely to continue to include SMM in their marketing plans in the future. SMM is also reported as making a positive contribution towards companies' Research and Development or New Product/Service Development processes. The study concludes by noting the suitability of SMM for the particular approach to marketing inherent within SMEs, while emphasising the importance of developing and maintaining a comprehensive business strategy to guide its use.

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Table of Contents Declaration.............................................................................................................................ii Permission to lend and/or copy..............................................................................................ii Acknowledgements...............................................................................................................iii Abstract.................................................................................................................................iv List of Tables.......................................................................................................................viii List of Figures.......................................................................................................................ix Chapter 1. Introduction...........................................................................................................1 Chapter 2. Literature Review.................................................................................................4 2.1 Definition.....................................................................................................................4 2.2 Usage of SMM.............................................................................................................9 2.3 Benefits of SMM.......................................................................................................11 2.3.1 Customer Retention............................................................................................11 2.3.2 Customer Acquisition.........................................................................................13 2.3.3 Research and Development and New Product/Service Development...............15 2.4 SMEs and Marketing.................................................................................................17 Chapter 3. Research Methodology.......................................................................................19 3.1 Research Question.....................................................................................................19 3.2 Research Philosophy..................................................................................................19 3.3 Ethics.........................................................................................................................20 3.4 Population..................................................................................................................21 3.4.1 Definition of Population....................................................................................21 3.4.2 Participants.........................................................................................................21 3.5 Design........................................................................................................................24 3.5.1 Survey Details....................................................................................................24 v

3.5.2 Participant Information Sheet............................................................................24 3.5.3 Participant Consent Form..................................................................................24 3.5.4 Questionnaire.....................................................................................................25 3.5.4.1 Company Profile........................................................................................25 3.5.4.2 Use of Marketing........................................................................................25 3.5.4.3 Use of SMM...............................................................................................25 3.5.4.4 Impact of SMM..........................................................................................26 3.6 Procedure...................................................................................................................27 3.6.1 Pilot Survey........................................................................................................27 3.6.2 Online Survey....................................................................................................28 3.6.3 Quantitative Analysis.........................................................................................28 3.6.4 Qualitative Analysis...........................................................................................30 4. Findings............................................................................................................................32 4.1 Introduction...............................................................................................................32 4.2 Quantitative Analysis.................................................................................................32 4.2.1 Impact on Social Media Marketing...................................................................32 4.2.2 Use of Marketing...............................................................................................37 4.2.2.1 Overall Marketing Budget..........................................................................37 4.2.2.2 Breakdown of Overall Marketing Budget Between Online and Offline....38 4.2.2.3 Marketing Spend as a Percentage of Average Cost-Per-Sale ....................38 4.2.3 Use Of Social Media Marketing (SMM)...........................................................39 4.2.3.1 SMM Tool Use...........................................................................................39 4.2.3.2 Number of Months Using SMM................................................................41 4.2.3.3 Motivation to Begin Using SMM..............................................................42 4.2.3.4 Level of Staff Involvement........................................................................44

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4.2.3.5 Percentage of Time Spent Monitoring or Contributing to Online Conversations.........................................................................................................45 4.2.3.6 Percentage of Overall Marketing Budget Spent on SMM.........................46 4.2.3.7 SMM Spend as a Percentage of Average Cost-Per-Sale............................47 4.3 Qualitative Analysis...................................................................................................49 4.3.1 Impact of SMM on Research and Development (R&D) or New Product/Service Development...............................................................................................................49 4.3.2 Positive and Negative Impacts of SMM............................................................52 4.3.2.1 Positive Impacts.........................................................................................52 4.3.2.2 Negative Impacts........................................................................................54 4.3.3 Changes to Initial Approach...............................................................................56 Chapter 5. Conclusions.........................................................................................................58 5.1 Benefit of Research...................................................................................................58 5.2 Discussion of Results.................................................................................................59 5.3 Contribution to Field of Research.............................................................................66 5.4 Limitations of Research.............................................................................................67 5.5 Future Research Considerations................................................................................68 References............................................................................................................................70 Appendix A: Application for Ethical Approval....................................................................78 Appendix B: Participant Information Sheet.........................................................................82 Appendix C: Participant Consent Form...............................................................................83 Appendix D: Questionnaire..................................................................................................85 Appendix E: Email Invitation to Participants.......................................................................96 Appendix F: Responses to Open-ended Questions..............................................................98 Vita.....................................................................................................................................110

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List of Tables Table 1: Effectiveness of SMM with Regard to Customer Acquisition...............................32 Table 2: Increase in the Rate of Customer Acquisition Since Adopting SMM....................34 Table 3: Effectiveness of SMM with Regard to Customer Retention..................................35 Table 4: Increase in the Rate of Customer Retention Since Adopting SMM.......................37 Table 5: Overall Marketing Budget as a Percentage of Annual Revenue............................38 Table 6: Marketing Spend as a Percentage of Average Cost-Per-Sale.................................39 Table 7: SMM Tool Use.......................................................................................................40 Table 8: Motivators to begin using SMM............................................................................43 Table 9: Percentage of overall marketing budget spent on SMM........................................47 Table 10: SMM spend as a percentage of average cost-per-sale..........................................48 Table 11: Likelihood of SMM forming a significant portion of marketing activities in the future....................................................................................................................................48

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List of Figures Figure 1: Impact of SMM on Respondents Rate of Customer Acquisition..........................33 Figure 2: Impact of SMM on Respondents Rate of Customer Acquisition..........................35

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Chapter 1. Introduction Irish Small and Medium Enterprises (SMEs) are coming to the realisation that they are competing in increasingly globalised and online marketplaces. Irish consumers (both in a business-to-business and business-to-consumer context) are spending more time online researching their purchases, carrying out their purchases, and discussing those purchases. In order to successfully attract new customers and retain existing ones, Irish SMEs need to create meaningful engagements with customers in the online environment.

When customers visit an online store, the visit is seen to be successful if the visitor: a) carries out the purchase they intended; b) carries out an unplanned purchase; c) returns to the website in the future; or d) recommends the website to another person. As online marketplaces have evolved over the past decade or so, it has become clear that a web store can increase its likelihood of success by the addition of "social cues" to the shopping experience (Wang, et al., 2007, pp. 153 - 155). Social cues (i.e. cues based on human characteristics) are artefacts or features of an online marketplace that attempt to replicate some aspect of the offline shopping experience for a customer. Traditionally, creating social cues in an online marketplace ranged from providing low-level feedback and interactivity through the use of email or Frequently Asked Questions (FAQ) pages, to providing a comfortable environment to the customer through the use of well designed site-navigation and user interface, and even up to the point of providing avatars (i.e. a virtual character) to provide real-time online assistance, often powered by Natural Language Processing algorithms.

In more recent years, the Web has become a much more interactive and social environment, and the increase in the amount of people using it to create and share experiences has been exponential. The "Web 2.0" tools at the disposal of users (e.g. blogs, microblogs, podcasts, fora, multimedia channels - e.g. YouTube/Flickr, reviews and recommendations) represent the most sophisticated form of social cues which are currently available to create customer engagement in an online environment. Many large organisations have used these tools to successfully co-create value and experience with customers through their engagement platforms: oft-cited examples include Nike's Joga social network service for football fans, ComCast's use of the microblogging service 1

Twitter to provide customer support, and Boeing's BoeingBlogs initiative. Organisations such as these are using this approach (dubbed "Social Media Marketing" (SMM)) to maintain effective communication channels both inside and outside their sphere of influence on the web, and to create invaluable "social capital". Recent research carried out by the Aberdeen Group (2009a), highlights the importance of SMM: in their survey of organisations who engage in SMM, figures show that 95% of respondents improved the likelihood that customers would recommend their products or services, and that 95% improved their customer acquisition rate. A further survey by WhitePaperSource (2009), identified benefits of SMM ranging from generating exposure for the business (81% of respondents), to helping close business transactions (35%), thus highlighting the real value businesses can achieve through the use of SMM. Given the economic recession being experienced globally since the end of 2008, it is clear that SMM represents an avenue of growth that SMEs cannot afford to ignore.

However, the cost (both in terms of financial and personnel), of engaging in SMM can be considerable. In the WhitePaperSource (2009) survey of SMM practitioners, it was reported that 64% of marketers are using social media for 5 hours or more each week, while the figure for those engaged in SMM for 10 or more hours weekly stands at 39%. These figures represent a significant resource commitment for the SME - given their nature, they may not have a dedicated resource for marketing, but instead depend upon a mix of generalist staff who are willing to carry out the tasks involved (Gilmore, et al., 2007). An SMM campaign may also carry a high financial cost, depending on the technology and channel mix, as well as the intended reach of the campaign. Forrester Research (2007a) predict a growth in SMM spending to $61 billion by 2012 in the US alone, of which almost $18 billion will go towards the emerging Web 2.0 channels and online video. While these spending levels are predominantly driven by the large multinationals, the costs associated with SMM are non-trivial, and need to be considered.

There is also an associated risk that SMEs may approach the SMM channel incorrectly, with no strategic alignment to their business goals. A common mistake that can be made concerns an organisation investing in an SMM channel where its target market are not actively engaging: e.g. creating and resourcing a presence on the Facebook social networking service (SNS), when the majority of its customers use the MySpace or Bebo 2

SNS. Forrester Research (2007b) recommend that companies should approach the SMM channel with a set of strategic objectives clearly defined, and that any SMM initiatives should have the full support of a senior executive. In contrast to this, Gilmore, et al. (2007) report that adoption of the Internet amongst SMEs is ad hoc in nature, with little or no strategic planning as to how best to integrate it with the company's business objectives. They go on to state that SMEs are "failing to use it [the Internet] to create real competitive advantage and simply made do with the direct operational benefits that it had to offer in terms of marketing communications." (Gilmore, et al., 2007, p. 237).

The proposed research will ask the following question: "Is Social Media Marketing a costeffective tool for Irish SMEs?". The research will also attempt to quantify the level of resources Irish SMES are currently investing in SMM, and it will set out measures for determining the value of engaging in SMM for SMEs in an Irish context. This research will be of interest to owner/managers or sales/marketing managers of Irish SMEs who currently have, or are looking to build, a presence online. The study will also be of benefit to academic researchers interested in the areas of online marketing and consumer behaviour.

This study will briefly examine the existing literature pertinent to the topic as outlined above, and then move on to a discussion of the research methodology and the practical aspects of how the research itself will be carried out. It will then detail the resulting findings and the conclusions which can be drawn from them, and finally, will list the limitations of the research and the direction any subsequent research may take.

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Chapter 2. Literature Review

2.1 Definition

Social Media Marketing (SMM) is an emerging field, and as such, definitions of exactly what it entails are continuously evolving in line with its development. For the purpose of this study, a definition is drawn from existing marketing practices as defined in the literature. The discipline of marketing has undergone dramatic change over the past two decades, and has diverged significantly from the traditional "4Ps" (Product, Pricing, Placement, Promotion) marketing-mix which had seen widespread adoption since the 1960's. Deighton (1996) first espoused the idea of "interactive marketing", a move away from the simple broadcasting of marketing message at customers, as necessitated by the growing influence of technology (database-driven marketing campaigns and the then fledgling World Wide Web were two examples of this). The three features of Deighton's "interactive marketing" were: 1) the ability for communication to occur between the individual and the organisation; 2) that the organisation could collect and analyse the response of the individual; and, 3) that the organisation could then "address the individual once more in a way that takes into account his or her unique response." (Deighton, 1996, p. 151). Deighton's view that the Web would become the "ultimate interactive medium" (Deighton, 1996, p. 152) is broadly in line with our view of what online marketing, and in particular SMM, has become today: however, his vision of "interactive marketing" does not make any allowances for the type of social interactions which are taking place today on the Web, and the hope that it would "put a more human face on marketplace exchanges without losing the scale economies of mass marketing." (Deighton, 1996, p. 151) seems naive when one considers the level of resourcing it takes to create a truly social online interaction. Iacobucci (1998) offers a more fully-formed description of interactive marketing systems, outlining the following qualities:

1. Technology - that interactive marketing is "...partly defined by the presence of technology.";

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2. Intrinsic Motivation - that there exists a segment of customers interested in interactive marketing; 3. Use of Interactive Marketing Information - that interactive marketing will generate data which is of value to the marketer and the customer; 4. Real Time - that exchanges between the marketer and the customer occur in real time; 5. Private - that is, it can be tailored and customised to suit the customer; 6. Truly Interactive - that there exists the "potential for a two-way exchange"; 7. Interactions Among Groups - that there exist interactions among groups outside of the traditional marketer/customer channel which relate to the marketing itself; 8. Networked Networks - that there exists a "greater sense of connectivity throughout the entire system and user base." (Iacobucci, 1998, pp. 7 – 10).

Again, we find that each of these qualities also exist in the concept of SMM, although we would argue that SMM is entirely defined by the presence of technology. We also find this definition to be out-of-date, as it fails to reflect the richness of the interactivity that occurs between the marketer and the customer, and between groups of customers, with particular reference to the explosive growth in the popularity of user-generated content (UGC). UGC is the term given to freely available media content created directly or indirectly by users, and can range from digital photographs uploaded to Flickr (see http://www.flickr.com), to remixed versions of video advertisements on YouTube (see http://www.youtube.com), or to 'Most Popular' articles on a news website, generated from the aggregated clicks of readers. From the SMM point of view, UGC can help to amplify a marketing message, by enabling brand advocates in a community to take the message and distribute it to their network in whatever form they feel it will be best received. UGC can also help strengthen the relationship between the company and the consumer, as the user feels that they are 'closer' to the brand, and that they have ownership of part of it (Marqui, 2006). The highest profile UGC 'campaign' has almost certainly been from Skittles, where the corporate website (see http://www.skittles.com) has been turned over almost in its entirety to user-driven websites: the 'home page' is the brand's Facebook Page (where it has close to 1 million 'fans'); the 'Products' section is the Skittles entry on Wikipedia; and the multimedia content

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on the site comes variously from YouTube or Flickr. In effect, control of the overwhelming majority of the content on the Skittles.com website is out of the hands of the company (MARS Snackfoods), and in the hands of the general public. Although opinion within the marketing and new media industries has been divided as to whether the exercise has been a success or not, the fact that the site saw a 1332% increase in traffic when the new version was released cannot be ignored (Hitwise, 2009).

