Facebook from Socializing to Advertising. An Empirical Study on the Effect of Facebook as Advertising Tool in Egypt

Table of Contents

Chapter 1
Introduction
1.1. Preface
1.2. Research Problem
1.3. Research aims and Objectives
1.4. Research and Practical implications
1.5. Research Originality
1.6. Research Hypothesis
1.7. Research Questions
1.8. Research Scope and Limitations
1.9. Research Methods and Instruments
1.10. Outlines of the Subsequent Chapters

Chapter 2
Literature Review
2.1. Introduction
2.2. Facebook from Socializing to Advertising
2.3. Traditional Means of Advertising
2.4. Online Versus Traditional Advertisements
2.5. Current Advertising Activities on Facebook

Chapter 3
Research Methods
3.1. Introduction
3.2. Research Strategy
3.3. Data Collection
3.4. Framework for Data Analysis

Chapter 4
Empirical Results and Research Findings
4.1. Introduction
4.2. Demographic Data Description
4.3. Factor Analysis and Reduction of Data
4.4. Reliability
4.5. Testing Hypotheses and Framework Development

Chapter 5
Conclusion, Discussion and Recommendations
5.1. Introduction
5.2. Conclusion and Discussion
5.3. Contribution to Knowledge
5.4. Recommendations
5.5. Research Limitations
5.6. Further Researches

References

List of Tables

Table 1: Reliability Test for Pilot Data

Table 2: Demographic Data of Respondents.

Table 3: KMO and Bartlett's Tests (Independent Variables)

Table 4: Rotated Component Matrix (Independent Variables)

Table 5: KMO and Bartlett's Test (Dependent Variables)

Table 6: Rotated Component Matrix (Dependent Variables)

Table 7: Reliability Testing (Cronbach's Alpha)

Table 8: Model Summary of DV2

Table 9: ANOVA (Analysis of Variance) for DV2

Table 10: Coefficients

Table 11: Kolmogorov-Smirnov Test for H1b

Table 12: Model Summary for DV3

Table 13: ANOVA (Analysis of Variance) for DV3

Table 14: Coefficients

Table 15: Kolmogorov-Smirnov Test for H1c

Table 16: Model Summary for DV4

Table 17: ANOVA (Analysis of Variance) for DV4

Table 18: Coefficients

Table 19: Kolmogorov-Smirnov Test for H1d

List of Figures

Figure 1: Hypotheses Framework

Figure 2: Scatterplot for DV2

Figure 3: Scatterplot for DV3

Figure 4: Scatterplot for DV4

Chapter 1

Introduction

1.1. Preface

This chapter aims to introduce the whole dissertation, state the purpose of the research, draw a relative background of the study, followed by sections to address the research problem, the aims and objectives of the research, its research and practical implications, originality, scope and limitations, proposed hypothesis and questions, and ended by outlining the subsequent chapters of the dissertation.

