Social networks as an advertising-based model

1.0 Introduction.
1.1 Background.
“Social networks, such as Facebook and MySpace have witnessed a rapid growth in their membership. Some of these businesses have tried an advertising-based model with very limited success. However, these businesses have not fully explored the power of their members to influence each other’s behaviour. This potential viral or social effect can have significant impact on the success of these companies as well as provide a unique new marketing opportunity for traditional companies”. (Iyengar et al 2009)

This research is focused on the impact of online social networks versus word of mouth in product referencing. It is an attempt to investigate the impact of the rapid growth of online social networks on the consumer and to investigate the possibility of it becoming a useful alternative to traditional word of mouth.According to Pedro Domingo (2005) traditionally, social network models have been descriptive, rather than predictive: they are developed at a very common level, normally with only a few global parameters, and are not practical for making concrete predictions of the future behaviour of the network. Until recent times, this was mainly due to lack of data: the networks available for tentative study were small and not many, and contained only nominal information about each node. Fortunately, the growth of the Internet has assisted its development. Substantial quantities of data are now available on very large social networks via blogs, social networking sites, knowledge-sharing sites, online gaming, newsgroups, chat rooms, etc.
2.0 Preliminary Literature Review.
2.1 Word of Mouth (WOM).
Word of mouth (WOM) has been recognized over the years as a significant influence on how people think, feel and react. Writings on interpersonal persuasion has ancient origins. Aristotle produced what has been called ‘the most important single work in the history of speech in the fourth century BC (Thonssen and Beard, 1948, p. 63). The book Rhetoric (Aristotle, trans. Roberts, 1924) highlights the influential impact of three artistic proofs inhibited in a speaker these are: ethos, pathos and logos. Ethos, the ethical and personal appeals of a speaker, consists of how the speaker projects personal characteristics so as to induce belief on the part of the listener. Pathos entails the emotional features of the speaker. Logos or logical appeals in the form of examples and enthymemes were regarded by Aristotle as the basis of reasoned discourse. Some 23 centuries later there now exists an immense literature on interpersonal communication (Littlejohn, 1990).
In a Marketing communication context, word of mouth (WOM) is a consumer-dominated channel, the sender is usually independent of the market. It is therefore perceived to be more reliable, credible, and trustworthy by consumers compared to firm-initiated communications (Schiffman & Kanuk, 1995; Arndt, 1967). Traditional communications theory considers WOM as having a powerful influence on behaviour, especially on consumers’ information search, evaluation, and subsequent decision making (Cox 1963) It provides information relating to product performance and the social and psychological cost of the purchase decision (Cox, 1963).Research generally supports the claim that WOM is more influential on behaviour than other marketer-controlled sources. Indeed, it has been observed that WOM can be more influential than neutral print sources such as Which and Consumer Reports (Herr et al., 1991).
2.2 Online Social Networks.
The term “Social network” can certainly not be described a new term, as individuals we are all involved in at least one form of social network and most of us especially the youth, are likely actively involved in several simultaneously, both “real” and online. The term social network can be defined as any web-based services that allow individuals to construct a public or semi-public profile within a bounded system, articulate a list of other users with whom they share a connection, and view and traverse their list of connections and those made by others within the system. The nature and nomenclature of these connections may vary from site to site. (Boyd, et.al 2007).
What makes social network sites unique is not that they allow individuals to meet strangers, but rather that they enable users to articulate and make visible their social networks. This can result in connections between individuals that would not otherwise be made, but that is often not the goal, and these meetings are frequently between “latent ties” who share some offline connection. (Haythornthwaite, 2005)
2.3 The Development of Online Social Networks
The first recognizable social network site was launched in 1997 this was known as SixDegrees.com, this website provided its members with the opportunity to create profiles list their friends and by 1998 provided the option of surfing their friends list ultimately leading to the interactive nature of our social networks today. However before 1997 other website and internet tools had already implored some one or more of this features (Boyd, et.al 2007), profiles where already being used by dating sites, ICQ buddy lists; the pioneer of the current crop of Internet instant messenger clients supported the listing of Friends, however this list was not visible to others. Classmates.com, allowed its members to connect with their old school mates and surf the network for others who were also connected, but members could not develop profiles or list Friends. SixDegree.com became the first site to combine these three main features of social networks as we know them today.