In response to a perceived vagueness in the marketing discipline regarding the definition of the phrase "Relationship Marketing", Coviello, et al., (1997) developed a classification scheme to distinguish the types of marketing in common use at the time. The classification scheme (commonly referred to as Contemporary Marketing Practices, or the CMP) identifies four types of marketing:

1. Transaction Marketing; 2. Database Marketing; 3. Interaction Marketing; 4. Network Marketing.

Of the four, Interaction Marketing most closely resembles SMM, in that it involves the creation of a social relationship between the marketer and the customer which involves "trust, mutual orientation, dependence, satisfaction, commitment, and adaptation" (Ford, 1984; Wilson, Mummalaneni, 1986; Gronroos, 1990; Easton, 1992; Wilson, Jantrania, 1994, as cited by Coviello, et al., 1997, p. 513). Of particular interest, given the focus of this research on the marketing activities of SMEs, is the view that Interaction Marketing does not fall solely in the domain of a marketing professional; that it can in fact become the responsibility of almost anyone within an organisation, and that they need not always assume the role of "seller". However, Interaction Marketing as per the CMP differs dramatically from SMM in that it explicitly states that the social interaction that occurs between the marketer and the customer is a face-to-face engagement, i.e. one that is not mediated by technology. This position is most likely informed by the capabilities of the technology extant when the classification scheme was first developed. SMM can perhaps 6

be seen as a subset of Interaction Marketing that relies on technology as an enabler for the engagement between the marketing practitioner and the customer.

Coviello, et al., (2001) updated the CMP to reflect the ongoing interest in marketing interactivity in the academic and business worlds. To the four marketing types as defined in the original CMP they added a fifth, "e-Marketing"; a marketing approach that "involves using the Internet and other interactive technologies to create and mediate dialogue between the firm and identified customers." (Coviello, et al., 2001, p. 26). e-Marketing has a number of properties in common with SMM: it is an attempt to engage in dialogue with customers, while acknowledging that customers may act independently of the organisation; it also allows for the personalisation of both the marketing message and the product, based on the individual's response. Despite these shared properties, Coviello, et al. purposefully omit the social aspects of Interaction Marketing, stating that:

"The relationship however, is formal, relatively distant, and relies on technology to enable interactivity. This contrasts with Interaction marketing’s face-to-face and interpersonal contact that is based on social processes." (2001, p. 26)

In an article detailing a quantitative analysis of the relationship between the penetration of e-Marketing (as defined in the CMP) and firm performance, Brodie, et al., further state that e-Marketing:

"[...]can act as a substitute for traditional relationship marketing (IM) [Interaction Marketing] where there is face-to-face interpersonal contact based on social processes. The relationships formed in eM [e-Marketing] are reliant on technology to enable interactivity and thus have the potential to substitute for face-to-face interpersonal contact." (2007, p. 4)

This appears to directly contradict the earlier statement on the relationship between eMarketing and Interaction Marketing. While we acknowledge that advances in technology will have had an impact on the original properties of e-Marketing, it seems that the authors 7

are suggesting that e-Marketing can either extend or directly substitute each of the original four marketing types. This raises the question as to whether e-Marketing can therefore be considered a distinct marketing type in its own right, or rather as a suite of tools that can impact across the spectrum of marketing techniques. These concerns aside, while there are again broad similarities between e-Marketing (both as defined by Coviello, et al., (2001), and Brodie, et al., (2007)) and SMM, e-Marketing does not go far enough in embracing the two-way nature of the relationship between customer and marketer, Coviello, et al., stating that:

"[...]the purpose of exchange in e-Marketing is to establish a dialogue that provides individual customers access to information." (2001, p. 26)

This represents a view of the marketing engagement that is still heavily focussed on broadcasting messages to the customer: it acknowledges that the customer has input in helping refine the message, but the emphasis is still primarily on the sales process (the author accepts that this is one of the primary motivators of business, but this approach fails to fully embrace the additional opportunities and benefits presented by SMM, which will be discussed in the next section).

In their report on the social media marketing industry, WhitePaperSource offer the following definition of SMM:

"Social media marketing is an engagement with online communities to generate exposure, opportunity and sales." (2009, p. 2)

Taking this definition, we amend it based on the literature reviewed, primarily drawing on elements of Iocabucci's interactive marketing (1998), as well as Coviello, et al.'s, Interaction Marketing (1997) and e-Marketing (2001). Our new definition is also informed by the concept of the marketplace as a conversation, as put forward by Levine, et al. (2000), where buyer and seller engage in conversation to "create and improve understanding" (Hirshberg, et al., 2007, p. 3). We will therefore use the following as a 8

definition of Social Media Marketing throughout the rest of this research, that it is:

"The act of facilitating and engaging in online conversation that adds value to a brand for both the brand owner and the consumer."

2.2 Usage of SMM

As was discussed in the Introduction (Chapter 1), the level of interest in the business world in SMM has increased significantly in recent years. There are numerous high-profile success stories, alongside a smaller number of spectacularly public failures. The exponential growth in the number of people who have access to broadband worldwide and are actively using some form of social media service presents a significant business opportunity for companies who wish to engage with existing and potential customers. The Organisation for Economic Co-operation and Development (2008) report that broadband subscriptions have surpassed 267 million amongst member countries, while figures for worldwide usage show that approximately 434 million users worldwide have broadband access (Point Topic, 2009).

Usage of online social networking services has grown apace with broadband access. Facebook (see http://www.facebook.com), arguably the most popular social network in the world, has over a quarter of a billion users (Facebook, 2009), and a growth rate of 157% over the past 12 months (TechCrunch, 2009a). From an Irish perspective, Facebook's penetration doubled to over 900, 000 users in the six-month period to August 2009 (Mulley Communications, 2009). Other social networking services such as Orkut (see http://www.orkut.com),

Hi5

(see

http://www.hi5.com)

and

MySpace

(http://www.myspace.com) have user-bases in the tens of millions. Blogging and microblogging

services

are

also

experiencing

visitor

growth:

Blogger

(see

http://www.blogger.com) had 222 million unique visitors during the month of November 2008, (TechCrunch, 2008); WordPress (see http://wordpress.com) had 114 unique visitors for the same period (TechCrunch, 2008); and the micro-blogging service Twitter (see http://twitter.com), which saw 37 million unique visitors in May 2009 (TechCrunch, 2009b), experienced a growth rate of 752% during 2008 (Mashable, 2009). The amount of 9

time users spend creating and consuming social media content has also experienced massive growth: the Nielsen Company (2009) report that 1 in every 11 minute spent on the Web is now spent in online communities.

The response from companies has mostly been enthusiastic. A recent study of the Fortune 500 (an annually-published list of the largest and most influential publicly and privately held companies in the U.S.A) reported that 16% of the companies maintained a publiclyfacing blog, including three of the top five ranked organisations: Wal-Mart; Chevron; and General Motors (Barnes & Mattson, 2009). One particularly interesting statistic reported by the study is that 90% of the blogs studied have comments enabled, allowing for twoway communication between the company and its customers, a positive step given that up to 80% of consumers who make purchases online spend time reviewing other consumers comments before purchasing (Forbes, 2009). A number of companies and brands have also developed a presence within third-party social network sites: Starbucks and Coca-Cola each have over 3.5 million 'Fans' on Facebook (Inside Facebook, 2009).

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2.3 Benefits of SMM

The following section will examine a number of case-studies, reports and articles which establish the benefits of SMM to companies in general, and to SMEs in particular.

2.3.1 Customer Retention The first benefit is that of improved customer retention. One of the qualities of SMM is that it can contribute to the development of meaningful, more transparent relationships between a company and its customers. SMM requires the practitioner to speak to their customer with a 'real' voice, conveying passion and honesty on the subject - if this is not conveyed to the customer then they are likely to leave the conversation.

In a study investigating the antecedents to customer loyalty in an e-commerce environment, Srinivasan, et al., (2002) identify eight factors which can positively impact on customer loyalty, six of which can be directly achieved through the use of SMM:

1. Customisation; 2. Contact interactivity; 3. Cultivation; 4. Care; 5. Community; 6. Character.

The authors also note that customer loyalty in an e-commerce setting (which they term "eloyalty") relates positively to customers' willingness to pay a premium for the goods or services, and also to recommend the firm (Srinivasan, et al., 2002, p. 47). Boehm (2008) reports that companies who implement an Internet channel reduce their rate of customer attrition by almost 88%, and further states that

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"[...] migrating customers to the Internet channel might have a larger effect on customer retention than cross-selling activities [...]" (Boehm, 2008, p. 18).

Brodie, et al., (2007) further state that increased penetration of e-Marketing (which, as has been discussed here previously, bears many similarities to SMM) positively impacts a company's customer acquisition performance, which in turn directly impacts their customer retention performance. The author also notes that e-Marketing does not directly influence a company's customer retention performance, but that Interaction Marketing does. The perceived importance in e-Marketing is played-down, with the authors stating that:

"[...] the traditional relationship marketing practice characterized by IM [Interaction Marketing] still plays an important role for a large proportion of firms and challenges the view that eM [e-Marketing] is replacing IM [Interaction Marketing] as a relationship management tool." (Brodie, et al., 2007, p. 15)

A close examination of Coviello, et al.'s (1997) definition of Interaction Marketing (as used by Brodie, et al., 2007) reveals that there are many similarities between it and SMM, and therefore we would expect to see a positive impact on customer retention from SMM. Furthermore, we feel that Brodie, et al.'s findings regarding e-Marketing and customer retention can be might be attributed to their limited definition for e-Marketing, in particular their de-emphasis on building online relationships, as was previously discussed.

In a survey examining companies attitudes towards the use of the Internet, Day and Bens (2005, p. 161) found support for "using the internet to tighten customer relationships". They report that between 32% and 44% of responding firms saw an opportunity to "encourage customer feedback and dialogue", and "facilitate linking more points of customer contact" (Day & Bens, 2005, p. 161). These are both activities which match the opportunities presented by SMM. It is interesting to note that Day and Bens state that in their opinion the firms that will be able to take advantage of these opportunities are the ones who are already "proficient at forging close customer relationships." (Day & Bens, 12

2005, p. 160).

Reports from the marketplace would also appear to substantiate the findings regarding SMM, customer loyalty and customer retention. A paper from Aberdeen Research (2009b) suggests that 89% of the companies who excel at social media interactions (i.e. those that have deployed "social media monitoring solutions", (Aberdeen Research, 2009b, p20)) will improve customer retention year-on-year. The practice of SMM can greatly contribute to the acts of collecting, integrating and acting upon customer feedback in the online sphere. The online retailer Zappos.com presents an example of how SMM can improve customer retention. Zappos.com, regarded as the 'poster-boy' of a new generation of sociallyengaged online companies, have embraced the social media channels with a huge level of enthusiasm: they actively maintain 12 blogs on their corporate website; they post videos on YouTube on a variety of topics, e.g. "behind-the-scenes" style clips on what it's like to work at Zappos.com; and the make extensive use of the Twitter micro-blogging service, to connect both with customers and other Zappos.com employees. In a recent interview (Econsultancy, 2008) Tony Hsieh, Zappos.com CEO, stated that up to 75% of the orders received through the website are from repeat customers, a figure he credits to the high level of interaction the company has with its customers.

2.3.2 Customer Acquisition The second benefit of SMM lies in increased exposure for a company, and customer acquisition (these two items are closely related, and are therefore dealt with together here). SMM can occur wherever conversations take place online: conversations about a product, a brand, an organisation; and the conversations can take the form of blogs, forums, video sites, wikis, etc., or a combination of these. Increased company exposure and customer acquisition are enabled by SMM in two ways: SMM encourages meaningful engagements in real-time at a time and place of the customer's choosing, which generates a positive response from the customer; and the fact that it is online by nature means that SMM lends itself to word-of-mouth (WOM) marketing: the message itself and the environment in which it is created (e.g. blog comments, discussion forums) are designed for sharing and redistribution. This is closely tied to Iocabucci's concepts of "Interactions Among Groups" and "Networked Networks" (1998). In a study examining the effectiveness of WOM in 13

social networks, Smith, et al., (2007) found that influential individuals within an online network will redistribute messages which they consider to be "unique and trusted" (Smith, et al., 2007, p. 395). Smith, et al. further recommend that marketers wishing to achieve a 'viral' distribution of their message should identify those websites where influential individuals (dubbed 'mavens') are found, and engage them in meaningful dialogue to elicit their trust. Similarly, Allsop, et al., (2007) recommend targeting the points of a network where an engagement will be most effective, stating:

"[...] marketers should work to understand who has the greatest impact on the spread of WOM in their particular category and figure out ways to give them a positive experience with the brand, so they will be more likely to pass that along." (Allsop, et al., 2007, p. 402).

The authors further reinforce the positive results that engaging meaningfully with consumers via SMM can have for a company, stating:

"[...] emotional appeal (trust, good feelings, and respect) consistently has the strongest influence on corporate reputation [...]" (Allsop, et al., 2007, p. 406).

A final point on WOM marketing is worth noting, especially given the focus of this research on the Irish SME: the Nielsen Company (2007) report that 84% of Irish consumers trust WOM recommendations (i.e. recommendations from other consumers) when they are researching a purchase. Clearly then, engaging in SMM and facilitating and enabling these WOM recommendations in an online environment should be of great interest to the Irish SME.

A survey by WhitePaperSource of those companies who engaged in SMM found that: 81% had seen a growth in exposure for their business; 61% indicated an increase in site traffic, subscriptions, or opt-in mailing list; 56% said that it had led to the development of new business partnerships; 52% had seen an improvement in their search engine results ranking; and 48% reported the generation of qualified business leads (WhitePaperSource, 14

2009). In an article published by Aberdeen Research (2009a), the findings show that of those companies who excel at SMM (e.g. companies with senior management backing for SMM, or companies with processes in place to continuously adapt SMM based on their interactions) 95% improved their rate of customer acquisition, and 95% also improved their "brand advocacy" amongst their customers (Aberdeen Research, 2009a, p. 4).