The Internet is becoming very important to a lot of people nowadays. Rao (1997) ascertained the impossibility of ignoring the internet and it is true as it recently grew to include advertising where consumers can have better control over the amount of advertising they want to get exposed to (Korgaonkar and Wolin, 2002). By time companies discovered that the traditional means of advertising alone cannot enable them to reach their consumers effectively revealed by Rao (1997) who found out that consumers are interested to know more information about products and services, prices, delivery, and after sale services. What was really missing back then was the interaction option (Royo-Vela and Casamassima, 2011) till the social network sites began to have popularity among the internet users. They are Internet sites with option to allow their users to have their own profiles, interact and share multimedia or textual contents (Anklam, 2009). Hopkins (2012) ascertained that those sites are important and play a big role in everyday activities of a lot of users because they help them to reconnect with their friends, and to make new connections with new friends of similar interests. Accordingly, talking about the importance of the internet will not be complete without mentioning the social network sites that is having a big role in the increase of time spent by users on the internet (Nielsen Company, 2009). Talking about social network sites reflects the importance of the interaction activity that is one of the main features of these sites conquered the market recently putting obstacles to the traditional means of advertising (Mangold and Faulds, 2009). Facebook is one of the most famous social network sites that started out as a site supporting university students in their studies and education, but nowadays almost one third of its global audience is aged 35 to 49 years old. (Nielsen Company, 2009). The trend toward consumers' involvement made marketers in a challenge to use these technologies to keep their clients and attain new ones (Ahrens et al., 2013). Egyptians used to underestimate the power of the word of mouth effect of the Facebook until the revolution of January 25th, 2011 as it was confirmed by the mass media that the preparation for this revolution was made by the youth through the Facebook. This reflected on the huge growth of the size of users and the age shift observed recently on Facebook. This growth in popularity of Facebook in Egypt, affected the amount of time people spend online and so their behavior (Coulter and Roggeveen, 2012). The word of mouth effect is being experienced through the Facebook in an easier and a faster way than before, users share whatever they like or don't like through the Facebook status, video, and pictures upload (Ahrens et al., 2013), which is very challenging for marketers especially in the Egyptian culture. Facebook provides advertisers with new and unique features that were not found decades ago, to be able to connect with their consumers; accordingly a change in their strategies is needed in order to successfully make use of this size of audience. Nielsen Company (2009) revealed that the current level of advertising activity on Facebook isn't as big as the size of the audience supposed to be targeted. With this in mind, the present study set out to focus on the effect of Facebook as an advertising tool in Egypt, and how this effect can be used successfully by marketers in Egypt. This effect is worth investigating because if marketers and advertisers know specifically which kind of effects Facebook has when used as a tool of advertising in Egypt; they can successfully concentrate on it, and accordingly advertise effectively and efficiently to the Egyptian people using the Facebook .The research couldn’t ignore the traditional means of advertising because they are still one of the criteria of advertising, and in Egypt the traditional means of advertising are the main way marketers use to advertise for their products or services although it was shown in the results of the survey made in this study that the traditional means of advertising are facing a big problem concerning the increase in commercial clutter which was also confirmed by Rotfeld (2002).

1.2. Research Problem

It is worth mentioning that the research found limited literature reviews showing a clear relationship between the Facebook and the traditional means of advertising or the effect of Facebook if used as a tool of advertising in Egypt. The gap was observed in the non-consensus agreement among the literature reviewed upon the criteria of Facebook as an advertising tool, nor a consistent declaration of how marketers can successfully use Facebook as an advertising tool in Egypt. Reviewing the literature showed different criteria for Facebook namely; Social Networking (Anklam, 2009; Neilsen Company, 2009; Mital, 2011; Hansen, 2011); Blogging, Micro blogging and Tagging (Anklam, 2009); Sharing Contents (Anklam, 2009; Neilsen Company, 2009; Hansen, 2011); Ethical responsibility towards the use of the users data in marketing (Light and McGarth, 2010); Advertising (Neilsen Company, 2009; Mital and Sarkar 2011; Hadija et al., 2012); Special events marketed on Facebook pages (Hede and Kellett, 2011); Social, Epistemic and Hedonic values of Facebook users (Yang and Lin, 2014); Luxury branding on social network sites (Jin, 2012); Facebook fan pages (Hutter et al., 2013; Ruiz-Mafe et al., 2014); Word of mouth (Royo-Vela and Casamassima, 2011; Coulter and Roggeveen, 2012; Ahrens et al., 2013, Hutter et al., 2013; Rauniar et al., 2014); Networking and Image Transfer (Okazaki and Taylor, 2013). Library Marketing on Facebook pages (Chan, 2011). Furthermore Neilsen Company (2009) stated that yet the magical formula for advertising on Facebook is still missing. On the other side, the criteria for Advertising found in literature included; Customer Engagement (Gummerus et al., 2012; Ching et al., 2013) Traditional, Untraditional and Content (Yuan et al., 1998; Korgaonkar and Wolin, 2002; Jobber, 2007; Fam et al., 2013); Web advertising (Rao, 1997); Amount of exposure to advertisements (Newall and Corkindale, 2007); Creative and Innovative Ideas (O'Donohoe, 1994; Rotfeld, 2002; Jobber, 2007); Source of Information, Consumption Stimulation and Targeting the right audience (O'Donohoe, 1994; Goldsmith and Lafferty, 2002; Lopez and Sicilia, 2013); Online Advertisements (Harker, 2008; Royo-Vela and Casamassima, 2011).

