The Power of Evil: The Damage of Negative Social Media Strongly Outweigh Positive Contributions

Marcel Corstjens

INSEAD

Andris Umblijs

McKinsey

Management slant

  • The challenge brand owners face in an environment that is rapidly changing because of the impact of social media on consumer choices is that they do not have means to know what impact social media has on their business. They receive large amounts of data on "buzz," "clicks," "likes," "page views," etc., but this data does not give any insight into what impact social media has on brand sales and profit.
  • Business impact of social media can be measured by including it as an additional variable in already existing and proven econometric modeling approaches widely used by marketing practitioners.
  • The large amount of information available on social media can be condensed into input variables for econometric models allowing to estimate impact of social media alongside "traditional" marketing and all other sales influencing factors.
  • Our results show that negative social media messages have much larger impact than positive messages.
  • Social media has significant impact on brand sales and it should be actively managed by brand owners to stay competitive.