2.3.3 Research and Development and New Product/Service Development The third benefit that SMM can bring to a company is in the area of Research and Development (R&D) and New Product/Service Development. Online conversations regarding products and services are a breeding ground for new product development: this is where the real problems being experienced by real users are being aired. Organisations that are able to take part in these conversations will be in a position to gather this feedback, and also to engage in an iterative design-and-test process with an energised group of users. Borg (2009) highlights the role that developing strong relationships with users can have in both the R&D and market trial elements of new products or services, stating that:

"The ability to convert knowledge and information into marketable products and services may rely on the type and quality of market relationships that a company can establish." (Borg, 2009, p. 365)

Borg further writes that the side-effects from having such relationships with consumers can include "the creation of innovation and new know-how". Borg is here using the concept of marketing to networks as espoused by Iocabucci (1998), which we have similarly drawn on in forming our definition of SMM. Su, et al. (2009) further state the importance of partnerships with consumers: the better a company is at interacting with its customers, the greater a pool of knowledge can be built identifying customers' needs, requirements, and preferences; it also enables the company to improve its ability to respond to the customers, in effect creating a 'virtuous circle'. As a result of their investigation into innovation within biotechnology firms, Su, et al., (2009) state that "Marketing capability and customer partnerships have a positive interaction effect on product innovativeness." (2009, p. 316), and that "well developed customer partnerships may facilitate the exploitation of marketing 15

capability and lead to product innovations that cater to meeting new customer needs." (2009, p. 316). This claim is further supported by Aberdeen Research (2008a), who report that 69% of companies that actively monitor their social media engagements increase the number of actionable insights in new product development year-on-year.

Reports from the marketplace would appear to support these findings. The oft-cited example of Dell's 'Ideastorm' initiative clearly shows how empowering consumers and engaging in open and meaningful conversations about a product or service can lead to innovation that adds value to both the company and the consumer. Launched in February 2007, Ideastorm was part of an initiative in Dell to become more engaged with their online user-base. Ideastorm is a forum where consumers and Dell staff can suggest, discuss and vote on new ideas for Dell products, as well get the latest information on which of the ideas will be implemented by Dell. In its 2007 filing to the U.S. Securities and Exchange Commission (EDGAR, 2007), Dell state that:

"This constant flow of communication, which is unique to our direct business model, also allows us to rapidly gauge customer satisfaction and target new or existing products."

Ideastorm is generally credited as being an enormous success, with 365 user-suggested ideas implemented at the date of publication of this research (Dell, 2009).

Vornado's (a U.S. based manufacturer of space heaters) experience with the microblogging service Twitter provides a further example of using SMM to drive new product development, albeit on a much smaller scale than that of Dell and Ideastorm. They began using Twitter with little or no idea of how it tied in with their existing business strategy. By actively monitoring the service for mentions of their own or their competitors' products, and engaging with those who were talking, they began building up a network of enthused followers. They were then able to tap into this resource to elicit feedback and suggestions about a new range of products by encouraging their online 'friends' and 'followers' to complete a survey (Bean, 2009; Pistachio Consulting, 2009).

16

2.4 SMEs and Marketing

We briefly review the literature surrounding the marketing practices of SMEs. The generally held view is that the SME approach to marketing activities is shaped by the generic characteristics of all SMEs: i.e. limited access to resources; limited expertise within the organisation; and the size of business, which determines its ability to impact the marketplace (Gilmore, et al., 2007). Marketing practice is most often at a remove from the defined business strategy of the SME (where such a strategy exists). Marketing activities are generally reactive, and occur on a needs basis: O'Dwyer, et al., (2009) report that this can frequently result in a "peripheral" marketing function, which in turn leads to "haphazard, non-sequential and unstructured" marketing decisions (2009, p47). This reactive nature means that the SME's marketing approaches are ad hoc and experimental, with SMEs in general embracing whichever marketing method they feel their customers will be most receptive to given the market conditions in place at the time (Gilmore & Carson, 1999). Marketing within the SME is seen as an evolutionary process, with those involved in the marketing activities learning experientially throughout the life-cycle of the product or service; however, this process is subject to the effects of step-changes in the external market, which are generally outside the control of the SME. The necessity of remaining close to their customer base for differentiation purposes may give SMEs an advantage in terms of the effectiveness of their marketing activities. The close relationships forged between the SME and its customers lend themselves to the practice of 'network marketing' - that is, the marketing that occurs through the every-day communication between the staff of an SME (most notably the owner/manager) and its customers. Although network marketing as per the CMP definition has a strong strategic emphasis (Coviello, et al., 1997), network marketing within the SME context is dynamic and interchangeable, and is in a large part shaped by the industry and market in which the SME exists, with variables such as market size, and proximity of both customers and competitors coming into effect (Gilmore, et al., 1999). The marketing activities that SMEs have tended to participate in are thus highly interactive in nature: staff at every level in the SME use informal WOM marketing techniques to engage with others in social, trade, and business contexts to enhance their networks. The

17

activities and outcomes of the SME approach to marketing would appear to be well supported by the practice of SMM. Extensive research has failed to identify any academic papers which examine the area of SMM (or its synonyms) with a specific focus on SMEs. This study seeks to remedy this situation, and address the knowledge gap that exists with regard to SMM and the particular characteristics of SMEs and their approach to marketing activities.

18

Chapter 3. Research Methodology 3.1 Research Question

The purpose of this research is to establish the financial and resource costs of engaging in Social Media Marketing (SMM) for the Irish Small-to-Medium Enterprise (SME). In particular, the research seeks to identify:

• the amount of time the staff of Irish SMEs allocate to SMM; • the breakdown between online and offline spend in the SMEs marketing budget; • and the percentage cost per sale spent on SMM and traditional marketing.

The research will also examine the perceived value of SMM to the Irish SME, using the benefits outlined in the literature review as a guide. Those benefits were as follows:

• an increase in customer acquisition performance; • an increase in customer retention performance; • and an improvement in R&D or New Product Development processes.

3.2 Research Philosophy

A combination of quantitative and qualitative research methodologies were employed during the course of this research, informed by an empirical approach. This hybrid approach was necessary as the research instrument consisted of both closed and openended questions. Combining quantitative and qualitative research methodologies in this manner provides a greater depth of information than could have been achieved by either of the methodologies separately. Qualitative data provides a richer analysis, as it can capture the experiential "voice" of the participant, allowing for a more detailed analysis and interpretation of the subject matter.

19

The author assumed a positivist perspective when assessing the quantitative data. As described in Saunders et al., (2003), the principles guiding a positivist approach dictate that the researcher

“assumes the role of an objective analyst, coolly making detached interpretations about those data that have been collected in an apparently value-free manner”. (Saunders, et al., 2003, pp. 83 - 84)

With regard to the qualitative data, an interpretivist perspective is employed. The interpretivist paradigm posits that all our realities are constructed subjectively through social and experiential meaning, and assumes that in research (especially research in the social sciences), it is impossible to separate facts from values. As a result of this, the interpretivist research paradigm does not expect a single, objective truth - rather, there can be multiple valid claims of truth which the researcher must then interpret. The research investigates (through the use of open-ended questions) the experiences and perception of value of the owner/manager or the sales/marketing manager of SMEs as they engage with their customers online. As such, we expect that these findings will be highly subjective, and influenced by environmental factors, such as the size of the SME, individual participants' level of competency with computers, etc.

3.3 Ethics

Ethical approval for this study was sought and granted by the Research Ethics Committee of the School of Computer Science and Statistics, Trinity College Dublin. No ethical issues were identified. Acting on the advice of the Research Ethics Committee, the researcher included the following clause in the Participant Consent Form (Appendix C): "I confirm that I am 18 years of age or older and am competent to provide consent."

At no point was any attempt made to deceive participants. All participants in the study gave their fully informed consent to take part, and were made aware that they could terminate their participation at any point. The anonymity and confidentiality of the study 20

findings was assured, and these assurances were communicated to the participants.

3.4 Population

3.4.1 Definition of Population

The population for the survey was Irish SMEs who are currently using SMM. The population size is currently not known. The following methods were used to assess participants against these criteria:

• Irish, SME: The researcher had access to a proprietary database of Irish companies maintained by his employer, Enterprise Ireland, the Irish government agency responsible for the development and promotion of the indigenous business sector. The researcher also made use of the Companies Registration Office (CRO) Company Search service. These resources were used to ascertain whether potential participants were: a) Irish; and b) classified as SMEs under the standard definition used by the European Commission (2003); that is, employing less than 250 persons; and having an annual turnover not exceeding €50 million, or an annual balance sheet total not exceeding €43 million.

• Using SMM: To fulfill this criteria, the researcher examined the online presence of potential participants for evidence of bi-directional engagements with their customers within the past six months. Examples of these engagements included: creating or posting to a thread on the Boards.ie (see http://www.boards.ie) community forum website; writing a post on a blog that allows readers to add comments; and responding to network members posts on a Social Networking Service (SNS) such as Facebook.

3.4.2 Participants To ensure compliance with the criteria as set out above, a judgement sampling mechanism 21

was employed. The adoption of SMM is still in its infancy amongst Irish SMEs, and judgement sampling is an effective mechanism when exploratory research is being carried out, or where there is little data available regarding the population (Crouch & Housden, 2003). One failing of the judgement sampling technique is that resultant findings are seen as a guide view of a population - the results are not statistically representative. In an effort to increase the likelihood of the findings being representative of the population, the researcher endeavoured to recruit a diverse pool of participants, with regard to the nature of their SMM usage, as well as their company profile, i.e., number of employees, business sector, etc.

The participants were primarily drawn from the following sources: the researcher's professional network; the Irish Blog Directory (see http://www.irishblogs.ie); the Irish Tweet Aggregator (see http://twitter.com/irishblogs/friends), and the Irish Twitter User Group on LinkedIn (see http://www.linkedin.com/groups?gid=1483487). The Irish Blog Directory and the Irish Tweet Aggregator are online services which aggregate the blog and Twitter posts of those who self-identify as being Irish. The researcher contacted only senior management within participating SMEs, to ensure that a holistic, end-to-end view of the company's activities was reported on. For the most part, either the owner/manager or the sales/marketing manager of the SME completed the online survey. While this helped to contribute to the richness and accuracy of the data collected, it presented a problem for the researcher, as senior management within an SME are traditionally seen as being time-poor, with little free time available to dedicate to matters not directly related to running the business. To this end, the researcher strove to ensure that the survey questions maintained their focus on the research objectives, and that the number of questions was kept to a minimum to allow the participant to complete the survey in the shortest time possible.

There was a sample size of 48 subjects in total. 41.7% (n = 20) of the participants indicated that they had a business-to-business trade focus, 22.9% (n = 11) indicated business-toconsumer, and 35.4% (n = 17) indicated that their trade focus was a mix of both businessto-business and business-to-consumer. None of the respondents indicated that they were unsure of their trade focus. The number of people employed by participating SMEs ranged from 1 to 85. The total mean number of employees was 11.28, and the standard deviation was 17.831. The company age range varied from 1 to 170 years. The total mean company 22

age was 14.67 and the standard deviation was 36.314.

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3.5 Design

3.5.1 Survey Details The survey was conducted online, using the online survey service SurveyMonkey.com (see http://www.surveymonkey.com). The survey contained three parts: the Participant Information Sheet (Appendix B); the Participant Consent Form (Appendix C); and the Questionnaire (Appendix D). While online surveys have been shown to have a lower rate of response than surveys in other media (Manfreda, et al., 2008), a number of advantages of utilising online surveys as the research instrument are reported by Singh et al., (2009). These advantages include: the low level of resources involved in the administration of the survey; the fact that the data collected from the survey does not need to be manually entered into a spreadsheet or database in preparation for statistical analysis; and that it is relatively simple to solicit participants to respond to the survey, provided the researcher has permission to email them (Singh, et al., 2009, p. 199).

3.5.2 Participant Information Sheet

The Participant Information Sheet consisted of an introduction to the research topic, and offered brief definitions of the terms "Social Media Marketing" and "Small-to-Medium Enterprise" to enable participants to better understand the questions put to them. It also contained a brief description of the type of questions in the questionnaire, how long the survey was likely to take, and a brief statement which sought to reassure participants about the anonymity and confidentiality of the survey and the resulting findings.

3.5.3 Participant Consent Form

The Participant Consent Form reiterated the level of importance being accorded to the participant's anonymity and confidentiality, and stressed that there would be no way to link the participant's company to the survey findings. It also provided participants with the names and contact details of the researcher, and encouraged them to contact the researcher if they had any questions relating to the study, or if they wished to receive a copy of the 24

findings.

Participants were then asked to indicate whether or not they gave their consent to participate in the study: those who gave their consent were brought to the first set of questions; those who declined to partake in the study were brought to a customised exit page.

3.5.4 Questionnaire

The self-constructed survey consisted of 26 standard questions, and four additional questions whose inclusion was predicated on the answers participants gave to specific questions. The survey was broken down in to four broad sections, as outlined below.

3.5.4.1 Company Profile

The Company Profile section contained demographic questions relating to the company's profile: the data collected concerned the company's trade focus, the number of employees, and the year the company commenced trading.

3.5.4.2 Use of Marketing

The second section, Use of Marketing, collected data about the company's overall marketing approach, and contained questions about the marketing spend. It also examined the breakdown between the SMEs' offline and online marketing spend.

3.5.4.3 Use of SMM

The third section explored the company's current use of SMM. Participants were again provided with a definition of SMM, as well as some examples of SMM tools. The data collected in the third section focussed on how the participant's company allocated 25

resources to SMM, as well as establishing which SMM tools the company utilised, and the motivating factors which led the company to begin using SMM. For the question which sought to establish which SMM tools the company utilised, the participants were presented with a non-exhaustive list of the most popular SMM tools in use at the time the research was carried out. The list was informed by the findings of a study of the global SMM industry, carried out by WhitePaperSource (2009). Participants were able to select multiple answers to the question, as well as having the option to provide details of other SMM tools they employed which were not present in the list.

Finally, the question "What motivated you to begin using SMM?" presented the participant with a selection of commonly-found motivating factors to beginning using SMM. The list of motivating factors was partly informed by a review of the literature as reported by Gilmore, et al. (2007, p. 237). Participants were able to select multiple answers to the question, as well as having the option to provide details of other motivating factors which were not present in the list.

3.5.4.4 Impact of SMM

The final section of the questionnaire examined whether or not the participant companies were experiencing any measurable benefits from using SMM. The questions were broken down into a series of sub-sections, which focussed in turn on each of the benefits of SMM as reported in the literature.

Sections one and two examined the impact of SMM on customer acquisition and customer retention respectively. The questions explored: how SMM had changed the company's approach to customer acquisition and retention; the effectiveness of SMM with regard to customer acquisition and retention when compared to traditional methods of marketing; and what impact SMM had (if any) on the respective rates of customer acquisition and retention. Depending on the answer to these last questions, the participants were either: brought to a separate page of the survey and asked to estimate the percentage increase or decrease in the rates of customer acquisition and retention since the adoption of SMM; or brought to the next set of standard questions. The ability to apply logic to a participant's 26

navigation of the survey based on their response to a particular question is a unique benefit of online surveys, allowing the researcher to present to a participant just the questions which are relevant to them, thus reducing the time taken to complete the survey.

