The Effects of Social Media on a Business

Social media has greatly changed the way people communicate and interact with one another. There are a variety of social media sites which are used worldwide, such as Youtube, Facebook and Twitter. This type of communications method is now being used by business in marketing their products. The fact that many people use social media to discuss their thoughts and views online, has caused business to alter their communications and marketing strategies to better fit the new mean of sending out messages. Social media is presently used in place of the “old-fashioned” marketing tools, such as TV, billboards, radio, etc. This new process which business use to convey messages and promote ideas or products has formed a collaboration with its customers. A business can now gain instant feedback from its customers, tackle rumors, and post any updates about the business online. Companies reported using these social media tools was helpful for several reasons. They reported that the tools provide the following: • Another way to communicate

• Added value to customers
• Product/brand awareness
• Ability to keep up with trends and competitors
• Demonstration of product
• A more cost effective and productive form of marketing. (Barnes, 2010)

This literature review will discuss the role that social media plays on businesses and the effect it has when promoting a business or marketing its product. This review will contain the view and analysis of experts in the use of social media by businesses, and in what way the media can benefit or damage the reputation of an organization. The research questions used were “How does social media affects businesses?” and “How can social media benefit a business?”. While The research questions were similar, they did offer a wide range of topics concerning the research objective.

Searching and locating literature
The main database used for the research was Polytechnic’s summons. The research questions were first used here which introduced many articles. Mostof the articles found by summons were taken from the Proquest and Emerald management collection databases, among other database systems. When reviewing the articles I read the “executive summary” or the “introduction” and later decided whether to continue with the article or to exclude it. The articles which were ruled out were the ones discussing social media from a non-business perspective. Some articles which were excluded did have good ideas, even though they presented it with a different viewpoint, so I used the reference list of said articles to locate more literature and further the research to get closer to the objective.

The role that social media plays on businesses
Mediatization describes how media is transformed from being a mediator and instrument for other institutions to become an institution in itself (Hjarvard, 2008). This further explains that social media is now a global institution, businesses and organizations will have to find new strategies in their marketing approach which will act in accordance with today’s mediatized society. (Pallas and Fredriksson, 2010) Businesses must now learn the new ways of functioning in a mediatized society. Media, especially social media, is important for the overall view of a business. When consumers look to a business they judge it based on its reputation, a reputation which it gains through mediatization. A successful business will have to know how mediatization works, and be able to alter it so that the customers will see what the business intends to be seen. A proper image and reputation of the business will be formed. As the flow of consumer online activity began rising businesses took notice of this “phenomenon” and picked new means of reaching consumers and their targeted audience through social media. In the beginning business created blogs, wikis, and forums in order to reach their audience, but now they have heavily started using the highest ranked social media sites such as micro-blogging via Twitter, and Facebook (Li and Bernoff, 2008).

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The effect of social media on a business
Many would argue that social media benefits a business in a positive way and is a innovative way of marketing. Electronic media brings people together, when businesses join in on this media they are now in-touch with theircustomers. They will be able to connect with their audience which will result in customer loyalty, which will give the business an upper hand over potential competitors (Varey, 1999). Organizations will need to incorporate social media tools into their marketing and communication strategies. Social media will shift the consumers views on the business because they will now be able to spot the degree of openness and responsiveness in the business (Schein, Wilson and Keelan, 2009). However, in her article How do the most successful companies use social media? (2010), Nora Barnes gives an opposing view on the use of social media by business. While in the short-run a business will gain a fast reputation, it will affect the business in the long-run. She argues that if a business is thought of as an “official” business with high ranking employers and maybe investors, then social media is not the correct marketing tool to be used as it shows a business as being vulnerable, and will not be thought of very highly by its high-ticketed consumers. Dury (2008) also furthers this argument by stating that marketing is different to social media and that the two should not be mixed. That it ‘destroys social media's foundations by undermining its human elements’. This is because the essence of marketing is corporate and that a social media approach will issue a softer outlook to the official corporate image of a business. An organizations reputation means everything. Executives know the importance of this, The stronger the reputation, the better quality of customers they get and the brand name begins to rise (Eccles, Newquist and Schatz, 2007). Social media is not considered a “quality” method of marketing an organization, and certainly not a brand name. An organizations quality is shown in its:

•share of voice – how much was said;
•performance – amount of coverage relative to one’s peers; •breadth of coverage – themes reported;
•media tone – positive, neutral, negative;
•risk profile – the ratio of positive to negative coverage for particular themes; and •position – whether the media reflects the organization’s desired profile. (Dowling and Weeks, 2011) Reputation is in the consumers mind therefore a company should be aware of the quality it is presenting in order to provide a positive reputation. A similar opinion was given by MatRamsey, mentioning “Don’t use social media for corporate communications” (Ramsay, 2010). Any updates regarding the business should be posted on its official website. If they were done via social media sites it will bring down the status and quality of the corporation.


The study of the above articles has proven one thing, that social media has a very important part to play in the communication and marketing section of a business, whether for the good of the business or for bad. The use of social media may benefit some businesses but it harmed others. A business must study this approach carefully when deciding to incorporate social media in the marketing strategies as the effect may make or break it.

The benefits of this review is the comparison between expert opinions over the matter. Social media hasn’t been fully investigated so this review brings all the thoughts on this topic together in ordered to get a clear image on the benefits and effects of social media.