Synergistic effects of social media and traditional marketing on brand sales: capturing the time-varying effects

Abstract

As social media gains more importance, managers are challenged to quantify its return on sales. The academic understanding in the effectiveness of social media is limited, and in fact the synergistic effects between social media and traditional marketing efforts have rarely been investigated. Despite the dynamics in marketing effectiveness on sales, the time-varying effectiveness of social media has never been studied either. In this study, we capture the time-varying effects of social media and the time-varying synergistic effects of social media and traditional marketing with a time-varying effect model (TVEM) approach. The empirical analyses of a large U.S. ice-cream brand sales reveal that a) the effectiveness of social media and traditional marketing vary over time, b) the synergistic effects vary over time for social media with product sampling and with in-store promotions, c) the proposed TVEM approach has a higher predictive accuracy than the benchmark models, and d) the proposed TVEM approach saves marketing costs by $0.4 million per year, compared to the time-invariant benchmark model. Overall, this study enables managers to not only better understand the synergistic effects of social media marketing and traditional marketing, but also the time-varying effectiveness of their marketing efforts with TVEM approach for better resource allocation.