The final sub-section consisted of a series of questions which were qualitative in nature. These questions sought to elicit the participants' opinion on:

•

the impact of SMM on the Research and Development (R&D) or New Product/Service Development processes;

•

the top three positive and negative impacts of SMM on their business as ranked by the participant;

•

what they would change about how they first approached using SMM;

•

and whether or SMM was likely to play a part in their future marketing plans.

3.6 Procedure

3.6.1 Pilot Survey

A pilot survey was created using the SurveyMonkey.com online service, and distributed to four participants who had agreed to test the survey and respond with feedback. As a result of the feedback in response to the pilot survey, the researcher made several changes to the layout of the survey to improve its usability, as well as changing the contents of the questionnaire to improve its clarity. Particular attention was also paid to the length of time it took the participants to complete the pilot survey, which also informed the changes carried out. These changes included:

• A number of questions relating to sales figures were removed, as there was a degree of ambiguity between the sales-related questions and a series of questions which referred to the participants' customer acquisition figures. The questions relating to the participants' customer acquisition figures were retained. 27

• The question, "Which of the following SMM tools do you use?" was re-positioned to be the first question on its page. The decision to move the question was taken following feedback which suggested that participants would feel more comfortable with the topic of SMM if they were immediately presented with some practical examples of SMM which they could identify with.

• A number of additional options were added to the initial list of motivating factors for engaging in SMM. These additional options were included to make the available choices appear more relevant to the participants.

• A question regarding participants' future plans for the use of SMM was added.

3.6.2 Online Survey

The online survey was conducted between the 3rd and 17th of July, 2009. Prospective participants were sent an email (Appendix E) which introduced the researcher, outlined the purpose of the research and provided a link to the online survey. Participants were also instructed not to forward the link to any third parties, as this could have had a possible impact on the validity of the resulting findings.

3.6.3 Quantitative Analysis

When the survey was closed, the findings were downloaded in 'Spreadsheet Format' from the SurveyMonkey.com website. The data was cleansed and formatted using the OpenOffice.org Spreadsheet program (Version 3.0 for Ubuntu), in preparation for statistical analysis. The Statistical Package for Social Sciences (SPSS), Version 16 for Windows XP was used to carry out the statistical analysis.

The majority of the questions were in a format that allowed for direct statistical analysis of the data, with the only exceptions being the open-ended questions in the final section of the questionnaire. However, to allow for comparative analysis of the data to be carried out, it 28

was necessary to create a number of new variables. The new variables were as follows:

• Number of SMM tools used: This variable was based on participants' answers to the question, "Which of the following SMM tools do you use? (You may select more than one option)", and represented the count of choices indicated by each participant.

• Number of motivators for adapting SMM: This variable is a simple count of the number of motivators for adapting SMM which were selected by participants in response to the question, "What motivated you to begin using SMM? (You may select more than one option)". This variable was created to allow the researcher to carry out statistical analysis on the responses.

• Number of 'proactive' motivators for adapting SMM; and, number of 'reactive' motivators for adapting SMM: These two variables were created to allow for the quantitative analysis of the data collected in response to the question, "What motivated you to begin using SMM? (You may select more than one option)". To allow for the variables to be populated, the list of motivators for adapting SMM which was presented to participants was subsequently divided into proactive and reactive motivators.

• Proactive motivators: • To promote your company better; • To enrich your overall marketing communications mix; • Management enthusiasm; • To increase sales; • To carry out market research.

• Reactive motivators: • Fear of competitive disadvantage; 29

• To lower operating costs; • To lower marketing costs; • Brand reputation management; • Increased competition.

• Number of months using SMM: This variable was created as a best-fit container for participants' responses to the question, "When did you first begin using SMM?". Participants' responses to the question were received in a variety of different formats, and it was necessary to create a standard variable that would allow for statistical analysis to be carried out.

• Percentage of staff engaged in SMM: This variable simply quantifies the number of staff engaged in SMM as a percentage of the total staff working in the company. This variable was created to allow for the large variance in the number of staff employed by participating companies.

3.6.4 Qualitative Analysis

A partial thematic analysis was conducted on the qualitative data gathered by the online survey. Thematic analysis is a process that can be used by researchers to transform qualitative data into quantitative data, which can then be used for the purpose of hypothesis testing. According to Boyatzis (1998), it also:

"[...] enables scholars, observers or practitioners to use a wide variety of types of information in a systematic manner that increases their accuracy or sensitivity in understanding and interpreting observations about people, events, situations and organizations [sic]." (Boyatzis, 1998, p. 5)

For this study, it was felt that a transformation of the qualitative data to allow for quantitative analysis was unnecessary due to the low volume of data collected. The work 30

involved in coding and transforming the data would also have put a further strain on the researcher's limited resources. As such, the analysis carried out by the researcher was informed by the principles of theme identification as set out by McLeod (2001, pp.140147), and the identified themes were mapped to trends in the quantitative data as appropriate.

31

4. Findings 4.1 Introduction This chapter presents the results of the online survey described in Chapter 3. First, a summary of the statistical analysis of the quantitative data is presented, followed by a synthesis of the qualitative data. 4.2 Quantitative Analysis 4.2.1 Impact on Social Media Marketing We begin with an analysis of the impact on Social Media Marketing (SMM) on Irish SMEs. 42 participants responded to the question "Has your approach to customer acquisition changed since you began using SMM?": of those who responded, 52.4% (n = 22) indicated that their approach had changed, 26.2% (n = 11) indicated that there had been no change, and 21.4% (n = 9) indicated that they were unsure as to whether or not there had been any change. Leading on from this, when asked to compare the effectiveness of SMM when compared to traditional marketing methods with regard to customer acquisition, the most frequently selected response was "Somewhat more effective", with 43.9% (n = 18) of participants choosing this option. The least frequently selected choice was "Considerably less effective", with just one participant (2.4%) selecting this choice. The combined percentage of participants who consider SMM to be somewhat or considerably more effective than traditional methods with regard to customer acquisition was 78% (n = 32). 41 participants responded to this question, with 1 participant declining to respond. See Table 1 for a full breakdown of the results of this question. Table 1: Effectiveness of SMM with regard to customer acquisition

Considerably Somewhat Effectiveness

less effective

less effective

2.4% (1)

7.3% (3)

No difference Somewhat

Considerably

more effective more effective 12.2% (5)

32

43.9% (18)

34.1% (14)

When asked to evaluate the impact of SMM on their rate of customer acquisition, 80.5% (n = 33) of respondents said that the use of SMM had a positive impact on the rate of customer acquisition. None of the participants indicated a decrease in the rate, while 7.3% (n = 3) reported no change. 12.2% (n = 5) reported that they were unsure as to whether the rate had increased or decreased, and 7 respondents declined to answer the question. Figure 1: Impact of SMM on respondents rate of customer acquisition

A Pearson Chi-Square test found that there was a significant relationship between the perceived effectiveness of SMM when compared to traditional marketing methods with regard to customer acquisition and the impact of SMM on the rate of customer acquisition: (n = 41) = 32.154, p = < 0.001. Of those participants who reported they had seen an increase in the rate of customer acquisition, the most frequently selected percentage increase was between 11% and 20% (27.3%, n = 9). The lowest reported increase in the rate of customer acquisition was between 1%-10%, and the highest increase was between 91%-100%. See Table 2 for a full 33

breakdown of the results of this question. Table 2: Increase in the rate of customer acquisition since adopting SMM

Increase range (%)

Frequency

Percentage

1 - 10

6

18.2

11-20

9

27.3

21-30

3

9.1

31-40

3

9.1

41-50

2

6.1

51-60

2

6.1

61-70

1

3

71-80

2

6.1

81-90

0

0

91-100

5

15.2

41 participants responded to the question "Has your approach to customer retention changed since you began using SMM?": of those who responded, 58.5% (n = 24) indicated that their approach had changed, 26.8% (n = 11) indicated that there had been no change, and 14.6% (n = 6) indicated that they were unsure as to whether or not there had been any change. When asked to compare the effectiveness of SMM when compared to traditional marketing methods with regard to customer retention, the most frequently selected response was "Somewhat more effective", with 56.1% (n = 23) of participants choosing this option. The least frequently selected choices were "Considerably less effective" and "Somewhat less effective", with just a single participant (2.4%) for each of these choices. The combined percentage of participants who consider SMM to be somewhat or considerably more effective than traditional methods with regard to customer retention was 73.2% (n = 30). 41 participants responded to this question. Table 3 details the full breakdown of responses to this question.

34

Table 3: Effectiveness of SMM with regard to customer retention

Considerably Somewhat Effectiveness

less effective

less effective

2.4% (1)

2.4% (1)

No difference 22.0% (9)

Somewhat

Considerably

more effective more effective 56.1% (23)

17.1% (7)

The majority of participants (53.7%, n = 22) reported an increase in the rate of customer retention since they began using SMM. No participants indicated a decrease in the rate, while 31.7% (n = 13) said that there had been no change in the rate. 14.6% of participants (n = 6) were unsure as to whether or not there had been any change. Figure 2: Impact of SMM on respondents rate of customer acquisition

A Pearson Chi-Square test found that there was a significant relationship between the perceived effectiveness of SMM when compared to traditional marketing methods with regard to customer retention and the impact of SMM on the rate of customer retention: (n = 41) = 19.439, p = 0.013. 35

Of those who indicated that they had seen an increase in the rate of customer retention, the most frequently selected percentage increase was between 21% and 30% (27.3%, n = 6). The lowest reported increase in the rate of customer retention was between 1%-10%, and the highest increase was between 91%-100%. See Table 4 for a full breakdown of the results of this question.

36

Table 4: Increase in the rate of customer retention since adopting SMM

Percentile increase range

Frequency

Percentage

1 - 10

5

22.7

11-20

3

13.6

21-30

6

27.3

31-40

2

9.1

41-50

2

9.1

51-60

1

4.5

61-70

0

0

71-80

1

4.5

81-90

0

0

91-100

2

9.1

4.2.2 Use of Marketing

4.2.2.1 Overall marketing budget

As a percentage of annual revenue, participants' overall marketing budget varied between a low of 0% and a high of 31%-40%. The percentage range with the highest frequency of selection was 1%-10%, with 74.4% (n = 32) of participants choosing this option. See Table 5 for a full breakdown of the results of this question.

37

Table 5: Overall marketing budget as a percentage of annual revenue

Percentile range

Frequency

Percentage

0

1

2.3

1-10

32

74.4

11-20

6

14

21-30

3

7

31-40

1

2.3

41-50

0

0

51-60

0

0

61-70

0

0

71-80

0

0

81-90

0

0

91-100

0

0

4.2.2.2 Breakdown of overall marketing budget between online and offline

The values for the percentage of the overall marketing budget representing online spend varied between a low of 0% and a high of 100%. The mean was 57.29%, with a standard deviation of 33.136. The values for the percentage of the overall marketing budget representing offline spend varied between a low of 0% and a high of 100%. The mean was 38.27%, with a standard deviation of 31.799.

4.2.2.3 Marketing spend as a percentage of average cost-per-sale

As a percentage of the average cost-per-sale, the ranges representing participants' marketing spend varied between a low of 0% and a high of 91%-100%. The percentage range with the highest frequency of selection was 1%-10%, with 59.5% (n = 25) of participants choosing this option. Table 6 shows a full breakdown of these results.

38

Table 6: Marketing spend as a percentage of average cost-per-sale

Percentile range

Frequency

Percentage

0

2

4.8

1-10

25

59.5

11-20

7

16.7

21-30

5

11.9

31-40

1

2.4

41-50

0

0

51-60

0

0

61-70

0

0

71-80

0

0

81-90

1

2.4

91-100

1

2.4

4.2.3 Use Of Social Media Marketing (SMM)

4.2.3.1 SMM Tool Use

The most frequently selected SMM tool was "Blog (comments enabled)", with 90.5% (n = 38) of respondents indicating that they used this method. "Microblog (e.g. Twitter)" and "Social Networks (e.g. Facebook, MySpace, LinkedIn)" were the second and third most popular tools, with 88.1% (n = 37) and 81.0% (34) respectively. The least frequently selected SMM tool was "Blog (comments disabled)", with just a single respondent choosing this option. Table 7 shows the full results of this question.

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Table 7: SMM Tool Use

SMM Tool

Frequency

Percentage

Blog (comments enabled)

38

90.5

Microblog (e.g. Twitter)

37

88.1

Social Networks (e.g. Facebook, MySpace, LinkedIn)

34

81

Video sharing website (e.g. YouTube)

29

69

Photo sharing website (e.g. Flickr)

23

54.8

Discussion forum (moderated by a third party, e.g. Boards.ie)

20

47.6

Social Bookmarking (e.g. Delicious)

18

42.9

Wiki

9

21.4

Discussion forum (moderated by your company)

8

19

Other

4

9.5

Blog (comments disabled)

1

2.4

The majority of participants indicated that they used two or more SMM tools, with just 2.1% claiming to use a single SMM tool. This is not surprising, as it is unlikely that any company is being discussed in any single location on the Web, and SMEs practising SMM will seek to engage with their customers wherever they congregate online. The mean number of SMM tools selected was 4.52. The percentage of participants who selected above the mean number of SMM tools was 58%.

4 participants indicated that they used a number of SMM tools which were not listed amongst the original options for the question. The additional SMM tools were as follows:

•

IGOpeople - http://www.igopeople.com

•

Podbean.com - http://www.podbean.com

•

SlideShare - http://www.slideshare.net

•

Wikinvest - http://www.wikinvest.com

•

MeettheBoss - http://www.meettheboss.com

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Three of these SMM tools (IGOpeople, Wikinvest, MeettheBoss) provide platforms for companies to represent themselves on the Web in locations outside of their immediate sphere of control. Creating company 'profiles' on these socially-enabled directory sites helps to raise awareness of the company, particularly within the business-to-business community. The other two SMM tools (Podbean.com, SlideShare) are channels for helping to distribute content (in these cases audio commentary and corporate presentations respectively) which help establish the company's expertise and credibility.

An investigation was undertaken to examine if a relationship existed between the number of SMM tools, and the rates of customer acquisition and retention. First looking at customer acquisition, an independent t-test was used to see if there was any difference between those that had seen an increase (mean = 5.45, standard deviation = 1.543), or no change (mean = 2.33, standard deviation = 1.155). The results of the t-test showed that there was a significant difference between the two means (t = 3.399, df = 34, p = .002). The mean difference between the groups was 3.121, and the 95% confidence interval for the estimated mean difference was between 1.255 and 4.987.

