Facebook: An online tool for offline marketing

NCTU — Hsinchu, TaiwanTimothy MacKay

• 1.6% share for $240 million US– This was what Microsoft paid for a part ownership

of Facebook in the Fall of 2007– Why?

Network Marketing opportunities

• Marketers were given a golden tool when the Internet became available to them

• So far, that has been difficult to use efficiently• Social network sites are the latest opportunity

for marketers because of the interactive nature of these sites.

• Facebook is an emerging leader in the sector.

A comparison graph of Facebook.com and msn.com. Facebook is now ranked number 7 most visited site and MSN is ranked number 5.

Consumer purchase behavior

Offline sources

Online sources

No purchase decision

necessary and no sale

Trusted Product or

service information

Purchase decision and possible sale

High Trust

Low Trust

Facebook(Online or offline?)

????

H1, H2, H3

Not-trusted product

information

????

????

H4

Network marketing

Commerce’s need for trust

• Trust is an integral part of commerce.• Building trust is a difficult task.• Consumers have a historical problem with

trusting online sources.

Offline vs. Online sources

• The Internet age has been greeted with some skepticism and unease– There is no vulnerability on the Internet because

of the ease of entry and the lack of accountability. (Social Exchange Theory)

• Social networks in the real world are highly trusted groups

• Offline relationships are keys to gaining consumers through trust relationships

Social Network Sites and Marketing

• SNS have shown some links to network marketing.

• It has been shown to work in MySpace by Boyd Thomas et al.

• Network marketing through SNS has been driving an increase in sales (Walsh 2006)

• The key to this is having an identified network

Facebook• Designed by a Harvard student to help friends stay in

touch.• Originally meant to be a service offered to college students

only.• In 2006, it was opened to the general public and has been

growing rapidly.• It has recently opened a “platform” allowing programmers

to design services.• Facebook is at its essence a directory• Members search for and add names (with faces) to their

directories. • Members can keep track of their “friends’” social

interactions through the “news feed”.

Research Questions

• Are Facebook members offline friends brought online by the application feature?

• Is Facebook being used to get new friends or keep in touch with current friends?

• Are non-students using Facebook for different reasons than students?

• Are Facebook members trusted enough to use Network marketing?

Hypotheses

• Facebook is being used more often for people to keep in touch with old friends than to make new online friends.

• Facebook is being used by students and non-students in a different capacity.

• The relationships that Facebook members have is a highly trusted relationship.

Methodology

• For this study, the researcher used a survey.• The first set of statements survey for the first

hypotheses reference the study by Lampe et al and tested who Facebook users were communicating with.

• The second set of questions referenced Tung et al. and tested the nature of trust from Facebook members toward their friends.

• 121 people were sent surveys by Facebook or by email and 64 responded. 61 surveys were usable.

• T-tests were used to compare the results of the non-student group versus the student group

Results

• The surveys showed that people were more likely to choose current offline friends as Facebook friends. However, the results were less vigorous than Lampe et al.

• Although there were differences in the results from students and non-students, they were inconclusive.

• The results for the trust-based questions showed only slight trust in Facebook friends by members.

Conclusions

• The results were not as vigorous as anticipated.• The researcher considered the possibility of non-

sample error especially of misunderstanding of the survey questions.

• It should be examined as to why the results differed from the results by Lampe et al.– Have the reasons for using Facebook changed?

• There isn’t enough evidence to point toward a clear connection to successful network marketing.

Future research

• A comparison of Facebook and other SNS is necessary to find out if there is a difference between the media.

• The results can be examined along with other data retrieved by the participants’ Facebook sites.