There can be little doubt that the trend is toward shifting more resources away from traditional advertising (television, print, billboards, and radio) in favor of social media. For several years now, the CMO survey has reported reductions in spending on traditional advertising. At the same time, the nearly 350 VP-level and above marketing executives in the survey indicate that social media spending will continue to rise as a percentage of the marketing budget.
Unfortunately, most companies lack insight into whether or not social media spending is an important driver of company performance. In fact, most marketing executives believe it isn’t – despite the shift in spending!
Certainly, the media landscape has changed. The ability for consumer-to-consumer sharing on a massive scale needs to be a consideration in every company’s marketing planning. But does the changing media landscape really mean that traditional advertising is any less significant?
Research to Understand the Relative Effectiveness of Traditional Advertising
To date, there has been no research which has simultaneously looked at the relative effectiveness of traditional advertising, firm-to-consumer (F2C) social media messages, and consumer-to-consumer (C2C) social media sharing. Without such research, it is impossible to evaluate the wisdom of the trend toward shifting spending away from traditional advertising to social media.
This important gap in understanding was filled by a study published in the September 2017 issue of Journal of Marketing. The article, “Effects of Traditional Advertising and Social Messages on Brand-Building Metrics and Customer Acquisition,” investigates the relative effectiveness of traditional advertising, F2C, and C2C on new customer acquisition, brand awareness, consideration, and preference of a leading European telecom provider.
To fill the gap in our understanding, the study combined several types of data that spanned more than a two-year time period. From the firm, the researchers obtained data on new customer acquisitions. The firm also provided data on FTC message impressions via its Facebook page (the firm’s main social media platform) and C2C sharing about the firm on Twitter and other relevant online forums.
From Nielsen data, the researchers obtained combined media spending on television, radio, print, and out-of-home. Finally, from a survey panel, the researchers obtained measures of brand awareness, brand consideration, and brand preference.
Research Confirms the Continued Significance of Traditional Advertising
The results revealed that traditional advertising is more effective than either F2C or C2C communications at creating brand awareness and consideration. In addition, traditional advertising is more effective at acquiring new customers. Though not as effective as traditional advertising, it is important to recognize that F2C messages also positively impact brand consideration and new customer acquisition. And this type of messaging is much less expensive.
In addition, a higher number of C2C messages has a favorable impact on new customer acquisition, and the valence of C2C messages (the percent that are positive vs. negative) is even more effective than traditional advertising at building brand preference – a critical step to growing long-term brand equity.
Finally, the results show that traditional advertising has an indirect impact on new customer acquisition and brand preference through C2C message sharing. Specifically, more traditional advertising leads to more C2C sharing and more positive C2C messages.
Overall, the results make it clear that traditional advertising remains a critical ingredient in company success. It has a direct and indirect positive impact on customer acquisition and brand equity. In fact, it is the most effective approach to growing new customer acquisition, brand awareness, and brand consideration. And, it also supports C2C messages that ultimately lead to brand preference and long-term brand value.
The media landscape has certainly changed, but this research reinforces the important role of traditional advertising even as F2C and C2C message sharing grow in volume. In fact, the research shows that traditional advertising has an important role to play in the success of any marketing strategy built on the promise of C2C social media sharing.
So, as the researchers conclude, before “managers consider shifting marketing investments from traditional advertising to other types of messages, they should take not only costs but also effectiveness into account” (p. 12). Wise counsel indeed.
Louise F. Pendry and Jessica Salvatore (2015), “Individual and Social Benefits of Online Discussion Forums,” Computers in Human Behavior, 50 (September), 211–20.
Lance A. Bettencourt is Associate Professor of Professional Practice in Marketing at the Neeley School of Business at Texas Christian University, and author of Service Innovation: How to Go from Customer Needs to Breakthrough Services.