Jingyun Huang, Ph.D. Candidate in Marketing
Bio
Jingyun Huang is a Ph.D. student major in Marketing from Stevens Institute of Technology under the guidance of Professor Gaurav Sabnis. Her research focuses on the social media data analysis and text analysis.
Skillset
Proficient in scraping data from social media platforms and utilizing different models in data analysis using python, R, python and STATA. Skilled in text analysis with machine learning.
Dissertation Summary
Exploring the Decline of Corporate Social Media: Antecedents, Consequences, and Implications for Large Firms
Contemporary research consistently demonstrates that social media provides numerous benefits to businesses, leading many to incorporate it into their marketing strategies as a cost-effective means of engaging with large audiences. It is now a common assumption that a substantial social media presence is essential for businesses to remain competitive and profitable. However, data derived from a panel of Facebook and Instagram official accounts belonging to Fortune 500 companies, spanning from 2018 to 2023, reveals a notable decline in the use of social media by major corporations. Some firms are reducing their participation, while others are abandoning social media entirely. Despite the wealth of research on social media's advantages, there has been little exploration of the factors driving this decline. This paper seeks to fill this research gap by providing evidence of the ongoing reduction in corporate social media usage and examining its antecedents and consequences.
Summary statistics from the panel reveal a clear downward trend in the total number of posts made by Fortune 500 firms on both Facebook and Instagram. These platforms, representative of the broader social media landscape, offer insight into this phenomenon. Facebook, the most widely used platform, has shown a steady decline in posts since 2018, with a more pronounced drop starting in 2020, despite the increased online activity prompted by the COVID-19 pandemic. Similarly, while Instagram saw an increase in posts up until 2021, it too experienced a subsequent decline. Despite a stable increase in follower numbers, engagement rates (interactions per follower) have declined from 2018 to 2023 on both platforms. This paper employs Vector Auto Regression (VAR) and fixed-effect regression models to explore the factors behind this decline, analyzing social media engagement and financial performance, and investigating the impact of lagged variables on post frequency. For robustness, the models incorporate data from both platforms, yielding an R-squared value of approximately 0.77, and displaying consistent correlations between the variables.
The analysis indicates that the number of posts is positively related to the post counts from the previous two quarters, which contributes to the ongoing downward trend. Additionally, post frequency is positively correlated with engagement rates from the previous two quarters, indicating that audience engagement influences posting behavior, albeit with a delayed effect. However, post frequency is negatively correlated with current engagement levels, suggesting that fluctuations in engagement have a delayed impact on posting behavior.
The findings reveal that the decreasing post frequency among Fortune 500 firms is largely attributable to declining follower engagement, and that larger firms are gradually reducing their use of social media on both platforms. Firm size is negatively correlated with post frequency, while the debt-to-equity ratio, representing a firm's financial risk, is positively correlated with posting activity. Contrary to expectations, larger firms with more stable financial performance are placing less emphasis on their official social media accounts. This suggests that decreasing post frequency is driven by reduced follower interactions, and that larger firms may no longer regard social media as critical to their marketing efforts as they once did.
This paper offers valuable insights into the declining trajectory of social media usage by large corporations, and highlights the potential need for strategic adjustments in the future. While research underscores the benefits of social media for large firms, the data demonstrates a decline in usage of platforms like Facebook and Instagram. This paper examines the underlying causes, focusing on two key perspectives: customer interaction with posts and the resulting financial performance variations linked to social media practices. From the perspective of customer interaction, despite the growing number of social media users, there is a noticeable decrease in engagement with corporate posts. This decline in engagement has led to a reduction in the number of posts, suggesting that firms may be realizing that a larger social media presence does not necessarily result in increased customer interaction. Moreover, financial data indicates that leading companies no longer view social media as an effective communication tool. While this study suggests that the golden era of corporate social media accounts for large firms may be nearing its end, it acknowledges the need for further empirical research to provide comprehensive explanations of the relationship between social media engagement and corporate performance.
Future research should aim to explore this relationship in greater depth, providing a more nuanced understanding of why firms choose to increase or decrease their social media activity and how these decisions affect financial outcomes. Such insights would enable businesses to optimize their social media strategies and derive greater value from their online presence.
Academic Advisor
Gaurav Sabnis