Social Media Marketing (SMM): What It Is, How It Works, Pros and Cons

By ADAM HAYES Updated October 22, 2022

Reviewed by MARGARET JAMES

Fact checked by KIRSTEN ROHRS SCHMITT

Social Media Marketing

Investopedia / Paige McLaughlin

With over 80% of consumers reporting that social media—especially influencer content—significantly impacts buying decisions, marketers across industries are driving the evolution of social media marketing (SMM) from a stand-alone tool to a multipronged source of marketing intelligence on an increasingly important—and growing—audience.

Within 18 years, from 2004 (when MySpace became the first social media site to reach one million users) to 2022, the dramatic growth of interactive digital channels took social media to levels that challenge even the reach of television and radio.

By Q1 of 2022, there were 4.6 billion social media users globally—over 58% of the world’s population—an increase of over 10% in one year alone.

As the use of social media trends upward, marketers are perfecting strategies to capture the significant competitive advantage that engagement with this key audience can deliver even more rapidly and more effectively than traditional marketing.

KEY TAKEAWAYS

Social media marketing (SMM) uses social media and social networks—like Facebook, Twitter, and Instagram—to market products and services, engage with existing customers, and reach new ones.

The power of social media marketing comes from the unparalleled capacity of social media in three core marketing areas: connection, interaction, and customer data.

Social media marketing has transformed the way businesses are able to influence consumer behavior—from promoting content that drives engagement to extracting personal data that makes messaging resonate with users.

Because social media today is so ubiquitous, marketing techniques using these platforms are extremely important for businesses.

What Is Social Media Marketing (SMM)?

Social media marketing (SMM) (also known as digital marketing and e-marketing) is the use of social media—the platforms on which users build social networks and share information—to build a company's brand, increase sales, and drive website traffic. In addition to providing companies with a way to engage with existing customers and reach new ones, social media marketing (SMM) has purpose-built data analytics that allow marketers to track the success of their efforts and identify even more ways to engage.

Why Is Social Media Marketing So Powerful?

The power of social media marketing (SMM) is driven by the unparalleled capacity of social media in three core marketing areas: connection, interaction, and customer data.

Connection: Not only does social media enable businesses to connect with customers in ways that were previously impossible, but there is also an extraordinary range of avenues to connect with target audiences—from content platforms (like YouTube) and social sites (like Facebook) to microblogging services (like Twitter).

Interaction: The dynamic nature of the interaction on social media—whether direct communication or passive “liking”—enables businesses to leverage free advertising opportunities from eWOM (electronic word-of-mouth) recommendations between existing and potential customers. Not only is the positive contagion effect from eWOM a valuable driver of consumer decisions, but the fact that these interactions happen on the social network makes them measurable. For example, businesses can measure their “social equity”—a term for the return on investment (ROI) from their social media marketing (SMM) campaigns.

Customer Data: A well-designed social media marketing (SMM) plan delivers another invaluable resource to boost marketing outcomes: customer data. Rather than being overwhelmed by the 3Vs of big data (volume, variety, and velocity), SMM tools have the capacity not only to extract customer data but also to turn this gold into actionable market analysis—or even to use the data to crowdsource new strategies.

How Social Media Marketing Works

As platforms like Facebook, Twitter, and Instagram took off, social media transformed not only the way we connect with one another but also the way businesses are able to influence consumer behavior—from promoting content that drives engagement to extracting geographic, demographic, and personal information that makes messaging resonate with users.

SMM Action Plan: The more targeted your social media marketing (SMM) strategy is, the more effective it will be. Hootsuite, a leading software provider in the social media management space, recommends the following action plan to build an SMM campaign that has an execution framework as well as performance metrics:

Align SMM goals to clear business objectives

Learn your target customer (age, location, income, job title, industry, interests)

Conduct a competitive analysis on your competition (successes and failures)

Audit your current SMM (successes and failures)

Create a calendar for SMM content delivery

Create best-in-class content

Track performance and adjust SMM strategy as needed

Customer Relationship Management (CRM): Compared to traditional marketing, social media marketing has several distinct advantages, including the fact that SMM has two kinds of interaction that enable targeted customer relationship management (CRM) tools: both customer-to-customer and firm-to-customer. In other words, while traditional marketing tracks customer value primarily by capturing purchase activity, SMM can track customer value both directly (through purchases) and indirectly (through product referrals).

