Shoutly Study Reveals Impact of Social Media Recommendation on Purchases

By Frank Griffin
TMCnet Contributing Writer

Businesses frequently struggle with their marketing budget because it is very difficult to truly quantify ROI. In a recent article on Inc. that outlines tips for setting 2014 marketing goals, the writer cites a question asked by the Lenskold Group and emedia to marketers. The question was, how much could they increase incremental profits in a company with a 10 percent increase in budget, and almost half responded by saying “I don’t know.” While traditional advertising such as TV, radio, print and billboards can only provide an educated guess as to how effective they are, online advertising provides more concrete data.

Each click tells marketers how the consumer is interacting with their ad as well as other online platforms. A new study by Shoutly, a monetization platform for the social web, surveyed 500 individuals to determine how online advertising and social media recommendations affects their decision to purchase a product or service online.

The study revealed 82 percent of the respondents favored personal recommendations when purchasing a particular product, while four out of five consumers find online advertising annoying. According to the survey, 50 percent said there are too many ads, while another 40 percent stated they find them distracting and 37 percent believe they take up too much room on the website page. While these sentiments are bad enough, close to a third or 30 percent said the ads were irrelevant, with an additional 29 percent claiming they disturb their reading.

The study shows not only is traditional online advertising ineffective, but it could potentially alienate potential customers from ever purchasing an item because of the negative experiences they've had while they are online.

Alternatively, a personal recommendation from users goes a long way into making the final decision to purchase a product. Almost all the respondents, or 92 percent stated it is important for them to read an endorsement before they make a purchase. These decisions are based on different factors including researching blogs, product reviews and recommendations from people they know.

Ninety percent said the person they follow online has the highest influence when it comes to making a decision with friends coming at 47 percent. The social media platform responsible for delivering the recommendation also carried a lot of weight. The most trusted platform to follow posts for a product recommendation was led by Facebook at 65 percent, followed by YouTube at 36 percent and Twitter (News - Alert) at 27 percent. Websites also had some influence with 26 percent of consumers followed by blogs at 19 percent, with Instagram, Pinterest and Linked in coming in at 17, 16 and 14 percent respectively.

“This study shows that traditional online advertising is not the most effective way to reach your audience and sell products and services. Instead, consumers want to read a trusted recommendation before buying a new product. At Shoutly, we help consumers make educated decisions about their purchases through our affiliate network and marketers who select the products they want to promote using their own words and personal reviews,” said Henrik Wastlund, CEO of Shoutly.