1.3. Research aims and Objectives

This research aims to investigate the effect of Facebook as an advertising tool in Egypt and how marketers in Egypt can use this effect to successfully advertise on Facebook.

1.4. Research and Practical implications

Researchers can use this research to test the effect of Facebook as an advertising tool in their own environments, meanwhile helping practitioners to identify the significance of adopting Facebook advertising to successfully attain potential and existing customers.

1.5. Research Originality

This research has not been done before in the same way. Among the published work of research in this area, no one tackled the effect of Facebook as a consumption stimulator when used as an advertising tool in Egypt; moreover, no other research approached the area of providing marketers with applicable trends to help in using the Facebook in the Egyptian market successfully in advertising.

1.6. Research Hypothesis

H1: Facebook has a significant effect as a tool of advertising in Egypt.

1.7. Research Questions

RQ1: What are the criteria of Facebook?

RQ2: What are the criteria of advertising?

RQ3: Is there any effect of Facebook as a tool of advertising?

RQ4: How can marketers succeed in advertising on Facebook in Egypt?

1.8. Research Scope and Limitations

The research adopted the quantitative approach to investigate the relationship between Facebook and advertising, using online and face to face interview surveys. Data collected from a sample of 400 Facebook users located in Cairo (the Capital of Egypt) and Alexandria (The second important governorate) with the range of age from 25 to 50 years old to ensure monthly income, earning a monthly income above 3000 Egyptian Pounds to ensure the purchase power, using Facebook at least twice a week to ensure updated knowledge. Limitations of this research are in the first instance geographically as it's applied only in Egypt, mainly Cairo and Alexandria, in the second instance demographically as it's approaching only a certain range of age with specific base of income, and frequency of use of Facebook, in the third instance the time limit didn't make it easy to split the population into clusters or made it possible to resample for data results validation.

1.9. Research Methods and Instruments

To achieve the research objectives and verify the proposed hypothesis, an empirical study was carried out using descriptive analysis to test the feel of data, Cronbach's alpha to ensure reliability of data, factor analysis for the reduction of variables and regression analysis for testing hypothesis.

1.10. Outlines of the Subsequent Chapters

The work is divided into two parts of four chapters. The first, theoretical part includes the literature review (Chapter 2) addressing the critical review of the relevant academic literature. The second part contains the empirical study which includes a chapter on Research Methods (Chapter 3) stating the methodologies considered, justifying the selection of the used methodology , the sampling techniques, the sampling framework, the sample size, and the type of the survey. This will be followed by a chapter on the Empirical Results and Research Findings (Chapter 4) reporting the findings with the use of graphical presentations, a chapter on Conclusion, Discussion and Recommendations (Chapter 5) analyzing and discussing the main results with linkage to the literature reviews and drawing conclusions to the research study. Finalizing with outlining the main recommendations related to the findings of the research, some limitations and opportunities for further research.

Chapter 2

Literature Review

2.1. Introduction

This chapter aims to address a critical review of the relevant academic literature; identify the relevant theoretical ideas, concepts, debates and issues. The main objectives of the study is to know the effect of Facebook as an advertising tool in Egypt, and consequently provide marketers with the best practices they may find useful to successfully use the Facebook as an advertising tool while marketing for their products and services in Egypt. To identify this effect that Facebook may have according to this study, reviews about the criteria of both Facebook and advertising should have been searched. The gap was found in the non-consensus agreement relating the effect of Facebook as an advertising tool especially in Egypt. From the limited reviews found Facebook was mainly a socialization tool that may help in marketing through some of its features that are different from the traditional means of advertising like for instance the interaction, but with no clear evidence that such feature can successfully help in advertising through Facebook. Moreover, those reviews were helpful in setting the arguments within, reflecting the limitations in each, and the further researches to be done building on what was proved. Worth mentioning that several reviews affirmed that marketing through Facebook is becoming important to be adopted by companies, and that still the magical formula to successfully use the huge size of audience on Facebook in advertising is missing, which was an urge to carry on with the research objectives and provide an ingredient in this formula aiming to help marketers at least in Egypt to find what is attested to be missing in advertising on Facebook. The following subsequent parts will be approaching the reviews regarding the criteria of Facebook, the advertising both traditional and online, and what was discovered concerning the current use of Facebook in advertising.

