Most studies of the interactions between companies and consumers look at one piece of the puzzle: Advertising or social media or news coverage or "consumer sentiment" as measured in surveys. A new study from researchers at the University of Maryland, University of Tennessee and Massey University examines how messages about brands across various channels interact in a complex set of feedback loops the authors call the "echoverse." And the study offers advice for managers on navigating this new complex media world.
"You can't just be in your silo," says Roland T. Rust, Distinguished University Professor and David Bruce Smith Chair in Marketing at UMD's Robert H. Smith School of Business. "You have to manage all of your brand communications as a big system."
In addition to offering an unprecedented look at the interdependence of media, corporate communications, and information emanating from consumers, the study underscores how the importance of Twitter in brand management has exploded since 2010--even more than one might expect--and how the influence of other channels has waned. Consumer sentiment, for instance, a snapshot of how people feel about brands, is not nearly as important as it used to be. The study focused on the four top financial service firms from 2007 through 2013, a tumultuous period for that sector: Bank of America, Citibank, J.P. Morgan Chase and Wells Fargo.
The authors analyzed the volume and tone of messages in different media: articles in top newspapers; tweets over the period that emanated from or mentioned the banks; press releases; ad spending; and consumer sentiment. As a measure of business outcomes, the authors used deposits on a quarterly basis. They controlled for factors that would affect all banks simultaneously, such as general economic conditions. All told, the authors write, theirs is "one of the most comprehensive datasets in the brand communications literature."
To capture the "valence," or tone, of most messages, they used automated linguistic analysis. And to spotlight changes over time, they divided the dataset into two groups: 2007-2010 and 2011-2013. While people often talk loosely about an "echo chamber," this study offers an empirically rooted picture of how it actually works. Among the findings:
The study also found that some banks had more effective social media strategies than others. Bank of America, the study found, was able to reduce the number of negative tweets mentioning the company, and even reduce negative news stories, by sending out more tweets. Wells Fargo could not. Unlike other banks, Bank of America, was also able to increase consumer deposits by ramping up its tweets. The authors suggested this is because Bank of America's main strategy was to send direct tweets to customers with concerns, whereas other banks were more likely to use Twitter as a kind of broadcast-advertising medium. (There was also some evidence that "high volume, consistent, moderately toned" tweets were more effective than more enthusiastic tweets that consumers may read as inauthentic.)
"Managers are used to a one-to-many model of communication," Rust says. "But more and more, they have to move to a one-to-one approach to be effective. On the other hand, consumer word of mouth used to spread one-to-one. More and more consumers are one-to-many in their brand communications."
The paper also implies that the considerable money companies spend on monitoring social media, including predictive analytics--predicted to reach $136 billion by 2020--is worth it.
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