Show Less
Restricted access

Measuring the Impact of Social Media on Business Profit & Success

A Fortune 500 Perspective

Cong Li and Don Stacks

An organization can have a high number of «likes» on its Facebook page and lots of «followers» on its Twitter account, but does that mean anything from a financial perspective? Is it worth the organization’s effort to maintain an active presence on social media in order to generate more revenue? Is it possible to use social media metrics such as the number of «likes» and the number of «followers» to predict an organization’s «success» even though those metrics are nonfinancial indicators? Prior research studies have looked at how organizations should utilize social media, but few studies have provided strong empirical evidence to support how the outcome of using social media should be measured and why. Focusing on Facebook, Twitter, Google+, and YouTube, this book examines how Fortune 500 companies use social media. Collected over a five-year period, the authors assess the companies’ social media activities and their business performance data, such as stock return, total revenue, net income, and earnings per share. These data, both financial and nonfinancial, are matched and statistically analyzed to see whether a company’s social media activities are significantly associated with its business performance.
Show Summary Details
Restricted access



Chapter 1

1. As argued in Jennings, Blount, and Weatherly (2014), establishing a clear policy for employees with regard to their social media usage is vital for today’s businesses because employees’ activities on social media may bring unforeseen challenges to the business, ranging from financial to legal and ethical.

2. As seen in Fisher (2009), measuring ROI in social media is very important but quite difficult. Many “ROI calculators” have been developed in the past, but they are quickly dismissed and considered unworkable.

3. There has been a large amount of research on social media in the past 2 decades (see, e.g., Khang, Ki, & Ye, 2012, and Wilson, Gosling, & Graham, 2012), most of which has focused on Facebook and Twitter. In this book we included only a few of the references that are more recent and more closely relevant to our specific research.

4. How these five nonfinancial indicators are specifically defined and calculated will be explained in more detail in Chapter 8.

5. The pilot test was conducted in March 2013. The nonfinancial indicators from the five social media platforms were collected first. Then, each public company’s stock price and earnings per share were recorded on March 22, 2013, and its net income (or loss) in 2012 was also recorded. Each company’s ranking was based on the 2013 Fortune 500 list. ← 137 | 138 →

6. The pilot test suggested several significant results. First, a...

You are not authenticated to view the full text of this chapter or article.

This site requires a subscription or purchase to access the full text of books or journals.

Do you have any questions? Contact us.

Or login to access all content.