2.2. Facebook from Socializing to Advertising

Mostly Facebook is seen as one of the online social networking services that succeeded to replace even the social network sites that preceded it (Mital and Sarkar, 2011), a map that provide overviews of social spaces (Hansen, 2011), a personal weblog that opens users' thinking through sharing links or blogs that opens a door for interaction (Anklam, 2009) and a vital tool in the daily lives of many of the university – aged students (Chan, 2011). Yang and Lin (2014) approached Facebook from other perspective, they approached the users of the Facebook and they discovered that people may stick to Facebook for social, epistemic or hedonic values. Which means users might not all stick to Facebook because they use it, but we may find people using it because it is something new, out of curiosity, which means they might not keep the same trend. Facebook is known to be for the younger audience and this was true, but it didn’t stay at this point but this audience is becoming broader and older (Nielsen Company, 2009) which increases the possibility to target wider audience size. Moreover, talking about popularity and the word of mouth effect of Facebook Goldsmith and Lafferty (2002) affirmed that this popularity has grown in recent years and the time spent on Facebook is taken away from other media relating this to what Coulter and Roggeveen (2012) discovered about its powerful word of mouth effect on how consumers behave concerning product adoption, it can be expected that Facebook can have an effect on audience since they are spending more time on it and affected by the word of mouth transferred through it, than any form of mass media.

Moreover, Fan pages were found to be a result of the big effect of the word of mouth of Facebook and succeeded to be one of its most popular features because it encourages users to interact with companies (Hutter et al., 2013) supporting this point Ruiz-Mafe et al. (2014) confirmed that this has a positive effect on consumers’ brand awareness and purchase intention because users easily can have a wide range of fan pages with different products and services from which to choose. But from this point we can mirror something else that people are interested to give their feedback and opinion to companies, which can be very important for establishing long term relationships with audience for successful marketers. Generally, Facebook succeeded to bring people together being a social networking site, but Okazaki and Taylor (2013) approached this socialization activity from another angel attesting that such activity enables marketers to build their brands with larger audiences. Meanwhile, Gummerus et al. (2012) supported the idea of marketing to larger audience and added that the uncertainty issue is avoided within the brand communities on social network sites.

2.3. Traditional Means of Advertising

Marketing activities are devoted to increase the success of introducing a product or service to targeted consumers. Lopez and Sicilia (2013) pointed that communication is a main part of these activities because through it consumers get aware of the product. Arguments increased around the traditional mass media advertisements for instance; O'Donohoe (1994) argued that consumers choose to pay attention to the advertisements. But she didn’t clarify in her research what exactly can grab people's attention to advertisements. Jobber (2006) argued that consumers find advertisements annoying, exaggerating, mistrustful, and repetitive. Which means it isn't only an issue of awareness and communication, it must be presented in a manner that is preferable by the audience which was supported by Rotfeld (2002) related the reason behind all of this to a misplaced marketing done by marketers who failed to focus on what consumers really need to see or hear and also by Fam et al. (2013) who recommended that the advertising should be liked should be liked by consumers to get their attention because consumers can avoid commercials when they consider it a source of irritation. But according to what Jobber (2006) attested above, the exposure rate and repetition are important too to avoid such irritation. Meanwhile, Newall and Corkindale (2007) supported this too stating that 'the effect of the repeated advertisements flatten out once the audience is saturated'. Among limited reviews compared between mass media and online advertisements Goldsmith and Lafferty (2002) ranked the frequently recalled advertisements to be mostly recalled through TV then internet then the radio came at last. Generally, traditional means of advertisements are facing several challenges; among them the mistrust and boredom which according to the literature reviewed in this regard, puts a heavy challenge on the marketers to communicate to their targeted audience.

