Kaitlin Renner

COM 350 Final Paper

Advertising on Social Media: Is it Beneficial?
Introduction
Without a doubt, social media plays a major role in the lives of
people all over the world. According to the Pew Research Center, 74%
of online adults use social media.1 Whether they are active on social
media sites or not, it is hard to go a day without seeing a post whether
it be on a site or on the news. Sites like Facebook, Twitter, Pinterest and
others are being used for a variety of different reasons, such as
networking with old friends, posting videos and pictures, and sharing
beliefs. The new trend on social networking sites is coming from
companies themselves. In the last few years, advertising on social
media sites has increased. As of 2014, 68% of Facebooks revenue
came from ads and for Twitter, 84% of its revenue came from ads.2
Large national companies and small local businesses are taking
advantage of social media. As of June 2013, one million advertisers
were active on Facebook.3
History of Social Media

1 Pew Research Center, Social Networking Fact Sheet, (2014)

2 Sonny Ganguly, Why Social Media Is Set To Explode In The Next 3
Years, Marketing Land (2015)
3 Robert Hof, You Know Whats Cool? 1 Million Advertisers On
Facebook, Forbes (2013)

While social media is a relatively new platform, social networks are not.
One of the earliest social networks was cave drawings, a critical
communication channel. The most common drawings were of animals,
hands, and hunting.4 Much later in history, people started to
communicate through more than just drawings, written language
became very important. For example, Martin Luther went viral in his
own way. He posted his issues with the Catholic Church and those in
charge on the doors of his cathedral where he preached. His followers
read his post, then liked it in their own way- agreeing and following
him, eventually forming a new religion, Lutheranism, and starting a
kind of revolution.5 Today, the platform of communication has changed,
but the fundamental idea has not.
Starting in 146 BC up until the 18th century, the town criers would run
from place to place and shout out the news of the day. They became
increasingly common as Great Britain colonized the New World. 6 In big
cities, newspapers started to gain popularity. The first newspapers
were printed in the 17th century. By 1870, over 5000 newspapers
existed in the United States alone.7 Today, a large majority of

4 Social Times, The History of Social Networking Through The Ages,

(2014)
5 The Economist, How Luther Went Viral, (2011)
6 Social Times, The History of Social Networking Through The Ages,
(2014)
7 Social Times, The History of Social Networking Through The Ages,
(2014)
2

newspapers are read online. The Internet has transformed how social
networks exist and are conducted.
Advertising in Social Networks
Advertising in social networks has always played an important role.
Farmers markets and town markets were where people would advertise
their latest crop and convince the shoppers to buy their corn over their
neighbors produce. Newspapers usually had ads in them, and these
ads are what supported the newspapers and kept them running. In the
1950s, Tupperware parties were all the rage. Originally, the product
was being sold in shops and department stores, but one woman had
the idea to market them directly to housewives and their friends. This
created the Tupperware party, where women would meet at one house,
have drinks and food, and a Tupperware representative would come
into their home to demonstrate, and sell their products.8 This same
idea is used in selling products, like Pampered Chef and Thirty One
Purses today.
Launch of Social Media Sites
In February of 2004, Facebook launched. The site was originally
created for college students at Harvard University. Soon, the website
was expanded to allow anyone to use it. By August of 2008, the site
had over 100 million users. But the early version of Facebook does not
look like it does today. The first ad was posted on Facebook in May of

8 Tupperware Collection, The History of Tupperware Home Parties,

3

2005.9 By December of 2009, the ad revenue of Facebook was $764

million.10 Soon, the social networking site would create ads that were
specific to mobile users. But why were ads originally included in
Facebooks plan? The answer: money. In April 2004, two months after
the launch of Facebook, former CFO Eduardo Saverin pitched the site
to advertisers. It had over 70,000 users and was available at 20
colleges.11 This pitch must have worked, because for the first quarter
earning of 2013, Facebook made over 1.8 billion dollars in ad revenue
and a third of that money came strictly from mobile advertising.
Unified, a company specializing in cloud marketing technology predicts
that by 2017, social networking sites like Facebook, Twitter, Linked In,
and Tumblr will make over 11 billions dollars in ad revenue annually.

12

Marketing Psychology
An important aspect of this question is marketing psychology.
According to Lars Perner from University of Southern California,
studying consumers helps companies improve their marketing
strategies by understanding:
The psychology of how consumers think, feel, reason, and select
between

different alternatiivesthe behavior of consumers while

9 Social Times, A Brief History of Social Advertising, (2013)

10 Social Times, A Brief History of Social Advertising, (2013)
11 Laura Sampler, Heres the First Slide Deck The Facebook Used to
Pitch Ads in 2004, Business Insider (2012)
12 Social Times, A Brief History of Social Advertising, (2013)
4

shopping or making

other marketing decisionshow consumer

motivation and decision

strategies differ between products

that differ in their level of importance or interest that they entail for
the consumer; and how marketers can adapt and

improve their

marketing campaigns and marketing strategies to more

effectively

reach the consumer.13

All of this is important in marketing on social media. Andreas Kaplan
and Michael Haenlein define viral marketing, as the type of advertising
on sites like Facebook and Twitter, quite different than a print ad. Viral
marketing has to reach more than just one person at a time, and must
appear on a website that allows user generated content.14