With regard to customer retention, an independent t-test was again used to investigate whether there was a difference between those that had seen an increase (mean = 5.64, standard deviation = 1.56), or no change (mean = 4.31, standard deviation = 2.287). The results of t-test showed that there was a significant difference between the two means (t = 2.045, df = 33, p = 0.049). The mean difference between the groups was 1.329, and the 95% confidence interval for the estimated mean difference was between 0.007 and 2.651.

4.2.3.2 Number of months using SMM

The length of time in months participants have been using SMM ranged between 6 and 114. The mean for the group was 35, and the standard deviation was 26.947. A mean of almost 3 years would indicate that the survey responders would be considered "earlyadopters" of SMM, given that it has only recently begun to enter mainstream awareness.

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An investigation was undertaken to examine if a relationship existed between the length of time participants have been using SMM, and their rates of customer acquisition and retention. First looking at customer acquisition, an independent t-test was used to see if there was any difference between those that had seen an increase (mean = 38.06, standard deviation = 28.496), or no change (mean = 14.67, standard deviation = 5.774). The results of the t-test showed that there was no significant differences between the two means (t = 1.401, df = 33, p = .171). The mean difference between the groups was 23.396, and the 95% confidence interval for the estimated mean difference was between -10.577 and 57.369. With regard to customer retention, an independent t-test was again used to investigate whether there was a difference those that had seen an increase (mean = 45.71, standard deviation = 32.114), or no change (mean = 24.17, standard deviation = 11.738). The results of t-test showed that there was a significant difference between the two means, when equal variances were not assumed (t = 2.768, df = 27.693, p = 0.01). The mean difference between the groups was 21.548, and the 95% confidence interval for the estimated mean difference was between 5.595 and 37.501.

4.2.3.3 Motivation to begin using SMM

The most frequently selected motivator was "To promote your company better" (85.7%, n = 36), with "To lower operating costs" and "Increased competition" being the joint least frequently selected at 4.8% (n = 2). Participants selected between 0 and 9 motivators, with a mean of 3.35 and a standard deviation of 2.338 (n = 48).

The most frequently selected 'proactive' and 'reactive' motivators were "To promote your company better" (85.7%, n = 36) and "Brand reputation management" (47.6%, n = 20), respectively. The 'proactive' motivators (To promote your company better; To enrich your overall marketing communications mix; Management enthusiasm; To increase sales; To carry out market research) outweighed the 'reactive' motivators (Fear of competitive disadvantage; To lower operating costs; To lower marketing costs; Brand reputation management; Increased competition) in 64.6% of the cases. 42

An interesting point to note is that one of the 'proactive' motivators, "To increase sales", a key strategic objective for many businesses, was chosen by less than half of the respondents (47.6%, n = 20) as one of the reasons they began using SMM. Table 8 shows the full breakdown of the results of this question.

Table 8: Motivators to begin using SMM

Motivator

Frequency

Percentage

To promote your company better

36

85.7

To enrich your overall marketing communications mix

30

71.4

To increase sales

20

47.6

Brand reputation management

20

47.6

Management enthusiasm

16

38.1

To lower marketing costs

15

35.7

Other

15

31

To carry out market research

12

28.6

Fear of competitive disadvantage

8

19

To lower operating costs

2

4.8

Increased competition

2

4.8

13 participants indicated that there were a number of other motivators to begin using SMM which were not listed amongst the original options for the question. Some of the additional SMM motivators were as follows:

"we couldn't compete with larger companies on budget so we had to find a way to reach the market that had a low cost of client acquisition"

"Optimise offiline [sic] networking efforts. Get to know people faster and easier. Speed in communication"

"Changing trends in marketing. Opportunity to convese [sic]"

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"Ability to offer extra services to clients"

"To share information and thoughts"

4.2.3.4 Level of staff involvement

The figures for the number of staff employed by participating companies ranged from a low of 1 to high of 85. The mean was 11.28, with a standard deviation of 17.831 (n = 47). The mean was 43.809, with a standard deviation of 39.627 (n = 46). The values for the percentage of staff engaged in SMM ranged from a low of 0% to a high of 100%. The mean was 43.809, with a standard deviation of 39.627 (n = 46). An investigation was undertaken to examine if a relationship existed between the percentage of staff engaged in SMM, and the rates of customer acquisition and retention in participating companies. First looking at customer acquisition, an independent t-test was used to see if there was any difference between those that had seen an increase (mean = 58.814, standard deviation = 36.983), or no change (mean = 9.252, standard deviation = 5.978). The results of the t-test showed that there was a significant difference between the two means, when equal variances were not assumed (t = 6.785, df = 22.843, p = .000). The mean difference between the groups was 49.56191, and the 95% confidence interval for the estimated mean difference was between 34.445 and 64.679.

With regard to customer retention, an independent t-test was again used to investigate whether there was a difference between those that had seen an increase (mean = 64.622, standard deviation = 35.755), or no change (mean = 24.075, standard deviation = 26.013). The results of t-test showed that there was a significant difference between the two means, when equal variances were not assumed (t = 3.863, df = 31.392, p = 0.001). The mean difference between the groups was 40.546, and the 95% confidence interval for the estimated mean difference was between 19.151 and 61.942.

The values for the number of hours all staff spent engaging in SMM ranged from a low of 1 hour to a high of 50 hours. The mean was 12.46, with a standard deviation of 11.112. An 44

analysis was carried out on the rates of customer acquisition and retention in participating companies, based on the number of hours all staff spent engaging in SMM. First looking at customer acquisition, an independent t-test was used to see if there was any difference between those that had seen an increase (mean = 14.34, standard deviation = 11.392), or no change (mean = 2.33, standard deviation = 2.309). The results of the t-test showed that there was no significant difference between the two means (t = 1.799, df = 33, p = .081). The mean difference between the groups was 12.01, and the 95% confidence interval for the estimated mean difference was between -1.572 and 25.592.

With regard to customer retention, an independent t-test was again used to investigate whether there was a difference between those that had seen an increase (mean = 13.71, standard deviation = 8.878), or no change (mean = 10.5, standard deviation = 13.661). The results of t-test again showed that there was no significant difference between the two means (t = 0.821, df = 31, p = 0.418). The mean difference between the groups was 3.214, and the 95% confidence interval for the estimated mean difference was between -4.771 and 11.2.

4.2.3.5 Percentage of time spent monitoring or contributing to online conversations

The values for the percentage of time spent monitoring online conversations ranged from a low of 0% to a high of 50%. The mean was 13.97, with a standard deviation of 12.658. An independent t-test showed that there was no significant difference between those who reported an increase in the rate of customer acquisition (mean = 13.55, standard deviation = 11.015) compared to those who reported no change (mean = 18.33, standard deviation = 27.538), in terms of the percentage of time spent monitoring online conversations (t = -0.299, df = 2.062, p = 0.793), where equal variances were not assumed.

The same test was conducted with regards to customer retention: again, no significant difference was established between the two groups (t = -0.301, df = 32, p = 0.765). The mean for those who reported an increase in the rate of customer retention was 13.18, and the standard deviation was 12.358. For those who reported no change the mean was 14.58 and the standard deviation was 14.055. 45

The values for the percentage of time spent contributing to online conversations ranged from a low of 0% to a high of 95%. The mean was 22.36, with a standard deviation of 25.027. An independent t-test showed that there was no significant difference between those who reported an increase in the rate of customer acquisition (mean = 23.5, standard deviation = 25.701) compared to those who reported no change (mean = 5, standard deviation = 5), in terms of the percentage of time spent contributing to online conversations (t = 1.229, df = 33, p = 0.228).

The same test was conducted with regards to customer retention: again, no significant difference was established between the two groups (t = 0.324, df = 32, p = 0.748). The mean for those who reported an increase in the rate of customer retention was 21.73, and the standard deviation was 24.204. For those who reported no change the mean was 19 and the standard deviation was 21.851.

4.2.3.6 Percentage of overall marketing budget spent on SMM

As a percentage of their overall marketing budget, participants' spend on SMM varied between a low of 0% and a high of 91%-100%. The percentage range with the highest frequency of selection was 1%-10%, with 45.2% (n = 19) of participants choosing this option. A Pearson's Chi-Square test was conducted on participants' spend on SMM as a percentage of their overall marketing budget, comparing it against the rates of customer acquisition and retention. The results show that neither relationship was statistically significant, with customer acquisition giving a result of (n = 41) = 6.864, p = 0.94, and the customer retention analysis resulting in (n = 41) = 12.716, p = 0.549. Table 9 provides a full listing of the results of this question.

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Table 9: Percentage of overall marketing budget spent on SMM

Percentile range

Frequency

Percentage

0

12

28.6

1-10

19

45.2

11-20

4

9.5

21-30

1

2.4

31-40

0

0

41-50

3

7.1

51-60

0

0

61-70

1

2.4

71-80

0

0

81-90

1

2.4

91-100

1

2.4

4.2.3.7 SMM spend as a percentage of average cost-per-sale

As a percentage of the average cost-per-sale, the ranges representing participants' SMM spend varied between a low of 0% and a high of 41%-50%. The percentage range with the highest frequency of selection was 1%-10%, with 52.5% (n = 21) of participants choosing this option. A Pearson's Chi-Square test was also conducted on participants' spend on SMM as a percentage of their average cost-per-sale, comparing it against the rates of customer acquisition and retention. Again, the results show that neither relationship was statistically significant, with customer acquisition giving a result of (n = 39) = 5.878, p = 0.437, and the customer retention analysis resulting in (n = 39) = 9.823, p = 0.132. Table 10 provides a full listing of the results of this question.

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Table 10: SMM spend as a percentage of average cost-per-sale

Percentile range

Frequency

Percentage

0

14

35

1-10

21

52.5

11-20

4

10

21-30

0

0

31-40

0

0

41-50

1

2.5

51-60

0

0

61-70

0

0

71-80

0

0

81-90

0

0

91-100

0

0

4.2.3.8 Likelihood of SMM forming a significant portion of marketing activities in the future

When asked to indicate the likelihood of SMM forming a significant portion of their marketing activities in the future, the majority of respondents selected "Highly likely", with 73.7% (n = 28) of the respondents choosing this option. The least frequently selected choices were "Highly unlikely" and "Unlikely", with none of the respondents choosing either of these options. See Table 11 for a full breakdown of the results of this question.

Table 11: Likelihood of SMM forming a significant portion of marketing activities in the future

Highly

Unlikely

Unsure

Likely

Highly likely

0% (0)

5.3% (2)

21.1% (8)

73.7% (28)

unlikely Likelihood

0% (0)

The combined percentage of participants who consider it likely or highly likely that SMM will form a significant portion of their future marketing activities was 94.8%. 48

4.3 Qualitative Analysis

A number of the questions in the online survey produced qualitative data, representing participants' opinions on key topics surrounding the use of SMM. These data will now be analysed to identify common trends which can provide an insight into these topic areas. The full set of responses to these questions is listed in Appendix F.

4.3.1 Impact of SMM on Research and Development (R&D) or New Product/Service Development

31 participants answered this question, providing a widely varying set of responses. The overall sentiment was highly supportive of the impact of SMM on R&D or New Product/Service Development, as evidenced by the following excerpts:

"SMMhas [sic] given us a much better and up to date understanding of the market and the customers needs allowing us to target our R&D better." (P5)

"It enables us to get more customer feedback for product development" (P3)

"It has allowed us to identify new trends in the market and provide unique services and offerings to our customers" (P23)

"We use social media to listen for requirements, receive product requests and to test product concepts" (P8)

One aspect of the impact of SMM on this area that was highlighted by participants was the fact that the companies were being perceived as being much closer to their respective markets, and had a heightened awareness of emerging trends and upcoming developments:

49

"Being connected with a wide peer group, who also happen to be part of our target market has enabled us to move with emerging trends" (P1)

"Enables much greater customer interaction and feedback." (P27)

"SMM allowed us to showcase our brand and new service a in a simpler and more engaging way. How do we know? Everywhere we network, more than 50% of the people have heard of [XXX] or know about us because of our video blog." (P15)

"If a product or business cannot be marketed by SMM then the effort and costs involved in getting it off the ground are not worth pursuing." (P6)

Another advantage identified by the analysis was that the use of SMM facilitated a faster response to emerging trends than would have otherwise been achievable, presenting a distinct competitive advantage:

"By being online and interacting all the time, I know what people want and I can instantly, as in within seconds, test ideas and potential new products with people interested in giving feedback" (P20)

"We recently rolled out a new design for the [XXX] details page and within minutes through monitoring of blog for the [XXX] keyword, we spotted that the new [XXX] were missing a feature that we though t noone [sic] would really miss, we were wrong!" (P16)

"If we come up with a new product/value package we can gauge instantly if there is good interest as people will comment/click through" (P25)

"We use social media to listen for requirements, receive product requests and to test 50

product concepts" (P8)

A number of SMM-related technologies and online services were specifically referred to with regard to the advantages they presented in terms of R&D and New Product/Service Development. The micro-blogging service Twitter, and the customer community and social networking website Get Satisfaction (see http://www.getsatisfaction.com) were both mentioned on more than one occasion as useful SMM tools.

"Use blog posts and Twitter and sites like GetSatisfaction to solicit opinions from people regarding possible new features/products" (P18)

"We use SMM (Twitter mainly) to monitor what people think of the service. Also GetSatisfaction.com. Instant feedback from users for new features and of course extremely viral." (P21)

"We are about to launch a new [XXX] and we were able to select a few people from twitter to test it and get a feel for it before we launched it" (P14)

Finally, the following response highlights how the use of SMM can help Irish SMEs "punch above their weight", and gain access to new markets and customers that would have perhaps otherwise been unattainable using traditional marketing approaches:

"it has gotten us feedback from some unusual and international sources, it has also helped to identify ideas and practices that we would not have been aware of had we not networked with professionals from other countries and markets" (P19)

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4.3.2 Positive and Negative Impacts of SMM

4.3.2.1 Positive Impacts

37 participants between them left 106 responses to the question, "In your opinion, what are the top three positive impacts the use of SMM has had on your business?". While there was a wide variety of issues mentioned, a number of major themes were identified.

