Social media has become the dominant mode of communication for the past few years. This medium for interactive dialogue has not only augmented the rapid exchange of ideas, but also the global economy as a whole. It has recently been in the news for increasing sales, creating jobs, and positively impacting overall economic of nations.
The creation of a community through social media is now crucial to many companies, all of whom are relying on it more than traditional marketing methods. This “word of mouth” marketing technique, demonstrated by a chain reaction of increased interaction between buyers and sellers, fuels brand loyalty and trust. But increased customer interaction is just one facet of this powerful publicizing method. Consumers often find their information about a certain business through friend recommendations on a Facebook or Twitter feed. Whether it is Social Networking or Video Sharing, social media has helped increase sales by creating unique experiences for consumers worldwide.
The job market has seen a positive reaction from social media as well. Before filing their IPO documents to the SEC, Facebook claimed to have created 450,000 new jobs in Europe and the United States. With more than 800 million users, the social networking website has advanced the “app economy” and added approximately $15.71 billion into the US economy, as reported by the University of Maryland’s Smith School of Business. A second study done by Deloitte stated that Facebook injected $20.2 billion in the European economy by assisting in the creation of almost 232,000 jobs. Included in this calculation were not only company’s own revenues and employees, but also the broader implications of product awareness and brand value for other businesses.
Another Deloitte study found that Facebook had an overall economic impact of €2.6 billion ($3.4 billion) in the United Kingdom in 2011 alone. Three main components were considered: direct effects, indirect effects, and induced effects. The direct effects like employment generated by Facebook plus induced effects like consumer spending by staff totaled almost € 32 million. Meanwhile, indirect effects like the business participation of supply-chain industries (paid advertising, customer communication, and brand value) came to a lump sum of €1.37 billion. But not taken into account was the efficiency lost due to employees surfing their own personal feed to interact with family and friends.
Social media seems to be most valuable to small and medium sized business due to the mode’s reach, accessibly, usability, and immediacy. It has proven effective during tough economic climates, but only with the right utilization can it continue to drive innovation for a more interconnected and globalized world.