CHAPTER 2 THEORETICAL FOUNDATION. Social media is a publication of content and the change of people in their process way of

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1 CHAPTER 2 THEORETICAL FOUNDATION 2.1. Social Media Social media is a publication of content and the change of people in their process way of reading and sharing information, thus creating and sharing content. It represents a change from the traditional way, broadcast mechanism to a many-to-many model, conversational format between authors and peers that have a base within their social networks. With the help of Internet, social media facilitate ways of communicating. People now have opportunities to share their thoughts, opinions, and skills globally. With the help of social media, it can empowered the influence of people as an influencer and makes the marketer or business people to being aware of this issue, as social media features are powerful tools in supporting their advertising and marketing communications strategies [11]. Social media nowadays make people conveniently communicate with the others, share information and networks by using several kinds of online technology tools through the Internet. There are several forms of social media; like text, audio, video, images, podcasts and other multimedia communications [12]. But, social media is not really that new in fact. People who seek for networks, social life matters, and information have been starting use digital media from over 30 years ago. Social media appears first on the line, not with the computers; the era of social media begins in the phone phreaking era in 1950 s early 90 s where there are several technophiles and 14

2 15 Information addicts hijack the telephone system; in result of that they can do free phone calls. By built boxes that is produce in-house as an electronic device; it can generate tones that can make them freely do several phone calls without paying. Another era appears after phone phreaking, named Bulletin Board Systems (BBS) occurs in where a computer or application is being used in order for people to sharing and exchange messages or data on a certain network [13], other features of BBS are like social discussion on message boards and online games. In the , commercial online services appear, like Prodigy and Compuserve where people introduced an interactive technology of a social media developed by a large scale corporate. Then, when the Internet are available in the 90 s which limited only for those who have legitimate access and become publicly accessed around 1994 or 1995, where in certain major areas of United States a private Internet Service Providers (ISPs) appears, the world wide web become available to the public. People can share or search things like information, pictures, videos, graphic files and audio files through a system in the Internet systems that support formatted documents in a markup language called HTML (HyperText Markup Language) called World Wide Web. In the late 90 s, BBSes were replaced by several Internet forums that significantly grew as the place for discussion through Internet [14].

3 16 Figure 1 Internet Forum Example In the 1996, an Instant Messaging system for desktop computers was developed by four Israeli technologists, called ICQ [14]. By using ICQ, people can interact with the others through Internet, share files, etc. Then, a peer-to-peer (P2P) application where people can share music files through Internet appeared in May 1999, named Napster. In Napster, the users can search and share music files, instant messaging with the others through an interface that is provided by Napster [15]. Later, in the May 2000 another peer-to-peer file sharing occurs, called Limewire. Suddenly it become popular among Internet users, replacing Napster due to its fall; by having many features, increment development of the application, better security, and constantly improved their performance [16]. Currently, there is a new peer-to-peer technology that makes people easier and faster in sharing and searching files, named BitTorrent. In April 2001, American programmer

4 17 Bram Cohen constructs the BitTorrent protocol; considering of how long the users will take in downloading large files, he create a new way of sharing files. BitTorrent protocol differ from the others peer-to-peer applications which enable the user do download files from multiple sources. Each user contributes to the files they have and it s connected to the other user s torrent, so if several users have the file that certain user want to download, that user who want do download will have increasing in the download speed because he has multiple sources that have the file he desired to download; all in one BitTorrent s world [17]. After peer-to-peer (P2P) era, then Social Networking era emerged, or called Web 2.0 when Friendster appeared in 2002; founded by Jonathan Abrams. Previously, the first social network sites was Sixdegree; founded in 1997 where people can make their profiles and connect with friends or other peoples. But, Friendster is a social network boom where in Friendster era people starting to using social network intensively. Then, MySpace appeared and took over Friendster number one position as social network sites in 2004 [18]. Now, Friendster has many competitors; competing to be the best social networking sites. Because there are others social network sites appeared and growing by the time. Recently, there are Facebook, Twitter, Tumblr, formspring, etc. Web 2.0 creates new ways for group of people to communicate, it also make people able to gather and share information at the same time. The way of Public Relation in engaging with their customers nowadays is to understand groups of people they want to engage and how they communicate with the customer without marketing at them [11].

