SMITH BRAIN TRUST – As our social lives increasingly flow from the real world to the online world, does it logically follow that, eventually, our shopping habits will flow that way as well? Or are our online social pursuits likely to make us too busy to spend time on shopping?
In recent research, Michael Trusov, associate professor of marketing at the University of Maryland's Robert H. Smith School of Business, together with recent Smith School marketing PhD graduate Yuchi Zhang (now assistant professor at Santa Clara University) and two co-authors, posed those questions.
On the one hand, they found, spending time on social networking sites like Facebook, Instagram, Pinterest and others might expose us to new products and purchases made by our social connections. And it's likely to expose us to other shopping-related information – by way of news articles and advertisements. And that all could drive us to online storefronts.
But on the other hand, they found, social networks just might dominate our online interests, eclipsing interest in other internet activities that carry entertainment value, including shopping. For marketers, understanding the online shopping habits of consumers and their use of social networks is key.
"While social media may account for a significant share of web traffic that online stores receive, it's unclear whether presence in social media and the traffic that companies get through social media are actually doing well in the storefront," says Trusov, who teaches internet and social media marketing at the Smith School.
Compared to other common traffic acquisition sources like search engines or affiliates, people who come to an online storefront from Facebook are less likely to "convert" – or buy something. At least right away.
"The naive view on this would be, 'Well, traffic from social networks is not high-quality traffic,'" Trusov says. Without those conversions, or sales, advertising on Facebook or other social media sites might seem like a waste of money. "But what we show in this paper," Trusov says, "is that indeed, perhaps storefronts are not immediately seeing returns. But, maybe the storefront and the company are generating awareness, and the conversion happens sometime later in time."
Using a consumer panel data set that tracked how more than 10,000 people browsed shopping and social network websites, as well as their online purchasing activities, for over a year, the researchers set out to test the relationship between social network use and online shopping.
They found that, generally, the more people use social networking sites, the more they shop online. And that makes some sense – that people who are comfortable making connections and spending social and recreational time online would be comfortable making purchases there as well. However, the researchers also discovered that immediately after periods of increased usage of social networking sites, online shopping activity appeared to dwindle.
"It appears that people more engaged in social media tend to be more efficient in shopping," Trusov says. "Instead of hanging out on Amazon.com for hours, they would be hanging out somewhere else. And when they have the urge to buy something, they know where to go and how to get it faster. They are better aware of the many options available to them."
The researchers say longtime social media users not only tend to buy more often, but also they tend to shop from a wider range of retailers. The research, forthcoming in the Journal of Marketing, is believed to be the first to link individual-level social network use with e-commerce activity.
It's likely to be of interest to marketers, keen to find ways to draw traffic from busy social media hotspots. Around the world, Facebook has 2 billion active monthly users; its Instagram photo sharing tool boasts about 700 million. Americans devote roughly 30 percent of their online time to social media, predominantly Facebook, and devote about 8 percent of online time to shopping.
Read more: Online Shopping and Social Media: Friends or Foes? by Yuchi Zhang, Michael Trusov, Andrew T. Stephen (University of Oxford) and Zainab Jamal (Guavus) is forthcoming in the Journal of Marketing.
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About the University of Maryland's Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.