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Social media efforts can boost profits, says study

January 21st, 2013 by Gary Ennis

Keyboard with three money keysSocial media has become an increasingly significant part of the digital marketing sphere over the last few years, but some business owners remain unconvinced that the return on investment (ROI) is significant enough to prove worthwhile. However, a new study from the University of Buffalo has proven that social media can help a business to build relationships, increase brand awareness, and generate profit simultaneously.

“There have been doubts about the effectiveness of social media for business because the link between a firm’s efforts and the ROI hasn’t been established,” Ram Bezawada, assistant professor of marketing at the School of Management and co-author of the study, explained.

“Our results show that when customers engage with a business through social media they contribute about 5.6% more to the firm’s bottom line than customers who do not … Social media activities help strengthen the bond between the customer and the firm – and boost financial performance.”

Bezawda also offered advice to companies who need to further develop their social media plans in order to attain this level of success: “When building communities, businesses should craft personalised messages, encourage member contribution, integrate knowledge about customers from both online and offline interactions, and create specialised sub-communities for customers looking for premium and unique products.”

The full study is scheduled to be published in the Information Systems Research journal later this month, but all evidence so far points to social media being a useful tool for both personalisation and profit.

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