CHAPTER II: LITERATURE REVIEW
2.1. Introduction
The chapter is divided into four main parts. The first part indicates the shift from the traditional
marketing to the social media marketing. The second part illustrates the major advantages of using social
media marketing. The third part of the literature review describes the reasons why PACs stated adopting
social media marketing. The last part provides information about current uses of social media marketing by
PACs.
2.2 A shift from traditional marketing to the social media marketing in PACs
Marketing experts claim that social media marketing tends to replace traditional forms of marketing,
because traditional marketing practices are becoming ineffective due to media disintegration, rising media
prices, falling returns, increased promotion literacy and the adoption of new advertising blocking techniques
(Honda, n.d.).
Traditional forms of marketing gradually lose credibility and effectiveness to impact purchase behavior
of consumers. People are overloaded with advertisements from TV, radio, e-mail promotions, billboards, and
so on (Thakereay, 2008). There is a significant decline of viewership in broadcast television. Instead, people
watching evening broadcast national and local news, switch to the Internet as a more convenient and flexible
source of information. According to data provided by
The State of the News Media 2006
the evening news
viewership declined by half between 1980 and 2006. Moreover, the audiences who stay with TV broadcasts
do not watch ads, using this time to talk on the phone or turn off the volume instead (The state, n.d.). The
effectiveness of the TV advertisement is extremely low because consumers become resistant to direct
promotion campaign coming directly from companies. A study conducted by Deutsche Bank in 2004
illustrated that only 18% of television ads generate positive return (Kirby, 2006)
.
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Consumers have altered their behavior and decision-making regarding purchasing. They are more
informed and educated about products and services and have changed the source of information over
traditional advertisement to alternative sources to evaluate product/service through consulting with peers
primarily through online reviews and networking websites (Clemons, 2009, Weber, 2009).
The participatory nature of society is one of the reasons the behavior is changing and driving the strong
desire of customers to communicate with their peers online. A growing number of consumers are willing to
actively interact with other Web users, organize fan groups, exchange messages, and contribute to various
online events. For example, such websites as Facebook or Twitter provide the opportunity to be connected
not only with closest network, but also with all registered friends and followers of a particular user
(Managing, 2009, Gillin, 2007, Hughes, 2005).
The development of social media marketing started with the second generation of the World Wide Web.
The term Web 2.0 originated at the brainstorming session conducted by O’Reilly and MediaLive
International in 2004 (O’Reilly, 2005). In fact, elaborating Web 2.0 lead to an evolution of the customers’
usage of the online interface. Customers participate in building content and are able to interact with each
other (Kurucs, 2008). Web 2.0 embraces myriad of social networking tools, user-generated content,
interacting, and information sharing websites. Some of Web 2.0 tools enjoy greater popularity among
Internet users and are used more frequently than others. Anderson (2008) affirms that it is hard to find a
person who would not be aware of the buzz around the social networking sites such as Facebook.com,
Twitter, MySpace.com, LinkedIn, etc (Anderson, 2008).
Some social network websites quickly gained enormous popularity among web users over past years.
Facebook is a social network website designed for communicating with “friends” and other users on a private
and public basis (Facebook, 2010). Facebook obtains customized user profile and offers various applications
for further personalized experience. This website is actively used by various organizations mostly for B2C
interactions and interconnections, including organizing events and updates about a company (Safko, n.d.).
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Facebook is constantly growing with increasing number of users and the time spent on a daily basis. A
Nelson Report on Social Networking’s New Global Footprint, 2008 illustrates that the total number spent on
Facebook globally increased from 3.1 billion minutes to 20.5 billion from 2007 to 2008 (The Neilson, 2009).
This report also indicates a shift in the proportion of the age groups among users of Facebook. Early on
usage was preliminary among young people and college students. However, the research results of a Nelson
Report indicated that the number of users in the age group of 35-49 grew faster by 10% over the younger
audience in the age of 18-34 during December 2007-December 2008. These findings illustrate fast adoption
of Facebook not only by the young people, but in the broadening audience. Higher usage and widening
audience appeal providing opportunities for businesses to use Facebook as a marketing tool for targeting all
demographic groups.
Other social networking sites gained extreme popularity over last several years. It has become very
common to observe Twitter and Facebook as they appear near icons “follow” or “share.” Twitter
is a social
network website that enables to send and receive messages known as “tweets.” Being created in 2007,
Twitter gained extreme popularity worldwide for the relatively short period of time. According to the statistic
data provided by comScore the number of users of Twitter is about 76 million users. In comparison to
Facebook with 400 million the number of users of Twitter is significantly smaller. However, the annual rate
of users’ growth of Twitter is 1383% the largest compared to such popular social network websites as
Facebook and MySpace (Ostrow, 2009). Moreover, the number of “Tweets per day” that occur per day
dramatically increased from 10 million to 50 million since 2009. All of this data illustrates extremely fast
rising popularity of Twitter among users (Wilhelm, 2010). Twitter can be used as a channel to inform the
customers via short messages (tweets) and connect them to a website, press releases, and other promotional
sites (Perez, 2009).