SixDegress.com was able to attract millions of users worldwide however its progress was halted and eventually shut down services in 2000. Reasons for its failure were attributed to its inability to become a sustainable business; the fact that its users did not have an extensive network of friends online and their non responsive nature to meeting strangers online also its users complained that the website offered little to do other than adding new friends, its founder believes that SixDegrees.com was simply ahead of its time (A. Weinreich, personal communication, July 11, 2007) cited from Boyd et al (2007).
In 2001 Ryze.com was launched to assist its member by leveraging on each other’s business networks. The founder reports that he first introduced the site to his friends—primarily members of the San Francisco business and technology community, including the entrepreneurs and investors behind many future SNSs (Boyd, et.al 2007).To complement the features of their business website in 2002 the management of Ryze.com Launched Friendster. It was created to compete with Match.com, a profitable online dating site (Cohen, 2003). Friendster gained footing amongst three groups of early adopters who ultimately defined the image of the site these where; bloggers, attendees of the Burning Man arts festival, and gay men. The website through these early adopters was able to grow to over 300,000 users through word of mouth before traditional press coverage began in May 2003 (O’Shea, 2003). As Friendster became more popular the site developed technical and social difficulties, this lead to a massive reduction in its users. However as its popularity faded in the United States and Europe its popularity increased in countries like the Philippines, Singapore, Malaysia, and Indonesia (Goldberg, 2007).
Between 2003 and date several social network sites have been created the most influential of these is most likely Facebook. Facebook was started off in early 2004 as a Harvard-only SNS (Cassidy, 2006). To become a member, a user had to have a harvard.edu email address this trend continued when it spread to other institutions as users were required to login using their school email addresses this made Facebook appear as an intimate social networking site that still offered all the exposure (Boyd, et.al 2007). In more recent years, Twitter has also become a leader in social networking.
2.4 Marketing on Social Networks versus Word of Mouth.
According to a report carried entitled, The European Social Media and Email Marketing Study on the Digital Dialogue between Facebook, Twitter and Email conducted by Volker Wiewer and Rolf Anweiler (2010), the usage of social networks is on a steady increase, in the UK out of 1045 respondents, 91% agreed to receiving at least one form of commercial communication through an online tool including email and newsletters. Facebook was the most popular amongst respondents and a further 94% acknowledged to either having an account or at least having knowledge of facebook and amongst these users the average number of friends was 77 users. However only 34% of the respondents agreed to engaging the typical forms of product or brand awareness on these social networks. These typical tools are however limited to; being a fan of/friend of a company/brand profile on a social network or a follower of a company/brand on twitter
Word of mouth on the other hand has been shown to influence a variety of conditions: awareness, expectations, perceptions, attitudes, behavioural intentions and behaviour, (Buttle 1998). It has been described by scholars as one of the oldest and most powerful marketing tools however, it can also be negative. According to Arndt (1971), it can be said that negative word of mouth is more powerful than positive word of mouth. White House Office of Consumer Affairs suggested that about ‘90%or more people who are disappointed with the service they receive will not patronize the service again. Furthermore, each of those unhappy clients will narrate his or her story to a minimum of 9 other people, and 13%of those unhappy former clients will tell their stories to more than 20 people’. It is not reported to how many these WOM recipients retell the story. (Buttle 1998)
3.0 Aims and Objectives.
This study will attempt to obtain an understanding of marketing on online social networks.
Evaluate the impact if any, of marketing on online social networks.
Attempt to Identify the range of online social networks.
It would explore the possibility of substituting traditional word of mouth with marketing on online social networks.
Explore the levels of acceptance of online social networks versus word of mouth through product recommendation.
Consider the implication of negative online social networks marketing versus word of mouth.

4.0 Research methodology
The complexity of the topic area combined with the nature of the research to be undertaken makes it preferable and possibly necessary to employ qualitative research methods in the gathering and interpretation of the research evidence. According to Leedy and Ormrod (2005) qualitative research usually requires adequate planning and preparation, thus it is decisive in researches involving description, interpretation, verification and evaluation. This section will be divided into two parts namely research design and data collection.
