Social media advertising in a competitive market

Abstract

Purpose Previous literature has discussed the importance of two types of social media exposures: owned social media (OSM) exposures generated by service providers and earned social media (ESM) exposures initiated by consumers. This study aims to examine the relative effects of owned and ESM exposures on brand purchase, as well as their advertising externality to competing brands. Rooted in theory of planned behavior and advertising externality literature, this study hypothesizes that owned and ESM exposures positively influence brand purchase. Such effects, however, can spill over to competing brands that invest in social media marketing and co-exist in the market. Design/methodology/approach This study collects brand purchase records and social media messages on the Facebook brand pages of a group of service providers over 12 months. The data are assembled for time series analysis with the unit of analysis being “brand × bi-week”. Findings Using a blend of fixed-effects models and seemingly unrelated regressions, this study finds that both owned and ESM exposures positively affect brand purchase, the purchase effect of OSM exposures is greater than ESM exposures, OSM exposures generate not only more purchase of the focal brand but also positive advertising externality to competing brands, whereas ESM exposures locks up the advertising effect to the focal brand without spilling over to competing brands. Originality/value This study advances the understanding about the externality of social media exposures in an increasingly competitive market where multiple brands invest in social media marketing and co-exist. Important implications on the strategic use of social media exposures to drive brand purchase while competing with similar brands are provided.