Do Social Media friends influence buying?

The basic outcome; yes people influence each other through their networks. On the other hand; what’s new? Humans are social animals that live in groups. In this research there are leaders (12%), followers (40%) and laggards (48%). Leaders keep moving on (revenue -14%), the followers imitate (revenue +5%) and the laggards (revenue change 0%), well, just lag unaffected. “Keeping up with the Joneses” is as always the game being played by customers and this can play tricks on your ROI from marketing.

As the researchers point out there is still a lot of groundwork to be done. The last paragraph of their conclusion:

Our findings are relevant for social networking sites and large advertisers. The members in high status group have an influence on those in the middle status group for the diffusion of a new product. However, a successful diffusion in the middle status segment may make high status members lose interest in the new product. This interplay of product diffusion and customer segmentation leaves much room for future research.

To my knowledge this is the first scientific research done on the effects of social media in terms of revenue effects. The  research and report “Do friends influence purchases in a social network?” is crafted out by Raghuram Iyengar, Sangman Han and Sunil Gupta. It is a free download from Harvard Business School.