The question isn’t quite age-old, but it is one that has been asked since the rise of social networks: How much money is a tweet, post, pin, review or comment worth?
A study released this week from ShareThis may have uncovered an answer. The research, developed by Beresford Research and presented in partnership with The Paley Center for Media, explores the connection between online recommendations and consumer behavior.
Researchers included various types of recommendations: online sharing through email or social networks, consumer star ratings, consumer reviews (think Yelp), in-person recommendations and professional, published reviews. Over the course of two studies, one in late 2013 and the other in early 2014, they evaluated some 6,000 people buying supermarket products, vehicles and mini-tablets. The goal was to compare online and in-person recommendations to brand and price. As it turns out, online recommendations had the greatest impact on consumers in each of the three categories.
What are the numbers?
The findings showed that a glowing online review or share — whether it’s on Amazon or Facebook — leads to a 9.5 percent increase in purchase intent. The fiscal translation is significant. According to the study, that gain means “an incremental increase in profit of $799 to $9,336 per vehicle in the automotive industry, $22 to $34 for a WiFi-only mini-tablet in consumer electronics, and $0.24 to $1.54 for a typical consumer packaged good sold in a supermarket.”
A bad review, however, can decrease purchase intent by 11 percent. Negative content is all over social media. People are constantly complaining about products, but what the ShareThis study shows is just how significant of an impact this content has.
What’s more, recommendations on sites like Facebook and Twitter have more influence on consumers than ratings and reviews — people seem to trust their friends and followers, rather than complete strangers on the web. Imagine a college student wants to buy a new iPhone case. He’s much more likely to buy the one that his cousin recently posted about on Facebook: “This is the best case ever.” This kind of social share is just as valuable as a face-to-face recommendation.
The study proves that it is, in fact, possible to measure the monetary effects of our social sharing habits, and an online recommendation can go a very long way — 9.5 percent, to be exact.
What does this mean?
Kurt Abrahamson, CEO of ShareThis, said there has been a lot of research on the value of recommendations over the past few years, but this study is the first to quantify social sharing.
“Online recommendations are still a relatively new phenomena, well under 10 years,” he said via phone interview. “The idea that they can be as important or more important than brand or price is a key finding.”
This research is especially helpful for marketers who are looking to understand how products fit in the digital space, as well as how to sell them.
“When you consider the pricing of your products and how you’re going to bring them to market, online sharing and recommendations should be an important part of that strategy,” Abrahamson said. “You should view your current customers as marketing partners.”
There are certainly companies in existence that have put this concept into practice. Abrahamson brought up Red Bull, a brand that has taken the Internet by storm — AdAge recently dubbed it “one of the more prominent brands on social media.”
— Red Bull (@redbull) April 21, 2014
Red Bull has an extremely loyal online audience, with millions of followers on Facebook, Twitter, Instagram and YouTube. The content, which often emphasizes extreme sports, has a certain virality factor — people want to share Red Bull’s photos and videos.
Essentially, the ShareThis study encourages marketers to take advantage of online shares and recommendations, much like Red Bull has done.
“This will be a really good wake-up call for brands,” said Abrahamson.
Melanie Stone is a journalism student at DePaul University in Chicago. Currently, she’s a Metromix intern at the Tribune Company. Her work has appeared in several print publications and websites, including Business Insider, Huffington Post and The Daily Illini. Tweet her at @MelanieAlissa.Related