Social media has become an increasingly powerful tool over the last number of years due to rapidly evolving technology. Social media is used daily among consumers, clients, and businesses to communicate brand messages, share stories, promote products, entertain, and more. There are a number of positive and negative effects social media can have within businesses which can lead to various pros and cons as social media is such a powerful platform. The role of social media has become extremely influential over recent years as the average adult spends approximately two hours and forty minutes on social media daily, which is increasing every year (Clement, 2020). Hence, it is crucial for businesses to take full advantage of this power and use it to the best of their ability for a positive outcome. From reading various journal articles on the effects of social media in businesses it is evident that it has positive and negative effects. Businesses and firms often face internal and external pressures to adopt social media presence which can result in various outcomes (Tiago and Veríssimo 2014). Negative effects can be seen through the power of web 2.0, social media backlashes, misuse of metrics, and when viral content goes wrong which can cause risks for a business (Berthon et al. 2012). On the other hand, positive effects can be seen through the growth of companies profits and KPIs, by enhancing customer relationships (Hanna, Rohm, and Crittenden 2011), Also through the use of celebrities to influence consumers and to essentially grow a larger consumer base (Laroche, Habibi, and Richard 2013). Businesses and companies can also have a large impact on customers sharing their Corporate social responsibilities via social media (Luiten, 2020).
Social media has a large role to play within firms which can be critical to the impact of their business. These roles include providing information to consumers, connecting with stakeholders, heightening communication flow, creating hype about products, growing a larger audience base, expanding out beyond competitors, and thus generating sales. Journal article ‘Digital marketing and social media: Why bother?’ discusses how businesses and marketers must focus on relationship-based interactions with their customers in order to improve social media engagement (Tiago and Veríssimo 2014). Through the rise of social media, consumers have become increasingly dependent on one another to value peer judgements and reviews on products more so than firm promotions which is an indication of a shift in persuasive power. (Berthon et al. 2012). Social media has shifted from one-way communication of direct marketing, e-mails, television, and radio to a two-way model of communication where consumers can interact and engage with businesses via social media. According to Taneja and Toombs (2014), there are four main factors that should be taken into consideration when deciding to integrate social media into their business (Morales et. al 2017). These include determining what social media platform would best work with their business for either B2B or B2C marketing, determining the potential benefits from the use of social media, how the use of social media will differentiate them from competitors, and determining the impact of their marketing efforts. (Morales et. Al, 2017)
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According to a survey conducted on marketing managers from Portugal, eighty-seven percent of respondents identified digital presence as an effective means of information exchange, stating that it established direct contact with the consumer and helps the businesses internal and external relationships. (Tiago and Veríssimo 2014). Eighty-two percent of surveyed managers also rated digital marketing extremely important to build their brand. Seventy-eight managers rated it important to improve brand knowledge and seventy percent said it was crucial for brand communication. The survey also evaluated the marketing managers' perceptions of how best to measure social media effectiveness within a business. The conclusion showed that the best metrics to measure effectiveness is from actions that provide engagement. From page views, click-through rates, and cost per thousand impressions there are several features to collect necessary data (Tiago and Veríssimo 2014). Means to measure these metrics have dramatically advanced in the last number of years with a wide variety of tools available such as google analytics, HubSpot, Hootsuite, and more. Despite the fact social media proved to have many advantages in the survey, one manager stated that “Without clear objectives and strategy definition it is better not to use social media at all” (Tiago and Veríssimo 2014, p. 707). This shows that for social media to be fully effective the firm must use various social media platforms correctly and to their full advantage to reap the benefits which can be a difficult task.
Negative effects of social media include conflicting feedback or engagement from consumers, the pressure of constantly having to keep updated and up to speed against competitors, and errors or distasteful events within a company that can face backlash. The way in which consumers interact and share information with one another has evolved rapidly in recent years through the combined use of blogs, forums, social networking sites, and podcasts known as Web 2.0. (Berthon et al. 2012). This term originated in 2004 by the O’Reilly media web 2.0 conference where they stated the original use of the web was for consumers to retrieve information, however, now it is used to both create and consume information. This can be difficult for businesses to keep up to speed and stay engaged with consumers, especially for international marketing strategies which can face several problems worldwide. The way in which different countries and nationalities interact with social media depends on an array of factors that businesses must take into consideration for social media planning. These include the countries infrastructure and the enabling of technology and social media, the culture and shared values of the nation, and the government's rules and regulations (Berthon et al. 2012). For example, YouTube is less popular in emerging markets where it uses a considerable amount of bandwidth and data as opposed to European countries or America where the infrastructure allows for it. Another example includes Facebook, Instagram, and many social media sites being blocked in China due to government restrictions (Berthon et al. 2012). These are important factors when it comes to social media in businesses as different regions must be targeted in various ways. These factors can also cause trouble for businesses as social media posts and events seldom remain local and can quickly cause a backlash if negative stories or posts become viral.
Social media has seen a dramatic shift in power away from the firm and towards consumers and communities. When we think of social media content that has gone viral often comical, entertaining, and interesting images come to mind. However, this is not always the case and companies can often find themselves in difficulty when a negative post, story, or video goes viral which can impact their business. For example, ‘United Breaks Guitars’ quickly became a viral backlash for United in 2009. Passenger Dave Carroll flew with United to discover his guitar was broken upon arrival at his destination. After a year of trying to claim for damages and to no avail Carroll informed the airline he would be writing a song about his experience. After the video was uploaded on YouTube and Twitter it quickly started trending, being shared and aired on T.V channels such as CNN. When the story was published in The Times London, United Airlines' market capitalization declined by twenty percent which was a significant one hundred and eight-million-dollar loss in value to shareholders. This was a huge downfall and backlash against United and it shows the impact of social media, how quickly it spreads to international markets.
Marketers need to listen and learn, take the right tone and actions when engaging with consumers (Berthon et al. 2012). Consumers build up trust and bonds with products and companies through loyalty and communities and feel betrayed when businesses have faulty products, services, or cover-ups. Another example of a social media backlash in a company was when Apple admitted they slowed down older iPhones in order to get consumers to either upgrade to a newer iPhone version or replace their battery. Apple explained to consumers that the older the battery gets it becomes harder to supply the maximum current needed for the iPhone's processor at full speed.
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