2.4. Online Versus Traditional Advertisements

About the difference between online advertisement and the traditional ones, as well as the advantages of the former, Ching et al. (2013) stated that the advantage of this type of advertisements is the ability to interact at a personal level which has a favorable effect on consumers’ behaviors. Of course this is not found in the traditional means advertisements but also this is not only the advantage of the online advertisements. Korgaonkar and Wolin (2002) brought us to a small comparison between the traditional and the online advertising where they discovered that consumers prefer it because they have control over advertising exposure which by its turn added a point of view that is similar to that of Royo-Vela and Casamassima (2011) that marketers can administer close relationship with millions of customers through the web faster than that of the traditional ones. Moreover, internet advertising includes keywords and e-referrals (Ahrens et al., 2013) which makes searching for products or services easier. Also, in case of applying a rewarding system to motivate customers to watch, hear or read advertisements, in traditional media it should be done manually which is impractical, while on the Internet, can be done easily (Yuan et al., 1998).

Searching reviews concerning the online advertising versus the traditional will reflect how consumers react to both kinds of advertising techniques, and will help to avoid the mistakes lead to negative reactions and maximize the effect of the moves lead to positive ones.

No one can deny even before the appearance of the social network sites, that the presence on the Web was important. Rao (1997) stated that 'it started purely as a description of the company size, product or services list, and contact information then gradually this presence progressed to include product brochures, bulletins and other advertising contents'. On the other hand, Hadija et al. (2012) concluded that internet users may fail to notice advertisements being attracted more to other contents found online. But this doesn't mean that those advertisements were not attractive enough, maybe those users are too busy to notice. Supporting the online advertising, Harker (2008) proved that advertisers are considering it for communicating with their targeted audience. Moreover, approaching the communication criteria of advertising and putting more challenges in the route of the traditional advertising, Hede and Kellett (2011) affirmed that the core of effective marketing communications relies on both the sender and receiver interaction which cannot be done through traditional advertising means.

2.5. Current Advertising Activities on Facebook

From the reviews found there was no agreement about the success of marketing on Facebook till date, for instance Hansen (2011) attested that the knowledge to gain practical trends from social media networks is still primitive, another instance Nielsen Company (2009) reported the current level of advertising activity on social networks to be not up to the huge size of the audience. Moreover, Hadija et al. (2012) stated that advertisers have to consider the different needs of the Facebook users and Gummerus et al. (2012) supported this attestation and added that marketers are still in need to create content that engage customers. Goldsmith and Lafferty (2002) from the other hand doubted that marketers evaluated the role of internet advertising in a right way. Ruiz-Mafe et al. (2014) argued that still marketers know a little about how to use word of mouth of Facebook users. Thinking about all of this, it is obvious that researchers although didn't agree upon a way to successfully market through the Facebook, they agreed that still Facebook isn't used effectively in marketing activities although they declared the chance to be found but needs more attention from marketers. Some researchers tried to give recommendations but from our opinion were not based on solid proofs to ensure reliability on different cultures; among those recommendations were rewarding customers for viewing advertisements (Yuan et al., 1998), a conversation model of advertising (Nielsen Company, 2009).

What wasn't to be ignored while carrying out this study, the point of the privacy of data and the ethical use of it by marketers, because certainly marketers will use such huge treasure of data of consumers and potential ones. From the limited reviews found approaching this point, Light and McGarth (2010) demanded the developers of Facebook to have ethical responsibilities.

Generally, within the few literature found approaching the use of Facebook in advertising, some highlighted important points to be considered by marketers in order to succeed in advertising on social network sites but still not in Egypt, moreover they can be of good use when tested in the Egyptian culture. Most of researches found none denied the power of social media especially in marketing (Rauniar et al., 2014) because the activities and features of Facebook can help in affecting the purchase decision process (Hutter et al., 2013). Consumers can evaluate the quality of products and services by referring to reviews and experiences of other consumers and this is the word of mouth effect that as per Jin (2012) can reduce the issue of the uncertainty.

Being such an important tool in marketing nowadays, with no consensus agreement about the criteria of success of advertising on Facebook especially in Egypt or a reliable way recommended to help marketers fulfill this mission successfully; it was worth addressing the aforesaid gap in this research aiming at helping marketers to firstly know the effect of Facebook as an advertising tool in Egypt and so, use this effect to succeed in advertising on Facebook in Egypt.

The next chapter will present the research methodology, instruments and tools used in the empirical study, along with justification for the final methodology selected, also will present in details the sampling techniques, sampling framework, sample size and the type of survey used to collect the data.