Prior Studies on Social Media Advertising

Since social media is a relatively new medium, advertising on the sites
is a new and pretty much a guessing game. There are few studies on
the topic. But a majority of the studies that have results say that
advertising on social media really does benefit the companies, though
it is difficult to track. But during the 2011 holiday shopping season, a
study was conducted to see if social media users who were fans of big

13 Lars Perner, Consumer Behavior: The Psychology of Marketing,

University of Southern California (2010)
14 Andrew Kaplan and Michael Haenlein, Two Hearts in Three-Quarter
Time: How to Waltz the Social Media/Viral Marketing Dance, Business
Horizons (2011)
5

companies like Amazon, Best Buy, Target and Walmart on social media
sites like Facebook really spent more money there, compared to those
who were not following the stores on social media.
Not surprisingly, the study found that fans of retailers, on
average, spent

significantly more at those stores than did the

general population- more than

twice as much at Amazon, Best

Buy, and Target, and almost that much more

at Walmart. Much more

impressive and to the point, however, is that

Friends of Fans also

typically spent more- only 8% more at Amazon, but a

striking

51% more at Target and 104% more at Best Buy. That would seem
to be a clear-cut, if modest, early validation of the social
advertising thesis.15
Research Question
Despite all of these data, there are that questions come up all the time
asking if advertising on social media really works. Does advertising on
social media benefit the companies? Are there any downfalls?

Does this work?

With this information, it would seem that advertising on social
media is the no doubt way to advertise sales and products for
companies. In the beginning, studies suggested, without a doubt,
advertising on social media reaches a new kind of audience. It is
15 Sam Gustin, Do Facebook Ads Work? Time (2012)

possible to target a large number of people, and it is easy to target

different groups of people based on age or gender or race. Users may
not be commenting on the ad directly, but it is pretty difficult to ignore
a large ad placed in the middle of a newsfeed filled with pictures of
babies and statuses about the meal someone just ate.
This forced nature of ads- meaning there isnt really a way to
escape them- might not always be a good thing. As advertising on
social media becomes more studied and tracked, there is more
evidence that the ads seen on social media sites are annoying and
intrusive. According to a 2013 study by Adobe, 68% of Americans find
that online ads are annoying, and 51% of Americans say that they are
distracting.16 But despite this, over 57% of Americans have liked their
favorite brands on social media sites.17
In an article posted in 2013, Robert Hof discusses the increase of
Facebook ads. There was never an increase per se, but Hof says that
there has been an increase of lame or boring ads on Facebook. One
thing I bet we do agree on is that Facebook ads have gotten worse in
recent months. The right-hand-side Marketplace, which Facebook ad
firms refer to as RHS, has always had some pedestrian ads, but they
were restricted in size and easy to ignore In recent months, though,
Ive seen more and more of these awful Web-style ads showing up in

16 Adobe, Click Here: The State of Online Advertising, (2013)

17 Adobe, Click Here: The State of Online Advertising, (2013)
7

my newsfeed- again.18 Hof gives the example of LowerMyBills.org,

whose ads are constantly popping up in his newsfeed. He says that he
started to fill out the basic information the site asked for, only to stop
once the site asked for his phone number and social security number. 19
This is another problem. Since Hof started to enter his personal
information into the site, this showed interest. I know for me, when I
search clothing items on certain website, the clothing item will then
pop up on my Facebook newsfeed. For example, I was looking at a
dress to buy for the holiday season, only to leave it in my shopping
cart. Later that day, I signed on to Facebook to see the clothing site
and the specific dress being advertised on the side of my newsfeed.
Creepy? Maybe. Annoying? Definitely.
In the spring of 2010, Kelly, Kerr and Drennan conducted a study that
examined at teenagers and their social media habits. One aspect of
the study was about advertising on social media. Overwhelmingly, the
teens interviewed said that they dont notice the ads, dont mind them,
or avoid them completely. One thirteen-year-old girl said that she
doesnt even notice the ads and that its like a conditioned response to
not notice.20 Some teens said that they avoid the ads because they

