A recently published study conducted by Chung and colleagues investigated how a business’s social media efforts—in terms of intensity, richness, and responsiveness—influence overall performance for businesses. Below I will discuss the study, and their findings. I will begin by defining the key terms that were utilized in this study.
The “richness” of a social media strategy refers to quality of the content that is being posted. Now, stay with me, it gets a little academic here:
“The richness of a firm’s social media efforts was measured as the ratio of the number of the firm’s enriched postings (e.g., flash, videos, photos, and music) to the total number of the firm’s postings in week t. A larger value of this measure reflects the firm’s greater efforts spent on social media in terms of the richness of information provided to consumers.”
What this means, is the researchers took the time to measure exactly what businesses were posting, and then divided that number by their total posts. This isn’t about quantity, it was about whether the percentage of posts that offer value.
The “responsiveness” of a social media strategy refers to interacting with social media fans. Again, it gets a bit academic:
“The responsiveness of a firm’s social media efforts was measured by the ratio of the number of the firm’s comments to the total number of comments made by both the firm and its fans in week t. It reflects the magnitude of the firm’s reciprocal action toward its customers through comment threads following a certain post.”
Here, the authors looked how often the business commented, and divided it by the total number of comments (both by the business and fans). This number indicates how often fan comments are being addressed by the business.
The “intensity” of a social media strategy refers to the quantity of posts and comments. Last academic quote, I promise:
“Intensity of a firm’s social media efforts, we use two measures of firms’ Facebook activities: the number of postings and the number of comments…In the main analysis, we use a weighted average of the number of a firm’s postings and comments in week t to measure Intensity.”
Ok, that was a mouthful, here is what it means: The authors looked at postings and comments, and created a single variable to measure intensity.
Network size and Performance
The authors also did some fancy math to adjust for the size of each business’s social media platforms (i.e., “network presence”), so that bigger businesses didn’t have a statistical advantage. The authors then looked at stock market performance and web traffic to gauge the effects of each business’s social media efforts.
First, the authors found that the average business they looked at (63 in total) had 4,800 Facebook fans, and posted every .73 days. Next, The researchers found that the richness and responsiveness efforts (i.e., quality-oriented social media strategies) are significantly associated with an increase in the business’s performance. Their results suggest that consumer engagement has a positive impact on business performance. Conversely, their findings suggest that the Intensity of a business’s social media efforts (i.e., quantity-oriented social media strategy) was not associated with an increase in returns. These findings provide unique and important implications for social media best practices for businesses.
What does this mean?
This research is groundbreaking in that it statistically supports the commonly held notion that social media should be about delivering high quality content in a social fashion. It is not enough to have a mere social media presence; you must make sure that you are interacting with customers, and that you are adding value to your fans. Overall social media quantity had little effect on ROI. Thus, if you want to see a return on your social media efforts you are going to have to work to deliver content that speaks to your fans and keeps them engaged.
Chung, Sunghun and Animesh, Animesh and Han, Kunsoo and Pinsonneault, Alain, Firms' Social Media Efforts, Consumer Behavior, and Firm Performance: Evidence from Facebook (June 10, 2014).