An Investigation into the Role of Social Media Marketing in Organisational Performance

Abstract

Purpose: In an era that is characterised by speed and ruled by technology, new communication tools are required to achieve business objectives in a fast and innovative manner. This is facilitated by the emergence of Web 2.0 tools. Consequently, social media aroused as an assemblage of internet-based platforms that utilise the technological and ideological foundations of Web 2.0. While social media changed the fundamentals of business, marketing and communications in general, it also redefined consumer behaviour and patterns of consumption.

In spite of the popular use of social media platforms by businesses, there is a lack of research and empirical evidence examining how, if any, social media platforms impact on the overall business performance. Return on Investment (ROI) is traditionally used to measure business performance. A new concept called social ROI, emerged as a central topic in strategic marketing in recent years. However, little is known on how to formulate this metric in a meaningful way.

Consequently, in this paper, we focus on social ROI and investigate how organisations measure the outcome of their social media marketing programmes. We aim to contribute to social media research by presenting empirical evidence on the following issues:

RQ1: What benefits can businesses gain by presenting an active presence on social media platforms? RQ2: In what ways can social media be utilised to help to achieve business objectives? RQ3: What are the drawbacks of using traditional ROI metric to measure the performance of social media marketing activities?

Methodology: Taking a positivist approach, we designed a quantitative study. A questionnaire was emailed to 150 businesses operating in the United Arab Emirates by using snowball sampling method. 96 businesses completed the survey, which resulted in a response rate of 64 percent. Six questionnaires were discarded due to a large number of missing questions. Hence, our data analysis is based on ninety fully completed questionnaires.

Findings: We present empirical evidence that the companies that participated in our research still utilise traditional ROI to measure the outcome of their marketing programmes. At the same time, there was agreement across the respondents that ROI had limitations to measure the impact of social media campaigns. Consequently, a number of alternative metrics were being used ranging from “audience growth rate” to “engagement rate” and “visitor frequency rate”. Moreover, the study respondents highlighted the role of social media in (i) promoting customer relationships and (ii) having a potential in improving sales performance by generating new leads.

Managerial Implications: This research suggests that businesses can benefit from participating on social media platforms if their social media marketing objectives are set out well and executed accordingly. Firms should embrace social media as a key aspect of their overall business and marketing strategy and should not treat social media solely as another promotional channel. However, it will not be beneficial to rely on traditional ROI. Alternative performance metrics should be used for measuring the performance of social media marketing activities.