5 Facebook Facebook is a social networking site which can connect many kinds of different groups of people; it was founded in 2004 by Mark Zuckerberg, a Harvard student. Then it gain success significantly in campus and expanding beyond Harvard school. Facebook users create the profile page of theirs that includes the information about them to the other users who viewing their profile. In each user profile, it includes the information about them (date of birth, interest, etc), status, friends, photos, notes, groups, and the wall [19]. According to the research from online schools ( provided in Digital Buzz Blog, as of 2011 there are active Facebook users around the world, approximately 1 of 13 people on earth and half of them are logged in everyday. 48 percent of people with the age of 18 to 34 years old were checking Facebook right after they wake up [20]. Currently, Facebook has global audience of registered users around the world, making them the largest social network in the world [21]. According to Alexa, the Web Information Company, Facebook currently is the 2 nd top site around the world, below Google at 1 st [22]. Indonesia is the 2 nd country which has the largest amount of total Facebook users, with the amount of registered users; below United States which have registered users as of March 22, 2011 [21]. The graph below is the trends of daily unique visitors who visit Facebook, the data is derived from Google Trends [23].

6 19 Figure 2 Growth of Facebook s daily unique visitors Jan 2009 to March 2011 Refer to the graph below; we can see that since January 2010, there are at least around 3 million daily unique visitors in Facebook. Although there is a decrease, specifically in the mid of November 2010, the numbers did not decrease significantly. At least there are definite 2.5 million daily unique visitors in Facebook every day since January Twitter Twitter is a social networking service where people can stay connected to their relations, especially like friends, family, or partners at work through the messages their exchanged frequently in the Twitter [24]. It was founded in March 2006 by Evan Williams, Jack Dorsey, and Biz Stone. Twitter has become very popular since its creation in 2006, by having mini-blogging features that make people keep in touch from a simple question of What are you doing? or What s happening? through the 140 space of characters in length of each user can write down or tweets (means to share their thoughts to others in Twitter) [25].

7 20 Unlike Facebook, there is no friends term in Twitter; what is in Twitter are following, followers, or listed. Following means if you follow your friends, then every time they tweets it will appeared in your Twitter s timeline. Twitter s timeline is a collection of all tweets from those who we follow; it is sorted based on the time of the tweets. Other timeline can be from the list that is created or the search result that we operated [26]. Followers are those who following us; so if a friend following us, every time we tweet it will appear in his or her timeline. List of Twitter is a feature that categorize the users that we want to put into a group; so if we want to get tweets from certain group of users (for example our family), we can see it through the list features [27]. According to Google Trends, the daily unique visitors of Twitter in Indonesia still not quite at Facebook level, below daily unique visitors in each day. But, the development of Twitter in Indonesia quite good, since it keeps increase by the time from January 2009 to March 2011; as we can see from the graph below from the Google Trends [28]. Figure 3 Growth of Twitter s daily unique visitors Jan 2009 to March 2011

8 Kaskus Kaskus is an online community provider which established in November 6, 1999 [29]. The name of Kaskus comes from the abbreviation of Kasak-Kusuk, means Chit-Chat [7]. The founder of Kaskus was Andrew Darwis; along with other two friends of him, Ronald and Budi. It was created during their study in Seatlle, the initial goal at first was to create a site for Indonesian students who study abroad that is lack of news about their country [29]. By the time, Kaskus become the largest online community in Indonesia, by having members as of March 28, 2011 [30]. According to Alexa, the Web Information Company, Kaskus is now ranked 6 th top sites in Indonesia. From the peoples who access Kaskus, 93.9% were accessed from Indonesia. Kaskus currently ranked 257 th as the top sites accessed around the world; the data were gathered as of March 28, 2011 [31, 32]. Nowadays, there are several kinds of forum available in Kaskus; for example like Sports, Computer Stuff, Movies, Music, Games, Fit & Healthy Lifestyle, etc [33]. Besides that, there is also another forum that is famous and most popular among Kaskus users (called Kaskuser ), named Forum Jual-Beli (FJB) which mentioned before in the beginning of the research the trends and cases of it. How Kaskus developing from just the small forum consist of 3 to 10 members become 2.7 million members recently itself come from Indonesian people who like to give opinions, communicate with others, and the power of word of mouth among peoples, said Andrew. At the beginning, Kaskus just have 3 to 10 members and the site did not grow. So Andrew plan to change the