As predicted by the literature, visibility/brand awareness and actual sales/sales leads were amongst the most frequently cited positive impacts on participating companies. SMM practitioners can raise a brand's profile by engaging and interacting with their customers anywhere the conversation is taking place online:

"great brand awareness, and wider brand presence" (P30)

"it has lead [sic] to offline media exposure" (P23)

"Made our business the ' go to ' place within our sector" (P8)

With regard to actual sales/sales leads, the high inter-connectedness and viral nature of SMM lends itself to word-of-mouth recommendations:

"Video demos are useful & impact positively on sales" (P21)

"Brought us almost 100% of our business." (P7)

"Record turnover" (P24)

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"I don't cold-call or do sales call, all business comes in to me from people who know me from my online activities" (P24)

A positive impact on the customer service experience was also noted. Engaging online with customers is a reciprocal activity, and a level of trust can be established between the customer and the company:

"Increased customer service and quality. What we do is now more public so can't risk something going wrong." (P7)

"Adds a personal presence for customers" (P31)

"allows us to build a relationship, even very slight with customers" (P30)

"More accessible to customers" (P15)

One of the more straightforward benefits of SMM is the impact it can have on a website's search-engine ranking, as evidenced by the following excerpts:

"Positive impact on Google rankings as a result" (P16)

"Helped generate traffic to website" (P1)

"New customers from web" (P4)

Finally, an apparent area of benefit to SMEs was the new market opportunities afforded by SMM. As the adage states, "On the Internet, Nobody Knows You're a Dog" (Steiner, 1993) - SMM offers SMEs an opportunity to showcase and package their offerings in a manner 53

that would hitherto have been beyond their means:

"Made us appear bigger and more established then we are." (P7)

"can reach market & communicate with customers who would otherwise be hard to reach" (P30)

"Demonstration of commitment" (P32)

"Enabled us to convey our in depth knowledge of our chosen field very effectivley [sic]" (P8)

4.3.2.2 Negative Impacts

31 participants between them left 72 responses to the question, "In your opinion, what are the top three negative impacts the use of SMM has had on your business?". One of the predominant themes to emerge from the analysis was a high degree of concern amongst SMEs regarding the resource drain of engaging in SMM, and the associated lack of ability to measure its impacts:

"Like any tool, it requires focus and its possible to waste time if you don't measure results" (P22)

"you can waste a lot of time on them if you are not disciplined" (P20)

"Distraction as it is another (invasive) channel to maintain" (P13)

The inability to control the marketing message and content once published on the Web was 54

another area of concern highlighted:

"being mis-quoted on message boards" (P5)

"Reduction in level of message control" (P26)

"It is risky, you need to open up on line. This can backfire" (P2)

"Issues can be blown out of proportion" (P12)

As a follow-on to this, the possibility of receiving unwanted, and possibly highly negative, attention as a result of engaging in SMM also emerged as a trend:

"putting us in the fireing [sic] line of people who have a disposition towards sarcastic and self rightous [sic] mis-informed commentry [sic]" (P5)

"'gossip' type effect" (P6)

"More people would like to see me fail" (P21)

"can attract timewasters [sic] to engage with you etc" (P27)

Finally, two respondents mentioned that there was a risk that they were becoming overreliant on using SMM to engage with their customers:

"SMM tends to attract a more technical audience (until lately), making us ill prepared to attract and pitch to non technical (guv, edu) customers." (P4)

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"shift in focus can mean you lose sight of the importance of face to face contact with clients, or you might be comfortable dealing with people electronically when they would prefer personal contact" (P20)

4.3.3 Changes to Initial Approach

30 participants answered the question, "What, if anything, would you have done differently in your approach to adopting SMM as an element of your marketing strategy?". Two main themes emerged from analysing the responses: the first was focussed on the nature of the content created for SMM, and the audience being targeted:

"Stuck to what we knew. We tried blogging about [XXX] but we didn't know much about the vertical. So we now blog about [XXX] and [XXX] to great success" (P2)

"Engage in blogging earlier, to mainstream not just techies. [sic]" (P20)

"I might have started a more professional approach earlier, eg. [sic] offering advice on blog posts" (P4)

The second theme that emerged was that participants felt that a more structured approach to the initial phases, particularly with regard to integration with other business activities and measurement, would have been beneficial:

"Been more systamatic [sic] about it, measuring and adjusting how it [SMM] was done to get better value out of it." (P5)

"waited till we had resources to do it [SMM] properly" (P9)

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"Ideally, organise other efforts in a better way so that the "social media person" can focus on this task more effeciently [sic]" (P14)

"would have planned its integration but at the time didnt [sic] really know what it was all about so it has developed a bit adhoc [sic]." (P30)

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Chapter 5. Conclusions

5.1 Benefit of research

This study sought to establish if Social Media Marketing (SMM) is a cost-effective tool for Irish Small-to-Medium Enterprises (SMEs). SMM is an area that is receiving a large amount of coverage in the Irish business press, with seven Sunday Business Post articles dealing with the topic in July 2009 alone. As a result, owner/managers of Irish SMEs are frequently exposed to stories of success achieved through the use of SMM, in addition to the self-promoting opinions of social and digital media "gurus", keen to develop their own business prospects. While a review of the literature suggests that there are real business benefits to be accrued (in the form of increased customer acquisition and retention, as well as a positive contribution to research and development (R&D) and New Product/Service Development initiatives), there has been little research investigating how this applies in the context of the Irish SME. Establishing the existence of these considerable benefits would appear to be of great interest to owner/managers or sales/marketing managers of Irish SMEs seeking to broaden their market base by identifying and engaging with new customers online, and competing on a global stage.

The research also intended to focus in particular on the level of resource commitment necessary to implement and sustain an SMM presence. The Irish economy (in line with most other developed nations worldwide) is experiencing a dramatic downturn in economic growth, with a contraction of 9.2% forecast for 2009, a rise in unemployment of over 187,000, and a decline in public spending coupled with a rise in taxes forecast (Economic and Social Research Institute, 2009; Organisation for Economic Co-operation and Development, 2009). In light of this, Irish SMEs are understandably reticent about committing scarce resources to new, and possibly unproven, marketing techniques. This study sought to provide a detailed analysis of how companies engaged in SMM are spending their time and financial resources, enabling Irish SMEs to develop accurate business strategies focussing on this area.

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5.2 Discussion of results

A note of warning must be sounded at this point: this research makes a contribution to the body of academic knowledge regarding SMM. This is a relatively new field of study, and those seeking to use these results to inform strategic business decisions would be advised to exercise caution. Future research into the area of SMM will help to provide a better understanding of the strength and nature of these relationships, and present a sounder platform upon which to base business decisions.

The results of the online survey appear to strongly support the benefits as suggested by the literature review. Participants confirmed that the use of SMM had a positive impact on their approach to customer acquisition, with a substantial majority (78%) declaring that SMM was somewhat or considerably more effective than traditional methods. This is most likely associated with the potential for SMM to contribute to the increased awareness of a company, alongside an increase in brand recognition and a natural fit between SMM and positive Search Engine Optimisation (SEO) techniques. This is also supported by participants' responses to the question regarding the top three positive impacts of SMM:

"Increased market awareness" (P33)

"great brand awareness, and wider brand presence" (P30)

"Positive impact on Google rankings as a result" (P16)

We note that research by WhitePaperSource (2009) indicated that 52% of companies engaged in SMM improved their search engine rankings. However, search engine ranking was not listed as one of the primary benefits of SMM in this study, as it is not considered to be of strategic importance to a company.

In line with these findings, 80.5% of respondents reported a positive impact on their rate of 59

customer acquisition as a result of the use of SMM, with over a quarter (27.3%) reporting an increase of between 11% and 20%. These results are in line with recently published reports from the industry: WhitePaperSource (2009) state that 81% of companies engaging in SMM had seen a growth in exposure for their business, and 48% reported the generation of qualified business leads; while an article from Aberdeen Research (2009a) finds that 53% of companies surveyed reported an improvement in their rate of customer acquisition. Furthermore, these results are in keeping with Brodie, et al., (2007) who state that the increased penetration of e-Marketing (eM), which as was discussed in the Literature Review (Chapter 2, 2.1), bears many similarities to SMM, positively impacts a company's customer acquisition performance. Brodie, et al., (2007) posit that this positive relationship is based on eM/SMM's "enhancement and support of existing [marketing] practices" (Brodie, et al., p. 15) - we would further suggest that the nature and level of engagement made possible by SMM is also a contributory factor in these results. The advent of SMM, and in particular the phenomenal popularity of user-generated content (UGC), allows consumers to connect with and take ownership of a brand in a manner which would previously have been unattainable, thus strengthening the relationship between company and consumer.

Similar findings were reported in respect of the effect of SMM on SMEs' customer retention performance. 73.2% of respondents stated that they considered SMM to be somewhat or considerably more effective than traditional methods for customer retention, and the majority (53.7%) increased their rate of customer retention as a result of adopting SMM techniques. Over a quarter (27.3%) of those who declared an increase in their rate of customer retention reported a gain in the region of 21%-30%, a remarkable achievement during a global recession. Again, these findings are very much in line with the qualitative results from the survey, in particular the responses to the question regarding the top three positive impacts of SMM:

"Closer engagement with customers" (P11)

"Adds a personal presence for customers" (P31)

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"Keeping in touch with customers / potential customers" (P36)

"Help in creating [a] community of customers" (P12)

These results are consistent with the research literature. While not reporting a direct connection between eM and customer retention Brodie, et al., (2007) state that an increase in customer acquisition performance (which has been shown to be linked to SMM) positively influences a firm's customer retention performance. Similarly, Aberdeen Research (2008b) found that 40% of companies using SMM techniques for monitoring customer feedback improved their customer retention performance year-on-year. The qualitative responses as outlined above suggest that the positive influence of SMM on customer retention performance can be somewhat attributed to the strength of the relationship between the company and consumer that can be developed using SMM techniques. By its nature, SMM encourages and rewards increased levels of openness and transparency on the part of the company, which in turn is reciprocated by the customer. An SMM interaction may also involve the creation and use of UGC, which further contributes to the relationship between company and consumer through a sense of collaboration and shared ownership.

Several interesting trends emerged following statistical analysis of the quantitative data. A statistically significant relationship was found to exist between the number of SMM tools employed by a company and their customer acquisition and retention performance. This is in line with expectations, as it would be unusual for consumers to be discussing a company, service or brand in one single location or channel on the Web. As companies increase the number of SMM tools they employ, the opportunity for engaging with their customers also increases. This observation comes with the following caveat: companies should be wary of stretching themselves too thin by creating a presence in every online channel. Companies who analyse each SMM channel to assess the likely return on marketing investment, and effectively resource these engagements are more likely to succeed in these endeavours (Forrester Research, 2007b). This particular issue was highlighted in the comments on the negative impacts of SMM by one particular participant: 61

"it requires focus and its possible to waste time if you don't measure results" (P22)

Other trends were also identified when the level of resources being committed to SMM by participating companies was examined. There was found to be no significant relationship between the length of time SMEs had been engaged in SMM and their customer acquisition performance. However, a significant relationship was found to exist between the length of time SMEs had been engaged in SMM and their customer retention performance. This may be attributed to the fact that customer retention is more dependant than customer acquisition on the quality of the SMM engagement - one could hypothesise that the longer an SME has been practising SMM, the more adept they become at managing customer relationships online, which contributes to their customer retention performance. This would be especially relevant in situations where an SME is dealing with negative customer feedback or adverse publicity. This connection between customer relationship management and SMM is referred to on numerous occasions in the qualitative responses, for example:

"allows us to build a relationship, even very slight with customers by linking to them" (P30),

and

"Increased communication channels to clients, prospects and partners" (P33).

A significant relationship was also discovered to exist between the level of staff (as a percentage of the total number of employees) involved in SMM and the companies' customer acquisition and retention performance. Again, this is in line with the author's expectations: to be truly effective SMM should reflect the "human-ness" of a company: staff at all levels throughout the enterprise can contribute to help improve accessibility and remove the barriers to communication with their customers (Aberdeen Research, 2008b;

62

Levine, et. al, 2000, pp.106 - 113). Furthermore, reports by Aberdeen Research (2008b) and Forrester Research (2009) both emphasise the vital importance of receiving the support of senior executives for SMM initiatives, with Forrester Research recommending that senior executives should also participate themselves. Securing the support of senior and middle-management to ensure the success of interactive marketing efforts (which, as has been discussed in the Literature Review (Chapter 2, 2.1), bear many similarities to SMM) is further highlighted in research by Zahay and Peltier (2008, p. 200).

Although predicted by the literature (WhitePaperSource, 2009) the analysis showed no significant relationship to exist between the total number of hours spent by staff on SMM and companies' customer acquisition and retention performance. The WhitePaperSource research suggested that those committing 20 or more hours a week to SMM would see the greatest return on investment in terms of company performance, but this conclusion is not borne out by the findings of this study. This should serve to give some encouragement to owner/managers or sales/marketing managers of Irish SMEs who are considering the inclusion of SMM in their marketing mix. It would appear from the findings of this research that as a result of SMM, Irish SMEs are currently experiencing growth in their customer acquisition and retention performance rates, without having to over-commit on scarce resources: on average, 43.8% of staff are contributing a total of approximately 12.5 hours per week to the company's SMM activities. A striking finding of the research is that no significant relationship was found to exist between companies' budget spend on SMM and their customer acquisition or retention performance. The majority of respondents are spending between 1%-10% of their overall marketing budget on SMM, and SMM costs represent between 1%-10% of their average cost-per-sale. As with the findings regarding the number of hours SMEs are committing to SMM, these results can also provide encouragement to Irish SMEs: modest financial investments in SMM can result in improved customer acquisition and retention performance rates.

An examination of the responses to the question, "Please outline the impact SMM has had (if any) on the Research and Development (R&D) or New Product/Service Development processes in your business?", shows that SMM can have a positive impact on R&D or New Product/Service Development, as suggested by the literature. Strong relationships between a company and its customers are a vital part of the innovation 63

process: if these relationships did not exist, companies would struggle to convert theoretical research and development activities into marketable products and services. Participants' responses are unequivocal in their support of this:

"Being connected with a wide peer group, who also happen to be part of our target market has enabled us to move with emerging trends in the [XXX] industry." (P1)

"We use social media to listen for requirements, receive product requests and to test product concepts" (P8)

As discussed in the Literature Review (Chapter 2, 2.3.3), the process of soliciting feedback and listening to customers also positions companies to respond more effectively: this is once again supported by participant's responses:

"By being online and interacting all the time, I know what people want and I can instantly, as in within seconds, test ideas and potential new products with people interested in giving feedback" (P20)

As discussed in the Findings (Chapter 4, 4.3.2.2), a number of clear-cut themes emerged from the analysis of the negative impacts of SMM. Of primary concern is the issue of effectively and accurately measure the return on marketing investment of SMM.

