Smith Brain Trust / March 18, 2018

Calculate the Value of Social Media Buzz

Calculate the Value of Social Media Buzz

Women Leading Research: Wendy W. Moe

SMITH BRAIN TRUST – How much is social media buzz worth to your brand? A new working paper, co-authored by Wendy W. Moe at the University of Maryland’s Robert H. Smith School of Business, quantifies the value of word-of-mouth mentions in terms of equivalent advertising dollars spent to influence consumers.

“Companies divide their marketing budgets between social media outreach and traditional paid advertising,” Moe says. “But nobody really knows the right mix. Our study removes some of the guesswork about where to spend your resources.”

For starters, she says, companies need to understand what they are trying to accomplish when they buy a display ad or share a meme on Facebook. Do they want to strengthen their ties with current customers or attract new ones? Do they want to invest in long-term consumer mindset metrics like brand awareness, sentiment and consideration? Or do they want to drive immediate sales among active shoppers?

“It makes a difference,” says Moe, director of the Smith School’s Master of Science in Marketing Analytics program and the Smith Analytics Consortium. “The customer decision process is a journey, and customers move through various stages.”

Some might be in the decision funnel, moving from need recognition to a specific purchase. Others might not be actively engaged in product evaluation. Moe says consumers respond differently to different types of brand messaging, depending on their status.

She and her co-author test the relative effectiveness of paid advertising versus social media word-of-mouth at each stage of the journey in the context of a vehicle purchase. Specifically, they analyze three datasets pertaining to four automotive brands in the U.S. market, covering a three-year period from January 2014 to December 2016.

They find that paid advertising generally offers more bang for the buck in terms of influencing current brand owners, regardless of how close they are to making their next purchase. Social media marketing works as well or better than paid advertising to influence consumers who do not currently own the brand, especially as they near a purchase decision.

Moe says paid advertising might have more impact on people who already own the brand for two reasons. First, they have personal experience with the product, so they rely less on others’ opinions. Second, advertising might remind them of features they can directly confirm for themselves, leading to greater awareness and a more positive opinion of the brand.

“Non-owners do not have direct product experience to draw upon, so they may be more likely to turn to the experience of others in social media,” Moe says. Even with current owners, social media works better than paid advertising if the goal is to drive word-of-mouth recommendations.

Calculating the precise value of a social media mention requires awareness of all these factors.

For a leading auto brand, an additional $2 million per month spent on advertising would be equivalent to an additional 1,282 social media mentions per week in terms of influencing non-owners in a passive search state. An extra 4,273 social media mentions per week would be necessary to equal $2 million in added advertising spending in terms of influencing the opinions of current brand owners in a passive search state.

“The analysis offers a way to evaluate the return on marketing investments for a social media word-of-mouth campaign relative to that of a traditional paid advertising campaign,” Moe says. “The key is having clear objectives in terms of the mindset metric and the customer journey stage being targeted.”

Read more: “Managing the Customer Journey: What is the Value of Advertising and Social Media?” is a working paper by Wendy W. Moe and David A. Schweidel at Georgetown University (2017).

Wendy W. Moe is a professor of marketing, director of the Smith Analytics Consortium, and director of the Master of Science in Marketing Analytics program at the University of Maryland’s Robert H. Smith School of Business.

Research interests: Models for online and social media marketing; consults for numerous corporations and government agencies, helping them develop and implement state-of-the-art statistical models in the area of web analytics, social media intelligence and forecasting; frequently serves as an expert witness in litigation.

Selected accomplishments: Highly published academic with research appearing in numerous leading business journals; author of Social Media Intelligence (Cambridge, 2014); co-editor of the Journal of Interactive Marketing; serves on the Board of Trustees for the Marketing Science Institute and the advisory board for the Wharton Customer Analytics Initiative; research in web analytics was the foundation for NetConversions, an early innovator in online data collection and analysis; part of the founding team that brought the company from startup to acquisition in 2004.

About this series: The Smith School faculty is celebrating Women’s History Month 2018 in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Daily faculty spotlights support activities from the school’s Office of Diversity Initiatives, starting with the seventh annual Women Leading Women forum on March 1, 2018.

Other fearless ideas from:  Rajshree Agarwal  |  Ritu Agarwal  |  T. Leigh Anenson  |  Kathryn M. Bartol  |  Christine Beckman  |  Margrét Bjarnadóttir  |  M. Cecilia Bustamante  |  Jessica M. Clark  |  Rellie Derfler-Rozin  |  Waverly Ding  |  Wedad J. Elmaghraby  |  Rosellina Ferraro  |  Rebecca Hann  | Amna Kirmani  |  Hanna Lee  |  Hui Liao  |  Jennifer Carson Marr  |  Wendy W. Moe  |  Courtney Paulson  |  Louiqa Raschid  |  Rebecca Ratner  |  Debra L. Shapiro  |  M. Susan Taylor  |  Niratcha (Grace) Tungtisanont  |  Vijaya Venkataramani  |  Janet Wagner  |  Yajin Wang  |  Yajun Wang  |  Liu Yang  |  Jie Zhang  |  Lingling Zhang

Photo illustration credit: Jag_cz



Media Contact

Greg Muraski
Media Relations Manager
301-892-0973 Mobile 

Get Smith Brain Trust Delivered To Your Inbox Every Week

Business moves fast in the 21st century. Stay one step ahead with bite-sized business insights from the Smith School's world-class faculty.

Subscribe Now

Read More Research

Back to Top