18 Robert Hof, Facebooks Real Advertising Problem Isnt Too Many

Ads. Its Too Many Lame Ads, Forbes (2013)
19 Robert Hof, Facebooks Real Advertising Problem Isnt Too Many
Ads. Its Too Many Lame Ads, Forbes (2013)
20 Louise Kelly, Gayle Kerr, and Judy Drennan, Avoidance of
Advertising in Social Networking Sites: The Teenage Perspective,
Journal of Interactive Advertising (2010)
8

dont pertain to them. Over the years, social media sites have been
tracking and developing software that targets certain demographics in
order to show them different ads.
Research Method
For this investigation, I want to conduct small focus groups to study
how the general public perceives social media. I would like to interview
about 5 groups, each with around 5-7 people. One group will be
teenagers, between the ages of 14-17 that are still in high school.
Another group will college-aged adults, between the ages of 18-22. A
third group will be interview adults aged 25-35 who are working. A
fourth group will be individuals ages 40-50 who are working with
families, and the last group will be individuals ages 60 and up. I want
to have a diverse group of individuals, including male and female
participants. I would also like different ethnicities involved. Of course,
these participants need to be active social media users on Facebook,
Twitter, or Instagram.
Each session will last about an hour. I will have a list of questions
about social media and advertising, and I hope that the questions will
stimulate discussion between the group members. The questions I ask
need to use neutral language in order to not sway the group one-way
or the other. The first question I want to ask is How do you feel about
advertising on social media? I think that from here I will be able to tell
which way the group sways. I want to ask about annoying ads, lame

ads (per the Forbes article), and how effective they really think the
advertising is. If the group likes ads on Facebook, I want to find out why
they like them, which companies they like the best. For all the groups, I
want to see how they feel about the companies that talk back to their
commenters, like Taco Bell on Twitter or Target on Facebook.
Sample Questions
1)
2)
3)
4)

How do you feel about advertising on social media?

Do you like ads on social media sites? Why or why not?
What companys ads on social media do you like/dislike?
How do you feel about companies commenting back to

you/consumers?
5) Do you not buy from certain companies because of their
advertising? Why or why not?
Benefits to Focus Groups
There are a few benefits to using focus groups in this situation.
For one, an open chat about advertising on social media may elicit
other responses about other related topics. This would be great
because I want to gather a lot of information and a lot of feelings about
advertising on social media.
Another reason why focus groups are a good idea for this
research question is because the answers will be more personable,
which social media is. Social media sites are largely personal because
you can share information about yourself, along with pictures and
videos. Talking with a small group of people who might be able to

10

relate to you is a good idea because it might open people up about the
topic.
Problems with Focus Groups
One problem that I may run into is the participants not
completely answering the questions. I know that a lot of people skip
over ads or just block them out when using the sites. This would be a
problem because then they would not have anything to tell me about
the topic. To avoid this problem, I might have to do different focus
groups of the same age range or multiple sessions with the same
people.
Another problem I might run in to is one person in the focus
group taking over or becoming the assumed leader. I want
everyones answers to be personable and not dictated by one or two
people. I also do not want people to feel like they have to agree with
the group. Disagreement is good. I want people from different
backgrounds in my groups so I get a wide range of people. If someone
finds the advertising on social media annoying, I want them to say so.
This is the same with the people who like social media and use it to
their advantage. I want the members to feel like they are in an open
environment where their opinions are valid and are benefitting the
research.
Conclusion

11

To answer my questions about advertising on social media, I

want to conduct relatively small focus groups with people around the
same age. I want to ask a few questions about advertising on social
media and their reactions to it, whether people find it annoying or
helpful. I want to do this because large amounts of people today use
social media sites in order to share and be shared with, but I want to
see where the line is.

Bibliography
Pew Research Center, Social Networking Fact Sheet, (2014)
Sonny Ganguly, Why Social Media Is Set To Explode In The Next 3
Years, Marketing Land (2015)
Robert Hof, You Know Whats Cool? 1 Million Advertisers On
Facebook, Forbes (2013)
Social Times, A Brief History of Social Advertising, (2013)
Social Times, The History of Social Networking Through The Ages,
(2014)
The Economist, How Luther Went Viral, (2011)
Tupperware Collection, The History of Tupperware Home Parties,
Laura Sampler, Heres the First Slide Deck The Facebook Used to Pitch
Ads in 2004, Business Insider (2012)

12

Lars Perner, Consumer Behavior: The Psychology of Marketing,

University of Southern California (2010)
Andrew Kaplan and Michael Haenlein, Two Hearts in Three-Quarter
Time: How to Waltz the Social Media/Viral Marketing Dance, Business
Horizons (2011)
Sam Gustin, Do Facebook Ads Work? Time (2012)
Adobe, Click Here: The State of Online Advertising, (2013)
Robert Hof, Facebooks Real Advertising Problem Isnt Too Many Ads.
Its Too Many Lame Ads, Forbes (2013)
Louise Kelly, Gayle Kerr, and Judy Drennan, Avoidance of Advertising in
Social Networking Sites: The Teenage Perspective, Journal of
Interactive Advertising (2010)
Martin Meyer-Gossner, Study: Digital Advertising Found Annoying and
Invasive Social Media Today (2013)
David Taylor, Jeffrey Lewin, and David Strutton, Friends, Fans, and
Followers: Do Ads Work on Social Networks? How Gender and Age
Shape Receptivity Journal of Advertising Research (2011)

13