"you can waste a lot of time on them [social networks] if you are not disciplined" (P20)

"You could get dragged away without a strategy" (P16)

Irish SMEs are not alone in expressing their concern regarding this: measuring the success (or otherwise) of SMM is a hotly-debated topic for the online marketing industry (see 64

Interactive Advertising Bureau, 2009; WhitePaperSource, 2009, p.6; Word Of Mouth Marketing Association, 2009; Ogilvy Public Relations Worldwide, 2007). Participants also reported some misgivings about relinquishing control of their brand's message and marketing content, as well as a fear of receiving negative attention and commentary. Drawing from an analysis of the literature (Aberdeen, 2009a; Forrester Research, 2007b), in conjunction with the findings of this study, the following factors present a means for overcoming these obstacles:

•

support from senior management to commit to using SMM;

•

a commitment from senior management to effectively resource SMM initiatives;

•

detailed and thorough research of the SMM environment in which the company is located;

•

and, an SMM strategy that clearly defines what success means for the company, and how that success will be measured.

Implementing these will inevitably present a challenge to the average SME: as has been discussed in the Literature Review (Chapter 2, 2.4), SMEs do not tend to think strategically about either marketing or the role of ICT in adding competitive advantage to the company (O'Dwyer, et al., 2009; Gilmore, et al., 2007). A recent report by eMarketer (2009), further suggests that the overwhelming majority of SMEs have no formal policy in place to manage and guide their SMM activities, with just 13% having implemented such a policy. This is supported by participant's responses to the question, "What, if anything, would you have done differently in your approach to adopting SMM as an element of your marketing strategy?":

"Been more systamatic [sic] about it [approach to SMM], measuring and adjusting how it was done to get better value out of it." (P5)

"would have planned its [approach to SMM] integration but at the time didnt [sic] really know what it was all about so it has developed a bit adhoc [sic]." (P30) 65

There is, however, a clear appetite amongst survey participants to continue with and expand upon their present use of SMM. When asked about the likelihood of SMM forming a significant portion of their future marketing activities, none of the respondents selected the "Highly unlikely" or "Unlikely" options. The responses point to a definite endorsement of SMM amongst Irish SMEs, with 94.8% of participants in the study indicating that they were "Likely" or "Highly likely" to include it in their forthcoming marketing plans.

5.3 Contribution to Field of Research

This study presents an analysis of the costs and benefits associated with SMM, as experienced by Irish SMEs. To the best of the author's knowledge, this is the first piece of research to examine SMM from the perspective of the Irish SME, and is amongst the first to examine this area with regard to SMEs worldwide. Owner/managers or sales/marketing managers of Irish SMEs who are interested in the possibility of adopting SMM techniques can elicit insights from the experience of those SMEs who are currently engaged in SMM, as well as having a benchmark for success with regard to their customer acquisition and retention performance.

As has been noted previously, in terms of marketing, SMEs are very different to other businesses. Gilmore, et al. (2007) state that the approach to marketing is:

"...more intuitive, competency based, revolving around networking and operating under financial and human resource/time constraints." (Gilmore, et al. 2007, p. 236)

The findings of this research would suggest that SMM is an excellent match for the marketing approach that generically characterises SMEs. In the straitened economic circumstances the Irish economy now finds itself, Irish SMEs could stand to benefit by examining how SMM could be turned to their advantage in opening up new markets, both domestically and in an export context. 66

5.4 Limitations of Research

A key limitation of this study is the lack of supporting academic research. To date, there have been very few articles dealing with SMM (or its synonyms) published by leading scholarly journals. This is most likely due to the short length of time that SMM has been present in the mainstream business world. SMM itself is a highly volatile area of study, with new services, "killer applications", and the promotion of vague strategies which guarantee "instant success" an almost daily occurrence. This inevitably leads to a difficulty with attempting to effectively define SMM; indeed the Wikipedia article on SMM (see http://en.wikipedia.org/wiki/Social_media_marketing) which discusses the problems with defining SMM, is in itself a candidate for merger with a Wikipedia article dealing with "Social network marketing" (see http://en.wikipedia.org/wiki/Social_network_marketing). The definition proposed by the author for this study, that SMM is "the act of facilitating and engaging in online conversation that adds value to a brand for both the brand owner and the consumer", is based upon both the relevant academic research that defines and examines the various categories of marketing, as well as the author's own professional experiences as an eBusiness consultant working with Enterprise Ireland. The author does not presume, however, that this definition will encompass every interested party's view of what constitutes SMM.

Two related limitations of this research are the size of the population, and the size and nature of the sample. The population size was problematic in that the number of Irish SMEs who have engaged in bi-directional online engagements with their customers within the past six months is quite small, and there is at present no exhaustive list of these companies. While exhaustive lists of Irish SMEs do exist (e.g. the Companies Registration Office's public and Enterprise Ireland's proprietary databases) a lack of time and resources prevented the author from identifying every SME currently using SMM techniques. A judgement sampling methodology was adopted to gather potential participants, with SMEs being invited to complete the survey as the author became aware of their SMM initiatives. The use of judgement sampling, when combined with the relatively small sample size (n = 48), means that the level of generalisability of the study is quite low, and that the results cannot be interpreted as being representative of all Irish SMEs. Furthermore, a post67

implementation analysis of the survey respondents revealed that many of the SMEs would be considered to work in the "web-space", e.g., offering online marketing or web development services. A number of the participating companies would also be considered to trade exclusively online. It is possible that this has introduced an unconsidered bias into the analysis, and should be taken into consideration by those basing strategic business decisions or future academic research on the findings.

Finally, a further limitation of the survey was that it was only possible to complete online, via the SurveyMonkey survey service. However, given the nature of the topic under investigation, as well as the demographic profile of the participants, the author believes that an online survey was the optimal instrument to employ, and that the number of potential participants who declined to complete the survey as a consequence of the choice of medium is extremely low.

5.5 Future Research Considerations

A number of topics that could be considered as avenues of future research were identified during the course of the study. There would be a great deal of merit in conducting a longitudinal version of the survey, allowing for the year-on-year customer acquisition and retention performance of individual companies to be assessed. A longitudinal study would also help explore how companies resource commitments change over time: it may be the case that SMM-related behaviours and capabilities become institutionalised as SMEs' experience grows, leading to a reduction in the resources needed.

Another area that would help broaden the knowledge-base around SMM would be an investigation which compared companies across business sectors. It may be the case that certain business sectors can benefit more from SMM, or have a natural disposition towards the capabilities required to successfully employ SMM. Another approach which could offer further insight would be to compare those companies using SMM based on their previous (or offline) marketing strategies: it is possible that relationships exist between the successful use of SMM and other categories of marketing practice, e.g. Database Marketing, Transaction Marketing. Further insights could be gleaned by exploring if there 68

are differences between wholly-online companies, and those who combine an offline and online trade presence. Another direction future research might take would be to investigate the difference in performance of companies who are entirely responsible for monitoring and contributing to their SMM activities, and those companies who employ the services of a third-party company to create their content or monitor their online reputation.

A final interesting area of research would be to examine the perceived benefit of SMM purely from an ICT perspective. For example, those companies who have a formal policy for adopting emerging technologies may achieve greater success with SMM than those who do not. An investigation of the impact of existing attitudes towards ICT amongst staff on the decision on whether or not to adopt SMM would also be of interest.

69

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Appendix A: Application for Ethical Approval

UNIVERSITY OF DUBLIN, TRINITY COLLEGE Faculty of Engineering, Mathematics and Science

School of Computer Science and Statistics RESEARCH ETHICS PROTOCOL When is Ethical Approval Needed? Ethical approval is required before any studies involving human subjects can commence. This requirement applies to studies to be undertaken by staff, postgraduate and undergraduate students. In the case of collaborative projects involving researchers from outside the School, ethical approval obtained from an external research ethics body may suffice – evidence of same must be submitted to the SCSS Research Ethics Committee prior to the commencement of the study (see procedures below). In the absence of such external approval, approval must be obtained as per this document. Additional ethical approval may be required if the project involves or is funded by an external body, for example, studies under FP7 automatically require such approval. For the purpose of this document a “study” may be understood to involve a potentially staged series of different experiments to be conducted over a period of time. If substantive changes are made to a study following receipt of ethical approval, this will constitute a new study for which further ethical approval must be obtained. Procedure To apply for ethical approval from the SCSS Research Ethics Committee, completed application forms together with supporting documentation should be submitted in hardcopy to the School’s Research Unit and an electronic copy e-mailed to [email protected]. The Committee will consider each application and normally provide a response within two weeks but not more than one month later. Applications that are considered not to have significant ethical implications may be evaluated by the Committee Chair without reference to the full Committee. Applications will otherwise be considered at a meeting of the SCSS Research Ethics Committee. When approval has been obtained from an external research ethics committee, and School approval is not required, a copy of the external ethical approval must be submitted to the School’s Research Unit, prior to commencement of study, for noting by the SCSS Research Ethics Committee. Note: These procedures may be amended from time-to-time following recommendation by the SCSS Research Ethics Committee and with the approval of the SCSS Research Committee. Before seeking ethical approval researchers should: • identify actual and potential ethical issues that might arise; • reflect on how these will be addressed; and • formulate procedures to deal with all such issues. During the research project researchers should: • implement the ethical procedures; • obtain continuous feedback from participants about ethical issues; • periodically review the ethical strategy in the light of feedback received; and

78

•

if required, update their ethical procedures.

Composition of the SCSS Research Ethics Committee The Committee will consist of a Chairperson/Convenor appointed by the Director of Research and two other experts – a member of the School’s academic staff and an external representative. The internal and external members will be selected from a panel approved by the Director of Research from time to time. Members will be selected on a case by case basis by the Chairperson subject to their availability. Researchers will be precluded from the Committee considering ethical approval for their study.

Part A Project Title:

Is Social Media Marketing a cost-effective tool for Irish SMEs?

Name of Lead Researcher (student in case of project work): E-mail:

[email protected] Contact Tel No.:

Course Name and Code (if applicable):

David Scanlon.

0879092405

MSc Management Information Systems

Estimated start date: On receipt of approval from Ethics Committee Estimated end date: 2009 Office Use Only SCSS Ref No.: ………………………............…………. Date Received: …………………………

End of June

………….............

I confirm that I will (where relevant):

• •

• • • • • • •

• •

Familiarize myself with the Data Protection Act and guidelines http://www.tcd.ie/info_compliance/dp/legislation.php;

Provide participants with an information sheet (or web-page for web-based experiments) that describes the main procedures (a copy of the information sheet must be included with this application) Tell participants that their participation is voluntary Obtain informed consent for participation (a copy of the informed consent form must be included with this application) Should the research be observational, ask participants for their consent to be observed Tell participants that they may withdraw at any time and for any reason without penalty Give participants the option of omitting questions they do not wish to answer if a questionnaire is used Tell participants that their data will be treated with full confidentiality and that, if published, it will not be identified as theirs Tell participants that all recordings, e.g. audio/video/photographs, will not be identifiable unless prior written permission has been given On request, debrief participants at the end of their participation (i.e. give them a brief explanation of the study) If College students are involved in the study, I will verify that they are 18 years or older

Signed: David Scanlon Date: 15/06/09 Lead Researcher/student in case of project work

Part B Please answer the following questions.

Yes/No

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Has this research application or any application of a similar nature connected to this research project been refused ethical approval by another review committee of the College (or at the institutions of any collaborators)? Will your project deliberately involve misleading participants in any way? Is there a risk of participants experiencing either physical or psychological distress or discomfort? If yes, give details on a separate sheet and state what you will tell them to do if they should experience any such problems (e.g. who they can contact for help). Does your study involve any of the following? Children (under 18 years of age) People with intellectual or communication difficulties Patients

NO NO NO NO NO

If you have answered ‘Yes’ to any of the questions above, details of the Research Project Proposal must be submitted as a separate document to include the following information: 1.

Title of project

2. Purpose of project including academic rationale 3.

4. 5. 6. 7.

Brief description of methods and measurements to be used Participants - recruitment methods, number, age, gender, exclusion/inclusion criteria, including statistical justification for numbers of participants Debriefing arrangements A clear concise statement of the ethical considerations raised by the project and how you intend to deal with them Cite any relevant legislation relevant to the project with the method of compliance e.g. Data Protection Act etc.

Part C If you have ticked ‘No’ to all the questions in part B above, please complete below. Give a brief description of participants and procedure (methods, tests used etc.) The participants are owner/managers or senior marketing representatives from Irish SMEs who are engaged in the practice of Social Media Marketing. The list of SMEs has been created from the researchers own personal contacts; in addition the researcher studied Irish blogs and Twitter accounts in an attempt to identify further candidates. Those who participate in the online survey, will be asked to complete a series of questions: these will be a mixture of closed questions, open questions, and multiple-choice questions, which will seek their opinion on varied issues relating to SMM and their business. The survey may take up to 15 minutes to complete.

I consider that this project has no significant ethical implications to be brought before the SCSS Research Ethics Committee. Signed: David Scanlon Date: 15/06/09 Lead Researcher/student in case of project work

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There is an obligation on the lead researcher to bring to the attention of the SCSS Research Ethics Committee any issues with ethical implications not clearly covered above.

Part D If external ethical approval has been received, please complete below. External ethical approval has been received and no further ethical approval is required from the School’s Research Ethical Committee. I have attached a copy of the external ethical approval for the School’s Research Unit.

Signed: .................................................................................. Date: .................................................................. Lead Researcher/student in case of project work

Completed application forms together with supporting documentation should be submitted in hardcopy to the School’s Research Unit, Room F37, O’Reilly Institute, and an electronic copy e-mailed to [email protected]

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Appendix B: Participant Information Sheet

My name is David Scanlon, I am a final year student in Trinity College Dublin, undertaking a Masters in Management of Information Systems. My research dissertation is entitled: "Is Social Media Marketing a cost-effective tool for Irish SMEs?". As part of my research, I am carrying out an online survey, which will examine the level and nature of Social Media Marketing usage amongst Irish SMEs. It will also examine the impact Social Media Marketing usage has on the Irish SME, in terms of the level of resource being committed, and any benefits or detriments it may bring to the business.

