Online to Offline: The Impact of Social Media on Offline Sales in the Automobile Industry

Abstract

Given the limited research into the impact of social media on offline sales of durable goods, this study examines the dynamic relationships between firm-generated content (FGC), user-generated content (UGC), traditional media, and offline light vehicle sales. Data were collected from the official Facebook and Twitter pages of 30 US car brands from 2009 to 2015 and a panel vector autoregressive model utilized to investigate the dynamic relationships among multiple time series variables, while controlling for influential durable goods characteristics. Our results suggest that Facebook and Twitter are heterogeneous in terms of their effect on offline vehicle sales; FGC is more effective than UGC for influencing offline light vehicle sales; viral impressions from Facebook and Twitter are essential, although effects vary for the various social media platforms, FGC, and UGC; and a firm’s marketing efforts and UGC both have a long-term effect on sales, with the long-term effect of a firm’s marketing efforts outlasting that of UGC. Improvements in predicting offline sales can be gained by incorporating FGC and UGC from Facebook and Twitter and traditional media. We also documented the within Twitter synergistic effect between FGC and UGC for offline car sales and cross-channel substitution relationships between FGC and both Facebook and traditional media and Twitter and traditional media. Finally, we provide guidance for managers seeking to leverage multichannel marketing to boost offline sales of durable goods.

Keywords: iFGC, UGC, traditional media, offline light vehicle sales, U.S. automobile industry, Facebook, Twitter, PVAR model

JEL Classification: C32, D22