4.1 Research Design
According to research design is categorised in three forms which are the exploratory, descriptive and casual, Chisnall (2005) according to the specific nature of the research in question. Semi-structured interviews will be organised as it will serve as an effective means of collecting people’s views/perceptions on the research area as well as providing a means of observing their body language and expressions while giving feedback to the posed questions. A questionnaire will also be designed and distributed to gather some general information. Focus groups may also be engaged depending on the possibility of getting a number of quality respondents together at the same time. A qualitative analysis and interpretation of their perceptions and feedback will be carried out subsequently.
This form of research design was chosen because, previous studies in this area have used qualitative research to arrive at analysis, thus utilising the same type of research methods provides the opportunity to agree with or challenge previous research confidently and logically. In addition, due to the nature of the topic being studied and the nature of information or evidence that is required, the interview seems to be most ideal for getting the needed information. This is by virtue of the fact that it helps to get a more detailed insight into people’s individual perceptions and opinions as opposed to the other methods of gathering information. The questionnaire will also be most useful in getting a more general opinion on the subject matter.
4.2 Implementation
100 Questionnaires with a maximum of 15-20 questions will be distributed amongst individuals at random. Due to the nature of the study respondents can be chosen at random as the quality of information required is not specific to a gender or speciality. Interviews will be conducted at random amongst users of online social networks to develop a detailed idea of how often products are marketed via their social network. If required a focus group will be created to gain information on a more specific aspect on this study. Additionally previous literature and published research relative to the area of the study will be reviewed
4.3 Data Collection
Qualitative information on word of mouth and Online social network would be sourced through individual face to face in-depth interviews. This aims to achieve individual perceptions on the subject matter with comparisons made at the final stage. The in-depth interview is preferred since this is an exploratory research and it would give the respondent the opportunity to talk freely about situations and events which this research aims to cover. This approach will also provide me an opportunity to query answers whenever I need the respondent to further explain their responses (Saunders et al, 2007). This will however be done with extreme caution, in order to avoid making the respondent uncomfortable or unable to provide pragmatic answers
To attain a complete perspective, both primary and secondary methods of data collection are being proposed to undertake this study. Chisnall (2005) defines primary data collection as the collation of any data or information that has been collected for the first time through any of the following means, experimentation, observation or questionnaires. The primary data for this research will be sourced from information gathered through questionnaire, interviews and if required focus groups. Questionnaires will be developed using both open ended and closed ended questions with respondents assured of the security of the information disclosed and the protection of their civil rights. To maintain a consistence in the information collected, the same questions used in the questionnaires will be administered during the interviews and if changes are made they will be properly documented.
Secondary data on the other hand, is information that has already been gathered by previous scholars who have researched this topic or other relevant subject areas surrounding this topic. This information will be sourced from the public domains which are relevant to the course of research. According to Saunders et al (2009) the study of secondary data will consist of a comprehensive examination and critical review of academic literature to gain insight into areas set out within the aforementioned objectives, and also a review of key journals, academic books, financial research reports, press, databases and websites. The use of this research will give the researcher a better insight to previous research works, Saunders et al (2009).
5.0 Difficulties and Limitations
The only foresee able difficulty or limitation is access. This is one of the major considerations, and prospectively one of the biggest hurdles that might be encountered with regards to the feasibility of this research study. The access refers to respondents and necessary information for conducting the research. Also due to the nature of the research, the quality of the information gather might be exaggerated as a band wagon effect is normal in topics related to this and amongst the core respondents which will mostly be youths as they are the largest users of online social networks.
6.0 Timescale
Due to the nature of the academic calendar, adequate timing will be allocated to each process and the final report will be submitted in accordance with the university approved time for submission of dissertation for the acquisition of an Msc. Degree in Marketing.
7.0 Cost
The nature of this research to be carried out is limited, the only item to be produced are questionnaires for distribution so costing will be very minimal.
8.0 Outline Structure of the Proposed Research project
Chapter 1: Introduction
The research topic will be introduced and the reasons, aims and objectives of the research will be clearly stated and identified. The background of the topic will be stated justifying the need to identify and possibly understand the influence of culture. The introduction will also clearly outline the research design.