9 22 orientation of the site to become User-generated content or can be called as Web 2.0 and that plan works significantly [6, 34]. Figure 4 Growth of Kaskus s daily unique visitors Jan 2009 to March 2011 From the graph above, we can see that Kaskus has more daily unique visitors rather than Twitter; based on the data from January 2009 to March But, Kaskus still not quite at Facebook level too; same like Twitter. Since their daily unique visitors are below users in each day. The promising thing is the numbers of Kaskus s daily unique visitors keep growing until now (March 2011) [35]. Recently, there is an electronic payment feature that implemented into Kaskus; named KasPay. KasPay is a payment system from PT. Darta Media Indonesia. Beside Kaskus, this system can be used in other sites that have affiliation with KasPay. The transactions in KasPay are using Top-up system, in order to avoid criminal s action; fraud and forgery of credit card. The transaction s security is defined by the confirmation through and transaction history [36]. The advantage of using this system is the additional costs of users in doing the transaction over distance are nearly zero. Because with

10 23 Internet, it covers area around the globe, there is no electronic transaction cost in traveling [37]. In the VivaNews s article collections, there is an article discussing the progress of KasPay. In the mean time of conversation between VivaNews and Andrew Darwis, he said that in the 4 months period, KasPay can account transactions up to 1 million IDR; even Kaskus still not do advertising and just only have 2 merchants (epulsa and Indo.co.id). In Indo.co.id, they only contributes 5%, comparing to epulsa with 95% contribution. In the mid of April 2010, the numbers of registered users in KasPay reach users. But the users whose are active and do top-up only 10% of the total registered, around 3000 users above. In average, every one month a user can account for transaction up to IDR, including IDR top-up. On the other hand, in each day the transaction that has been put into account range between to IDR [38] Benefits of Social Media As the increasing popularity of social media, it will give benefits and opportunities for people around the world. In Indonesia, it also will create opportunities since social media is now becoming a trend in here, also the number of Internet users grow tremendously; many people like to use social media whether is it for build relation, business, etc. Every people have different purpose of how to make use of the Internet and social media in achieving their purposes.

11 24 Benefits for the users For the users, they will get several benefits by using social media. By using media, a user can get their name being aware to the public; it is all depends on the reputation that they are built upon the public through the act that they are done in the social media. The act that can be done by them that can affect their reputation to the public are like several blogging, reviews, findings, creations, businesses, networking or relation with others, etc. Through the entire act that the user have done in the social media, it can bring them to a job from the company that interested in hiring them to be their employee; from the reputation that they built. It can also expand business networks as the user positioned them as the expert in their field, more colleagues will come which offer partnership in the future. Beside business networks, the user can connect with their social network like family, friends, cousins or their relations. The user can also gather with others people that have similar interest with them, through the social media they can share thoughts, have several activities together to strengthen their relations, brainstorming, have several feedbacks, etc [39]. Benefits for the marketers and business people For the marketers and business people, there are several benefits that they can get. First, it can increase their company s brand awareness; as it is the crucial factor that can lead to company s future. Without get the customer being aware of company s brand, they would go to the other brand that they are aware. By

12 25 using social media, company can expand their brand awareness beside marketing strategy like banner advertisement, flyer, television advertisement, etc. They can also look after their competitors, by following competitors twitter; so they can know what are their competitors have provide to the customers recently and to make sure the company provide better offers than the competitors. By using social media, the company also can interact with their customers; asking for opinions and feedbacks so they can have improvements in the future to make the customers more satisfied; making one customer satisfied will lead to more customers in return. Personal interaction with customers also will build trust between company and the customer; they will prefer to do the business with our company rather than our competitors. Besides that, social media also can cover the questions from the customer and response it in a timely manner that will satisfy the customer and save cost between the company and customers to interact through phone or meetings [39]. Social media can also take several possible techniques for advertising and branding through the dissemination of online communities from social network. It will be penetrated through sharing information, experiences, sites for photos, videos, and bookmarks, virtual worlds, micro-communities to social news sites [40]. Benefits in general Benefits of social media in general are people can get information through social media, social media can also connect one to another; for example government

