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The Great Debate: How Does Social Word of Mouth Influence Purchasing Decisions?

Social media marketers have invested a great deal of time, energy and effort in creating perfectly crafted tweets to followers — and hopefully impressions to second and third degrees of Twitter users through associations — to spread awareness and share content related to their brand. Recently, however, a Gallup Poll revealed that a majority of Americans believe social media have no effect at all on their purchasing decisions. So are all of their efforts for naught?

According to the self-reported survey, 62% of people in the U.S. say Facebook and Twitter, among other sites, do not have any influence on their decision to purchase goods and services. Only 30% said social media have “some influence” and a much smaller 5% said they have “a great deal of influence.”

And with age as a variable, almost half (48%) of millennials, the generation closest to the advent of social media technology and the largest percentage of social media users, still said social media had “no influence at all” on them.

So what is the reasoning behind all of this? Science offers one explanation. The third-person effect hypothesis, a psychology theory, predicts that people tend to perceive that mass communicated messages have a greater effect on other than on themselves. Essentially, people think, “I’m too smart to be lured into the tricks of advertising and marketing.” But, data proves otherwise.

Neilsen data showed that 92% of people trust recommendations from their networks, messages shared after interactions with a brand in the form of social word of mouth. This doesn’t mean that these people are being easily manipulated and falling prey to marketer’s “set-ups.” Rather, it means marketers are reaching and better connecting with their target influencers, who are often voluntarily sharing content on the brand’s behalf to their friends, family and co-workers. Given positive feedback through social word of mouth about a brand from a trusted source, people are then likely to at the very least form positive awareness toward the brand, if not build brand loyalty and choose to purchase a product.

Additionally, the study revealed that 94% of users said they use social media to connect with friends and family, reminding us of the social component of social media. People are coming to these social environments to stay updated with their closest networks and hear what they have to say. Now, marketers are successfully leveraging citizen influencers in a social space to insert themselves into the discussion in a very organic way.

Marketers interact through touch points that are subtle enough to not be annoying, but persistent enough to be noticed. While consumers may not trace the source of their purchasing decision to social media, with more than 1.73 billion users on social including brands, it is nearly impossible to separate the influence businesses have on user networks — whether Americans want to admit it or not.

For more information, check out our Fortune 500 Social Currency Index to view the effects of subtle actions brands take toward individuals.

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