Determining whether a Relationship Exists between Social Media and Sales and Advertising

1. Determining whether a Relationship Exists between Social Media and Sales and Advertising

2. Introduction We were asked to analyze the impact of social media on buying behavior. Social media is defined as, “forms of electronic communication through which users create online communities share information, ideas, personal messages, and other content (as videos)”. The social media platforms were: Facebook, Twitter, YouTube and Mobile Apps.

3. What’s next? We looked at every social media platform for each company and identified any similarities as to how they utilize each one and also identified any dissimilarities. We then took the financial information for all 24 companies and determined whether there was a significant correlation between advertisement money spent and sales. We then analyzed 14 of these companies sales and advertisement (before social media and after social media) and determined whether there was a correlation between a company adopting social media and experiencing an increase in sales.

4. Method • Sample: 24 companies and 4 of their social media platforms. • Measure: Quantitative and Qualitative. • Data Collection Plan: Compare annual sales and advertising spent in dollars from 2000 to 2011, and analyzed 5 yrs prior to social media adoption, and after. • Quantitative Analysis Plan: Determine whether a significant correlation exists between using social media sites and an increase in company sales. • Qualitative Analysis Plan: Determine how the Facebook, Twitter, You Tube and Mobile Applications are utilized by the retailers. • Type of Data: We used secondary quantitative data, companies financial records and analyzed whether there was a significant correlation between an increase in sales and using social media sites. We also collected primary qualitative data for the top 4 social media platforms for the 14 companies such as similarities and dissimilarities.

5. Analysis • We conducted a correlation analysis for each company. • We analyzed each company and identified the way that every company used their respective social media sites. • Collect any similarities/dissimilarities for each of the 4 top social media sites for the 14 companies. • We then analyzed the correlations for before and after social media adaptation and came to our conclusionand recommendation.

6. Urban Outfitters • Urban Outfitters has steadily increased their advertisement spending • over the years, and their sales reflect that. The correlation between advertising spending and sales was 0.999, which makes the correlation significant.

7. Ann Inc. The graph illustrates a steady growth in sales and a peak in 2010 where advertising spent also shows an increased dollar amount spent. The figure shows that before social media platform the correlation between advertising spent and sales is just above a 0.5 and after adapting social media platforms the correlation between the two variables increased well above a 0.5 to 0.99

8. French Connection Graph shows a steady correlation in sales when increasing money spends in advertising. French Connection showed a significant correlation between advertising and sales before adapting social media platforms and shows an even higher correlation after adapting social media platforms.

9. H & M The findings on this company were quite interesting since as seen on the graph in 2005 there is an enormous drop in earnings, which can be attributed to them closing their U.S. stores and only focusing on their European doors. However, the correlation in advertisement spent and total sales were the highest 0.999 The correlations were equal .999, which means that there is not a significant correlation between an increase in sales by adopting social media.

10. Aéropostale • The chart illustrates a steady increase between advertising spending and an increase in sales. The correlation equals 0.997, which is greater than the rule of thumb of 0.5 which makes the correlation between advertising spending and increase in sales significant.

11. American Eagle The graph illustrates a steady increase in advertising spending over the years, and their sales reflect that. Figure demonstrates the correlation of sales and advertising for American Eagle before and after the adoption of social media. The correlation between advertising spending and sales was 0.996, which makes the correlation significant

12. Correlations Before and After Social Media

13. DISCUSSION After analyzing the data, we found that there is not a significant correlation in advertising dollars spent to increase sales. However, social media platforms such as Facebook, Twitter, You Tube, and Mobile Applications aids a company gain insight of this unique social shopping community as well as the culture associated with the different platforms.

14. Recommendations Based on our findings it is our recommendation that implementing social media platforms does not increase sales dollars, but will enable a company to capture the interests of its target market. It will increase brand loyalty, increase interaction between retailers and consumers, increase time spent on sites, and also creates a sense of community. The impact of social media is favorable to the buying behavior of target consumers towards apparel.