13 26 want to socialize with citizens, can be regarding with their plan, collect citizens aspiration, feedback, etc. Social media can make an unity of people, for example in Mentawai s disaster case (Tsunami and Volcanic eruptions), through a social group that created in social network, people initiatively make donations without being aware of that matter [41] Consumer Behavior Consumer behavior is the action of the person when purchasing and using products and services, it was triggered by the mental and social processes of the person. The questions that might come up with their behavior of consuming are why they make the purchases that they make? What factor that influencing their purchases? What are their criteria in choosing the products or services? When do they buy? Where do they buy? How do they buy? Companies must analyze what, where, why and how consumers buy, it is essential in developing strategy of marketing. There are theories that describe the factors that drive consumers in doing the purchase, such as psychological models, sociological models and economic models. Psychological model focuses on their motives for buying and learning process. Sociological models are their behaviors that are influenced by the social forces around them. Economic models focuses on the consumer self-satisfaction in purchasing the products or services they intend to purchase. Sociological models explain the behavior of the consumer upon the act of social forces around them; can be from culture, reference groups, family, value system (beliefs), and lifestyle. This model is related to the topic of the research, where the current trend and

14 27 lifestyle of the consumer in Jakarta that frequently uses Facebook, Twitter and Kaskus might affect their purchase behavior. Culture is the behavior of the society that includes traditions, values, and attitudes that influence the behavior of the consumer. Reference group is the influence from neither consumer formal or informal group which they are in that affect their behavior E-Environment In general, there are macro-environmental and micro-environmental factors that directly can affect the organization. Several aspects from macro-environmental factors are social, legal, ethical and taxation, economic, political, technological, and competitive. All aspects are related to the issues from the topic of the research. Social factors means that the influence of consumer perceptions in defining the usage of Internet for different activities, that can affect another people or consumer. Legal and ethical factors are the method in determining how the products can be sold through by online. Government in their role to the society, tries to protect individual s right to privacy. Economic factors are the influence from the economic performance of different countries and region that can affect citizens spending behavior and international trade. Political means that governments and transnational organization have an important role in defining future adoption and control over Internet and its rules or regulations by which it is governed. Technological factors are the change in technology that offer and create new opportunities in marketing the products [42].

15 Simple Linear Regression Regression analysis is a technique that has a purpose to model and go through the relationship between two or more elements [43]. The name of two variables that are attempted to be analyzed is X and Y axes. It can be vary according to the scope of the research. In general, it can be described in the Figure 6: [44] X-axis Independent Y-axis Dependent Predictor Predicted Carrier Response Input Output Figure 5 X and Y axes relationship

16 Research Variables, Dimensions, and Indicators No. Variables Dimension Indicator 1. Facebook (X1) 1. Advertisement (AD) 1. Advertisement s Influence to consumer purchase behavior or not, in form of rate (scale). 2. Friend s Influence (FI) 2. Update and Information from friends affecting consumer purchase behavior or not, in form of rate (scale). 3. Company/Business Pages (BP) 3. Information from Business Page on Facebook affecting consumer purchase behavior or not, in form of rate (scale). 2. Twitter (X2) 1. Friends Twitter (FT) 1. Tweets from friends affecting consumer purchase behavior or not, in form of rate (scale). 2. Company s Twitter (CT) 2. Company or other business s Twitter affecting consumer purchase behavior or not, in form of rate (scale). 3. Kaskus (X3) 1. Forum Jual Beli Kaskus (FJB) 1. Forum Jual Beli affecting consumer purchase behavior or not, in form of rate (scale).

17 30 2. Advertisement (AD) 2. Advertisement s Influence to consumer purchase behavior or not, in form of rate (scale). 3. Trust (TR) 3. Trust that has been built between consumer and the seller (merchant) affecting consumer purchase behavior or not, in form of rate (scale). 4. Purchase Behavior (Y) 1. Purchase Rate (PR) Consumer Purchase Rate after gathering information through certain social media (scale) 2. Purchase Back (after first purchase) (PB) Whether the consumer do another purchase after their first purchase or not after gathering information through certain social media (scale) 3. Purchase Development (PD) The consumer purchase development over 3 years period. (scale) Figure 6 Research Variables, Dimensions, and Indicator