Chapter 2: Literature Review
At this stage of literature search, it is envisaged that previous work in these broad domains will form the foundations of the critical review of literature:
Chapter 3: Methodology
Primary and Secondary research will be used to analyse the research topic and this will be based on interviews and questionnaires. This approaches have been adopted as they are the most tried and tested form of research method used by academic writers on this subject matter.
Chapter 4: Findings
This chapter will be concerned with analysing and interpreting the information and data gathered for the research work with the aim of producing the findings of the research.
Chapter 5: Conclusions
The final section of the research project will do the three things normally expected in the formal conclusion of investigative study:
summarise the key outcomes of research exercise;
identify limitations inherent the planned research design and/or in what was actually achieved;
Suggest further lines of enquiry that might be pursued in subsequent studies.
References
Alan R Andreasen. Journal of Public Policy & Marketing. Chicago: Spring 2002. Vol. 21, Iss. 1; pg. 3, 11 pgs
Arndt, J. (1967). Role of Product-Related Conversations in the Diffusion of a New Product. Journal of Marketing Research, 4, 291–95.
Boyd, D. M. and Ellison, N. B. (2008), Social Network Sites: Definition, History, and Scholarship. Journal of Computer-Mediated Communication, 13: 210–230. doi: 10.1111/j.1083-6101.2007.00393.x
Buttle, Francis A. (1998) ‘Word of mouth: understanding and managing referral marketing’, Journal of Strategic Marketing, 6: 3, 241 — 254
Cassidy, J. (2006, May 15). Me media: How hanging out on the Internet became big business. The New Yorker, 82(13), 50.
Chisnall, P. 2005, Marketing research, McGraw-Hill.
Cox, D. F. (1963). The Audiences as Communicators. In S. A. Greyser (Ed.), Proceedings, American Marketing Association, December (pp. 58–72). Chicago: American Marketing Association
Cohen, R. (2003, July 5). Livewire: Web sites try to make internet dating less creepy. Reuters. Retrieved April 5, 2010 from http://asia.reuters.com/newsArticle.jhtml?type=internetNews&storyID=3041934
Goldberg, S. (2007, May 13). Analysis: Friendster is doing just fine. Digital Media Wire. Retrieved April 7 2010 from http://www.dmwmedia.com/news/2007/05/14/analysis-friendster-is-doing-just-fine
Haythornthwaite, C. (2005). Social networks and Internet connectivity effects. Information, Communication, & Society, 8(2), 125–147.
Herr, P.M., Kardes, F.R. and Kim, J. (1991) Effects of word-of-mouth and product attribute
Information on persuasion: an accessibility-diagnosticity perspective. Journal of Consumer Research 17,
454–62.
Leedy, P.D., & Ormrod, J.E., 2005, Practical Research: Planning and Design. (8th ED). Pearson Merril Prentice Hall. New Jersey
Littlejohn, S.W. (1990) Theories of Human Communication, 2nd edn. Belmont, CA: Wadsworth.
O’Shea, W. (2003, July 4-10). Six Degrees of sexual frustration: Connecting the dates with Friendster.com. Village Voice. Retrieved April 4, 2010 from http://www.villagevoice.com/news/0323,oshea, 44576, 1.html
Pedro Domingos 2005, “Mining social networks for viral marketing”, IEEE Intelligent Systems, vol. 20, no. 1, pp. 80-82.
Saunders M., Lewis P. & Thornhill A. (2007) Research Methods for Business Students. 4th Ed. New York: Financial Times Prentice Hall.
Schiffman, L. G., & Kanuk, L. L. (1995). Consumer Behaviour, 9th Ed. Upper Saddle River, NJ: Prentice Hall.
Thonssen, L. and Beard, A.C. (1948) Speech Criticism: The Development of Standards for Rhetorical Appraisal.
New York: Ronald Press.
Volker Wiewer and Rolf Anweiler, December 2010, the European Social Media and Email Marketing Study – A 6 Country Study about the Digital Dialogue between Facebook, Twitter and Email (Part 2) (European Summary Consumer Results) London
yengar, Raghuram, Han, Sangman and Gupta, Sunil, Do Friends Influence Purchases in a Social Network(February 26, 2009). Harvard Business School Marketing Unit Working Paper No. 09-123. Available at SSRN: http://ssrn.com/abstract=1392172