Social Media Marketing is the practice of facilitating and engaging in online conversation that adds value to a brand for both the brand owner and the consumer. For the purpose of this study, an SME is defined as an enterprise that: employs less than 250 persons; and has an annual turnover not exceeding €50 million, or an annual balance sheet total not exceeding €43 million.

If you agree to participate in this survey, you will be asked to complete a series of questions: these will be a mixture of closed questions, open questions, and multiplechoice questions, which will seek your opinion on varied issues relating to SMM and your business. The survey may take up to 15 minutes to complete.

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Appendix C: Participant Consent Form

Participant Consent Form

Participation is this survey is entirely voluntary, and you may withdraw at any time. You may also skip any question without consequence or prejudice. Anonymity and confidentiality will be preserved throughout the study. You will not be asked for your own name, or that of your business at any point during the course of the survey. Your results will be assigned a code which will be used for administrative purposes only. At no time will your consent form (this page) be stored with your completed survey.

If you require further information about this survey, or if you would like to request a copy of the general findings, please don't hesitate to contact my supervisor or I.

Participant Declaration

I have read the information provided explaining this study and hereby give my consent to participate in this study. I confirm that I am 18 years of age or older and am competent to provide consent.

Name: Date:

Thank you for taking the time to read about my study.

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Researcher David Scanlon School of Computer Science and Statistics Trinity College Dublin [email protected]

Supervisor Barry Collins School of Computer Science and Statistics Trinity College Dublin [email protected]

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Appendix D: Questionnaire

Page 1

85

Page 2

86

Page 3

87

Page 3 (cont.)

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Page 4

89

Page 5

90

Page 6

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Page 7

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Page 8

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Page 9

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Page 10

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Appendix E: Email Invitation to Participants

Dear XXX,

My name is David Scanlon, and I am currently completing my dissertation for a Masters in Management of Information Systems at Trinity College Dublin. I am also an employee of Enterprise Ireland, the Irish government agency responsible for the development and promotion of the indigenous business sector.

My research dissertation is entitled: "Is Social Media Marketing a cost-effective tool for Irish SMEs?". As part of my research, I am carrying out an online survey, which will examine the level and nature of Social Media Marketing usage amongst Irish SMEs. It will also examine the impact Social Media Marketing usage has on the Irish SME, in terms of the level of resource being committed, and any benefits or detriments it may bring to the business.

As an Irish SME currently engaged in Social Media Marketing, your views and experience of the topic would be very welcome. I would be most grateful if you would agree to complete the online survey, which should not take more than 15 minutes to complete.

The

survey

can

be

accessed

at

http://www.surveymonkey.com/s.aspx?

sm=s5yP_2fjsyZi5_2bX8Y2BBiYAw_3d_3d

I would be grateful if you did not pass the survey link on to anybody else, as I am attempting to ensure that only Irish SMEs who pass certain criteria fill out the survey.

I appreciate you taking the time to read this email, and look forward to hearing back from you. Please feel free to get in contact with me if you have any questions.

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Kind regards / Le dea mhein,

David Scanlon [eBusiness Executive], eBusiness Unit, Enterprise Ireland, The Plaza, East Point Business Park, D3

[t] +353-1-7272706 [m] +353-87-9092405 [e] [email protected] [w] http://www.linkedin.com/in/davescanlon

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Appendix F: Responses to Open-ended Questions

1. Please outline the impact SMM has had (if any) on the Research and Development (R&D) or New Product/Service Development processes in your business?

Participant #

Response

1

Being connected with a wide peer group, who also happen to be part of our target market has enabled us to move with emerging trends in the web tech industry.

2

None

3

It enables us to get more customer feedback for product development

4

It is helpful, sometimes I will blog about a new product and ask for feedback

5

SMMhas given us a much better and up to date understanding of the market and the customers needs allowing us to target our R&D better.

6

Considerably. If a product or business cannot be marketed by SMM then the effort and costs involved in getting it off the ground are not worth pursuing.

7

Opens up relevant channels outside of google

8

We use social media to listen for requirements, receive product requests and to test product concepts

9

As a retail business, it is useful to get customers opinion on new products can do this through blog or facebook page. Without SMM this would not be possible.

10

0

11

Developing new ideas has become a priority

12

None

13

Ability to find and follow trends and innovations of the market is greatly increased which is essential market knowledge.

14

We are about to launch a new Shopping forum www.talkshop.ie and we were able to select a few people from twitter to test it and get a feel for it before we launched it

15

SMM allowed us to showcase our brand and new service a in a simpler and more engaging way. How do we know? Everywhere we network, more than 50% of the people have heard of Channelship or know about us because of our video blog.

16

We recently rolled out a new design for the daft property details page and within minutes through monitoring of blog for the daft.ie keyword, we spotted that the new maps were missing a feature that we though t noone would really miss, we were wrong! SMM can allow you to test products in 98

Participant #

Response the open and integrate user feedback instantly and is much better than soliciting feedback via email as people tend not to be negative enough using email.

17

new product launches are now blogged & if possible a video demo launched

18

Use blog posts and Twitter and sites like GetSatisfaction to solicit opinions from people regarding possible new features/products

19

it has gotten us feedback from some unusual and international sources, it has also helped to identify ideas and practices that we would not have been aware of had we not networked with professionals from other countries and markets

20

By being online and interacting all the time, I know what people want and I can instantly, as in within seconds, test ideas and potential new products with people interested in giving feedback

21

We use SMM (Twitter mainly) to monitor what people think of the service. Also GetSatisfaction.com. Instant feedback from users for new features and of course extremely viral.

22

We are a pure social media company and hence SMM drives everything we do and 3rd parties use us as part of their SMM requirements.

23

It has allowed us to identify new trends in the market and provide unique services and offerings to our customers

24

SMM has become a entirely new set of packaged offers to clients.

25

If we come up with a new product/value package we can gauge instantly if there is good interest as people will comment/click through (and I can monitor click trhough and traffic sources through google analytics.

26

unsure

27

Enables much greater customer interaction and feedback.

28

none

29

To early to say at the moment but signs so far are positive, with regard to customer feedback/response.

30

Service Development -Customer Service, Service Development - Online Alerts & Updates Research - Trends, New product lines researched

31

Too early to tell

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2. In your opinion, what are the top three positive impacts the use of SMM has had on your business?

Participant #

Response 1

1

Made important contacts in the media

2

Sales Leads

3

Raise awareness

4

Increased web presence

5

Improved SEO

6

increased sales

7

Brought us almost 100% of our business.

8

Increased visibility online

9

engage with key influencers

10

Interaction

11

Closer engagement with customers

12

Increase Reputation

13

good to announce new features

14

More retention

15

Increased Exposure

16

Being seen as leader or Key player

17

Brand Recognition

18

generates leads

19

Amazing awareness

20

Product improvement

21

Video demos are useful & impact positively on sales

22

increased profile

23

increased online brand trust,

24

Working 7 days a week

25

Twitter - a quick way to communicate with new and existing users of our service

26

Brand positioning

27

Access to the people we already know online

28

Brand Awareness

29

Level of engagement possible

100

Participant #

Response

30

great brand awareness, and wider brand presence

31

Adds a personal presence for customers

32

Visibility

33

Increased brand awareness

34

Instant communication/reaction

35

More responsive to customers

36

Keeping in touch with customers / potential customers

37

Brand Awareness 2

1

Helped generate traffic to website

2

Referrals

3

Improve profile (seen as a member of the community)

4

New customers from web

5

Customer Loyalty

6

increased customer satisfaction

7

Made us appear bigger and more established then we are.

8

Made our business the ' go to ' place within our sector

9

connect with people active in area

10

Retention

11 12

Help in creating community of customers

13

good to improve 2 way comms

14

Better crm

15

Faster response times

16

Positive impact on Google rankings as a result

17

Cost Effective if you work at it

18

generates awareness

19

Speeding up the process of building high quality contacts

20

Humanising the brand

21

-

22

increased sales

23

it has lead to offline media exposure

24

I don't cold-call or do sales call, all business comes in to me from people who know me from my online activities

25

LinkedIn a great way to find partners 101

Participant #

Response

26

Raising awareness

27

Access to people who know people we know

28

speed of communaction

29

Diversity of multimedia content possible

30

can reach market & communicate with customers who would otherwise be hard to reach

31

Provides a communication stream for customers

32

Demonstration of commitment

33

Increased communication channels to clients, prospects and partners

34

Opening communication channels going both ways

35

Content is immediately available to customers

36

Finding new people who might be interested in what I do

37

Interactivity with the customers 3

1

Positioned myself as 'expert in the field' to help my customers with new media

2

Reputation

3

Increased traffic

4

Press interest

5

Creating a brand image

6

better customer interaction

7

Increased customer service and quality. What we do is now more public so can't risk something going wrong.

8

Enabled us to convey our in depth knowledge of our chosen field very effectivley

9

R & D improved

10

Feedback

11 12

Brand Awareness

13 14

More ideas and more friendly face

15

More accessible to customers

16

new online networks and contacts developed

17

Viral Advertising very quickly

18

marketing positioning as expert

19

Video has become our main ally. Great resource 102

Participant #

Response

20

SEO Benefits

21

-

22

lower marketing costs

23

we have been nominated for different awards and our blog is central to that

24

Record turnover

25

Blogs - drive new users

26

Customer Aquisition

27

Providing our customers with an insight to our business.

28 29

Ability to have one on one conversations and collaboration

30

allows us to build a relationship, even very slight with customers by linking to them etc. even in non buying periods

31

Provides a marketing medium for business

32

Opportunity for exchange

33

Increased market awareness

34

Changing attitude to needs of customer

35

business model has become more flexible

36

Drives Traffic to website

37

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3. In your opinion, what are the top three negative impacts the use of SMM has had on your business?

Participant #

Response 1

1

None

2

Time

3

Some drain on my time!

4

Effected productivity

5

being mis-quoted on message boards

6

time wasting

7

Time Consuming

8

Difficult to measure

9

Time spent on monitoring social networks

10

not a major impact as we are a b2b biz

11

More open to criticusm

12

Easy to get distracted

13

Distraction as it is another (invasive) channel to maintain

14

Time Consuming

15

resource usage i.e. time commitment

16

Time consuming

17

none

18

resource time

19

time sink

20

you can waste a lot of time on them if you are not disciplined

21

More people would like to see me fail

22

Many of the users who come from Tech-focused SMM don't really pay for anything!

23

n/a

24

Our competition copying us with everything we do

25

none it can only help

26

Reduction in level of message control

27

perhaps takes time away from something else

28

Need to be very cautious on what is posted

29

Being watchful of our replies to comments

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Participant #

Response

30

Time consuming

31

The amount of time you have to put into it 2

1

None

2

It is risky, you need to open up on line. This can backfire

3

none

4

A couple of public, damaging mistakes.

5

putting us in the fireing line of people who have a disposition towards sarcastic and self rightous mis-informed commentry

6

'gossip' type effect

7

expected to be available 24/7

8 9 10

need someone focused on it

11

Takes time

12

Issues can be blown out of proportion

13

Highlighted our gaps in marketing strategy

14

Trying to keep on top of all mediums

15 16

You could get dragged away without a strategy

17 18

no proven return with blog / discussion effort

19

ROI not as high as expected

20

you can have negative feedback to it by some people

21

Constant contacts from people

22

Like any tool, it requires focus and its possible to waste time if you don't measure results

23

n/a

24 25 26

Demands on speeds of engagement

27

it is slightly uncontrollable

28

Negative comments spread as quickly

29 30

Online brand management / reputation management more exposed

105

Participant #

Response

31 3 1

Oh, and none.

2 3

none

4

Over reliance on SMM. SMM tends to attract a more technical audience (until lately), making us ill prepared to attract and pitch to non technical (guv, edu) customers.

5

time

6

how to control/ define official/ unofficial channels?

7

Very public

8 9 10

hard to drive traffic

11

senior managment are not yet convinced

12

More difficult to focus on long term tasks

13 14 15 16

Losing focus

17 18 19

trolls

20

shift in focus can mean you lose sight of the importance of face to face contact with clients, or you might be comfortable dealing with people electronically when they would prefer personal contact

21 22

n/a

23

n/a

24 25 26

Time demands

27

can attract timewasters to engage with you etc

28

Time consuming to maintain

29 30

Constant changes in technology hard to keep up with 106

Participant #

Response

31

107

4. What, if anything, would you have done differently in your approach to adopting SMM as an element of your marketing strategy?

Participant #

Response

1

Nothing.

2

Stuck to what we knew. We tried blogging about healthcare but we didn't know much about the vertical. So we now blog about tech and marketing to great success

3

We would have budgeted it rather than just done it without recognising the cost.

4

I might have started a more professional approach earlier, eg. offering advice on blog posts

5

Been more systamatic about it, measuring and adjusting how it was done to get better value out of it.

6

Established a more user friendly message board on our website

7

engaged more fully in it

8

I should have adopted them earlier.

9

waited till we had resources to do it properly

10

Research better ROI

11

Focused on one or two specific areas to start.

12

Dedicated more resources to it (which is what we are planning to do now)

13

NONE

14

Ideally, organise other efforts in a better way so that the "social media person" can focus on this task more effeciently

15

Would have started a blog sooner

16

nothing

17

Made it integrated with offline

18

I would have started earlier in my career and learned some basic html coding too.

19

Nothing

20

Engage in blogging earlier, to mainstream not just techies.

21

nothing.

22

Nothing other than invested more if we had more to invest

23

nothing , I still think we got in on the ground floor and are ahead of our competition in this area

24

More experimentation and collaboration

25

gotten the blog integrated to the website from the beginning - due to

108

Participant #

Response budget we are only having it added to the website now.

26

Followed more tutorials

27

More integration from earlier on.

28

We should have looked to put a better plan around SMM sooner

29

------------

30

would have planned its integration but at the time didnt really know what it was all about so it has developed a bit adhoc.

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Vita

David Scanlon holds a B.Sc. (Hons.) in Computer Applications (Information Systems) from Dublin City University. On graduating in 2004, he accepted a position as web developer within Enterprise Ireland's IT Department, working on the development of internal and external facing web applications. In 2008 he was promoted to the eBusiness Unit, fulfilling a role promoting the awareness of eBusiness to Enterprise Ireland client companies. The role involves working with companies across a broad range of business sectors on an individual basis, as well as organising knowledge events to promote the benefits of eBusiness to a wider audience.

David is also a co-organiser of the BizCamp event series, where entrepreneurs of all disciplines come together to learn and share experience with their peers. David has also published an article in The Market magazine, entitled "Harnessing the Power of Online Marketing".

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