MySpace is another well-known social network websites; the first one created for social interaction
among people. MySpace was founded in 2003. By 2006 it became the most popular social networking
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website. However, it was overtaken by Facebook as its main competitor based on the number of users in
2007. It became extremely popular among music professionals and fans after launching MySpace Music
section. This new section was specifically designed for people interested in music allowing them to be
connected with people from this industry. Moreover it provides access to entire discographies consisting of
MP3 songs and allows creating playlists, resembling the functions of Last.fm, Project, Playlist, iTunes,
Napster and others. Music fans have discovered a lot of new talent on the site, and found many independent
artists who gained popularity through MySpace over time (NielsonWire, 2009, MySpace, 2010).
Besides social networking websites designed for casual interaction, additional websites for professional
networking appeared as popular marketing tool. LinkedIn was created preliminary for professional
networkers who were looking for business contacts, a new job, or new candidates to come work for a
company (Boyd and Ellison, 2007). The popularity of this website grew constantly because people sought
job networking sites due to economic crisis. According to comScore the total number of unique users of
LinledIn increased from 3.3 million to 7.7 million in the timeframe between 2007 and 2009 (Schonfeld,
2009). LinkedIn was also used as a marketing tool for B2B interaction. These websites provide an access to
professionals’ profiles of various businesses and tools that can be used for productive networking and
business development. Prolific blogger Beth Kanter writes: “LinkedIn can be a terrific place to develop
professional contacts, grow your business, and promote your work and opportunities” (Kanter, n.d.).
Besides social network websites social media marketing tools encompass user-generate content
websites. Youtube is popular video-sharing website has been ranked as the top visited Web globally.
According to the statistics provided by a Pew Internet study, two-thirds of people at the age 18-29 constantly
use YouTube for sharing and watching videos (Lee, 2008). The top video on YouTube accumulated more
than 120 million viewers (Bree, 2009). This website provides opportunities for companies to share the video
clips with the wide audience and can be viewed, evaluated and passed to other users. While YouTube is used
for sharing video, Flickr is a website for sharing pictures. It also widely used by bloggers to post images that
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they imbed in their blogs and other social media websites. The Flickr’s users are asked to organize their
pictures using tags to allow users to find a picture related to a particular topic (Flickr, 2010). Flickr gained
extreme popularity since Yahoo purchased it in 2005 (Graham, 2006). Flickr is the fastest growing photo
website and the 5
th
most popular website in the overall web. Currently, it hosts more than 4 million images.
Generally, Flickr is used by the companies to expose the images to wider public and generate discussions
around them (StepCase, 2008, Colangco, 2001).
Due to high popularity, all above-mentioned social media tools are often used by companies for
marketing. The social media marketing report 2010 indicated that Twitter, Facebook, LinkedIn and Blog are
used by more than 70% of marketing professionals across the US (Stelzner, 2010). These tools are used to
develop social media marketing aiming to build relationship with the audience. It easy to comprehend that
establishing strong relationship through Web 2.0 platforms with concert visitors becomes of critical
importance for PACs to build loyalty and retain the core group of customers (Rothschild, n.d.)
Applying alternative marketing tools that are more effective and efficient in attracting public becomes a
critical issue for PACs for several reasons. First, there is a strong tendency for diminishing returns from the
subscription strategies. In fact, there is no decline of performing art popularity as people are still interested in
live music. One of the reasons for empty seats at events is lack of knowledge of and understanding new
principles of communication with the contemporary audience. People are not willing to pay in advance for
the whole season of unknown performances, in contrast to a blockbuster event with the website buzz around
it (Haecker, 2009, Bernstein, 2007). A contemporary audience makes decision regarding leisure activity
more spontaneously and expects high technological and customized service. This fact actually has a
dramatic implication for the art promoters. An organization that relies mostly on single ticket purchase
pattern would depend on strong reviews of the performance and word of mouth to attract customers. To meet
expectations of the customers, PACs must realize the importance of using Internet technology, such as social
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media tools and websites that allow online ticket purchase and social interaction around an event (Bernstein,
2007).
Secondly, the live performance art sector faces new challenges from the flourishing commercial
recording industry, and advanced Internet technology that has led to shrinking audience and switched
attention of the audience to another source of entertainment (Bree, 2009, Bernstein, 2007, Plommer, 2010).
Thirdly, economic recession is another challenge for the live performing industry that leads to declining
buyer attitude, cutting government funding and ticket sales. Market research in the U.S., conducted in 2009,
reveals decreased ticket volume for entertainment venues that inevitably affects revenue of this business
(McCarthy, 2001). Statistics show that 71% of Americans do not attend music concerts. Moreover, the
majority of people who attend concert do it less than twice per year. All of these factors threaten the
profitability of these businesses and make the future of live performing arts uncertain. Changing cultural,
economical, technological and social environment creates the necessity to find new solutions to prospect in a
market (Mintel, 2010).
Integrating social media tools into marketing strategy is considered as an effective solution to respond to
current challenges. Even though businesses are only at the beginning of the social web marketing era it is
important to take advantage of it now (McCarthy, 2001). A report on a National Survey of Performing during
the economic slowdown of 2008-2009 demonstrates that 70% of the respondents are going to use new
technology and online social networking in response to economic crisis. This data illustrates that 70 percent
of the sample consider using social networking as the effective and efficient response to the economic
downturn (Theater, 2009). If companies are reluctant to adopt new tools of marketing it will be harder to
retain patrons later. Proactive competitors will entice customers using more beneficial marketing strategies
(Weber).
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