Shareable Content: Businesses can also convert the amplified interconnectedness of SMM into the creation of "sticky" content, the marketing term for attractive content that engages customers at first glance, gets them to purchase products, and then makes them want to share the content. This kind of word-of-mouth advertising not only reaches an otherwise inaccessible audience, but also carries the implicit endorsement of someone the recipient knows and trusts—which makes the creation of shareable content one of the most important ways that social media marketing drives growth.

Earned Media: Social media marketing (SMM) is also the most efficient way for a business to reap the benefits of another kind of earned media (a term for brand exposure from any method other than paid advertising): customer-created product reviews and recommendations.

Viral Marketing: Another SMM strategy that relies on the audience to generate the message is viral marketing, a sales technique that attempts to trigger the rapid spread of word-of-mouth product information. Once a marketing message is being shared with the general public far beyond the original target audience, it is considered viral—a very simple and inexpensive way to promote sales.

Customer Segmentation: Because customer segmentation is much more refined on social media marketing (SMM) than on traditional marketing channels, companies can ensure they focus their marketing resources on their exact target audiences.

Tracking Metrics

According to Sprout Social, the most important social media marketing (SMM) metrics to track are focused on the customer: engagement (likes, comments, shares, clicks); impressions (how many times a post shows up); reach/virality (how many unique views an SMM post has); share of voice (how far a brand reaches in the online sphere); referrals (how a user lands on a site); and conversions (when a user makes a purchase on a site). However, another very important metric is focused on the business: response rate/time (how often and how fast the business responds to customer messages).

When a business is trying to determine which metrics to track in the sea of data that social media generates, the rule is always to align each business goal to a relevant metric. If your business goal is to grow conversions from an SMM campaign by 15% within three months, then use a social media analytics tool that measures the effectiveness of your campaign against that specific target.

Even in the digital age, people appreciate the human touch, so don't rely only on social media to get the word out.

Advantages and Disadvantages of Social Media Marketing

Tailored social media marketing (SMM) campaigns that instantly reach a range of target audiences are clearly advantageous to any business.

But—like any social media content—SMM campaigns can leave a company open to attack. For example, a viral video claiming that a product causes illness or injury must be addressed immediately—whether the claim is true or false. Even if a company can set the record straight, false viral content can make consumers less likely to purchase in the future.

What Is Sticky Content in Social Media Marketing?

Sticky content is the marketing term for attractive content that engages customers at first glance and then influences them not only to purchase products but also to share the content.

What Is Viral Marketing in Social Media Marketing?

Viral marketing is an SMM strategy that attempts to trigger the rapid spread of word-of-mouth product information—a very simple and inexpensive way to promote sales.

What Is Earned Media in Social Media Marketing?

Earned media is a marketing term for brand exposure from any method other than paid advertising, e.g., customer-created content ranging from product reviews and recommendations to shares, reposts, and mentions.

What Are Some Examples of Social Media Marketing Strategies?

Social media marketing has grown to include several techniques and strategies to engage users and market products and services. These include audience-targeted advertising, the use of interactive chatbots, creating personalized experiences for customers online, the use of social media influencers, building an online audience, and so on.

How Can One Get Started in Social Media Marketing?

To start working in social media marketing, it is good to have at least a bachelors degree in marketing or a related field. Then, it's critical to gain a good understanding of how marketing campaigns work on platforms like Facebook, Twitter, and Instagram. After that, showcase your talents by creating compelling and effective content. Follow influencers and other social media marketers to learn what they are doing well and where they fall flat. Together, use these steps to create a personal brand that you can use to sell yourself and your work.

The Bottom Line

Social media marketing (SMM) is the use of social media platforms to interact with customers to build brands, increase sales, and drive website traffic. As social media usage grows around the world, both via computer and mobile devices, the ability to drive sales from certain user populations is a growing business, rife with competition for views and clicks.