Chapter 3

Research Methods

3.1. Introduction

The research aim is to investigate the effect of Facebook as a tool of advertising in Egypt, knowing what type of effects can the Facebook have on the users when used in advertising is very important because it can be different from a country to another and from culture to another, so, such study will reveal this effect to facilitate the task of the marketers in Egypt by giving them practical trends to use in order to successfully market for their products and services using the Facebook. From the literature reviews it was generally found that the current advertising activities through Facebook isn't up to what should be done with the huge size of the audience (Nielsen Company, 2009), marketers still don't know how to use the unique features of Facebook (Gummerus et al., 2012), marketers must know how to attract the targeted users of the social media (Hadija et al., 2012). These reviews and more about the same point added to this there was no consensus agreement about the effect that Facebook can have when used as a tool of advertising especially in Egypt. Discovering what kind of effect can the Facebook have when used as an advertising tool will inspire marketers with creative campaigns successfully targeting their audience and gaining desired results, while keeping long term relationships with their consumers and attain potential ones, which are the ultimate targets of any successful marketer. That’s why this research is keen to get valid and reliable results for practitioners to rely on, and researchers to enrich the marketing research field building on these results.

This chapter will provide the details of the research strategy adopted to address the gap identified above, together with the means of collecting data for analysis, including the sampling techniques, sampling framework, sample size, and framework for data analysis with justification for the selection of methodologies.

3.2. Research Strategy

This research investigates the effect of Facebook as an advertising tool in Egypt; using the Interpretivisim paradigm because this paradigm is preferred when it comes to Social Sciences that involve people as well as things (Greener, 2008). Since the research deals with Facebook users who are humans and there are differences between humans, the mentioned paradigm is the most appropriate to adopt (Bryman and Bell, 2007). Swanson and Holton (2005) stated that 'this paradigm assumes that knowledge and meaning are individual interpretations'. In order to explore the relationship between Facebook and Advertising and how advertising on Facebook can be successful in Egypt; Explanatory research is considered as an appropriate methodology because it is the design that shows the reason behind and configures this relationship (Bryman and Bell, 2007) and this is exactly what is needed to reflect the effect of Facebook when used as a tool for advertising in Egypt.

There are two main approaches to adopt in any research, either a quantitative approach or a qualitative approach. In general, quantitative research shows numerical assignment to the research under study, whereas qualitative research shows only textual descriptions of the research under study (Vanderstoep and Johnston, 2009). Seeking accurate results in order for this research to benefit other researchers and practitioners; the research will adopt the quantitative approach to investigate the effect of Facebook as an advertising tool in Egypt because the data collected will be more accurately reflecting the overall population of Egypt from which the sample is drawn, also because this research is proposing hypothesis to be tested, analyzed and evaluated (Swanson and Holton, 2005). For this research to be reliable and can be generalized, investigating to what extent there is an effect of Facebook as an advertising tool or there isn't and what kind of effect, can be implied accurately using the quantitative approach (Jonker and Pennink, 2010).

Survey will be the most appropriate tool to collect the data in a consistent way, simple in developing hypotheses, easy to construct and consume short time to collect data from a big sample size (Kothari, 2004). We will ask individuals about their opinions and their behavior regarding the Facebook and the advertisements being the independent and the dependent variables respectively, so the survey methodology is used in research as it helps to get individuals’ behavior, opinions, and preferences (Yang and Miller, 2008).

Sampling is very important because, in this case as it is not practical to study all the members of the Egyptian population who own Facebook accounts. Generally, there are two ways to sample, either randomly or non -randomly. The random sampling is the technique in which all members in the sample frame are equal in the chance to be selected (Vanderstoep and Johnston, 2009), accordingly, the research will adopt the random sampling for its flexibility to increase the sample size and so a close reflection of the big population will be granted. The sample size is 400 Facebook users located in Cairo; the Capital of Egypt and Alexandria; the second important governorate, with the range of age from 25 to 50 years old to ensure monthly income, earning a monthly income above 3000 Egyptian Pounds to ensure the purchase power, using Facebook at least twice a week to ensure interest and updated knowledge.

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