Over the past decade, the media landscape has dramatically changed, with social media outlets (SMOs) such as blogs, online discussion forums, and online communities now supplementing traditional media outlets (TMOs) such as newspapers, magazines, and television programs. Moreover, while social media was once the domain of younger, tech-savvy consumers, it is now generally considered to have entered the mainstream and covers a broad demographic spectrum. The mainstream popularity of social media makes it critical to understand not only how social media influences consumers, but also how it operates alongside traditional media. The authors focus on how traditional and social earned media affect sales of a microlending website, Kiva.org. They also examine how traditional and social earned media affect activity in each other. “Earned media” refers to media activity that a company does not directly generate. Examples of traditional earned media activity include press mentions in newspaper articles and on television programs. Examples of social earned media activity include posts made by consumers on online communities, social networking websites, or blogs.
To examine how traditional and social earned media affect sales and activity in each other, the authors analyze 14 months of time series data covering the daily sales and earned media activity across multiple TMOs and SMOs for Kiva.org. A sale in this context is a small, low-risk microloan made by a lender (customer) to a qualified borrower in a developing country. The number of loans made on the website each day is daily sales volume, separated into new and repeat customer sales. Earned media activity data consists of daily counts of Kiva mentions in TMOs (newspapers, magazines, television, and radio) and SMOs (blogs and online communities). The authors use multivariate time series modeling techniques to capture how earned media variables affect sales and each other, and long-run effects (elasticities) are estimated.
Overall, the authors find that (1) both traditional and social earned media affect sales; (2) the per-event sales impact of traditional earned media activity is larger than for social earned media; (3) however, because of the greater frequency of social earned media activity, after adjusting for event frequency social earned media’s sales elasticity is significantly greater than traditional earned media’s; and (4) social earned media appears to play an important role in driving traditional earned media activity (but not the other way around).
Jeff Galak is Assistant Professor of Marketing at the Tepper School of Business, Carnegie Mellon University. He earned his doctorate in marketing from the Stern School of Business, New York University. Dr. Galak was awarded the BP Junior Faculty Chair in recognition of his research efforts. He studies a variety of topics related to consumer behavior including satiation to hedonic experiences, financial decision making, fluency effects, and memory. He has published in leading marketing (Journal of Consumer Research, Journal of Marketing Research, and Journal of Consumer Psychology), psychology (Journal of Experimental Psychology: General and Journal of Experimental Social Psychology), and decision science (Judgment and Decision Making) journals.
Andrew T. Stephen is Assistant Professor of Business Administration and Katz Fellow in Marketing at the Joseph M. Katz Graduate School of Business, University of Pittsburgh. He earned his doctorate in marketing from Columbia Business School. He studies a variety of marketing topics related to social media, social networks, digital marketing, affect as information, and financial decision making. He is a past winner of the American Marketing Association’s John A. Howard Award, was a finalist in the Journal of Marketing Research
Paul E. Green Award, and a past winner of the Marketing Science Institute Alden G. Clayton Award. He has published in leading marketing (Journal of Marketing Research
, Journal of Consumer Research
, Journal of Service Research
, and Journal of Business Research
), psychology (Psychological Science
), and sociology (Social Networks
Journal of Marketing Research, Volume 49, Number 5, October 2012
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