With the increasing number of social media websites, and businesses all over the world using social media for promoting and branding their products, will this over take the traditional way of marketing? What are the differences between social media marketing and traditional marketing?
Almost definitely not. The most amazing potential that social media has is to make things social. (yes that sounds obvious, but i mean REALLY social, like when people actually interact, in real life) That doesn't mean solely confined to a medium, whether it be twitter, on youtube, or in a facebook stream. That only seems semi-social, it's all button clicks and single destinations. The power of social media is going to be huge as it's integrated into more traditional outlets, which over the past few months I've seen happening a lot. QR codes on subway advertisements and in newspapers. Checkin services integrated into restaurant drink and menu specials. Augmented Reality business cards, making a physical business card social and integrated with social media. Image recognition allowing users to learn more about products as they walk by them. The way all of these different mediums can work together will create a multiplier effect, increasing the effectiveness of each one.
Your product is 90% of your marketing. The remaining 10% consists of advertising, building a website, building social presence etc.
The non-product percentages might be slightly higher in mature, mass-market industries which require massive TV, print advertising campaigns but in the context of startups, what makes or breaks your business is the strength of your product.
If you look at things this way, even if social takes over the whole 10% of non-product marketing activities, it's still only 10% of marketing.
But social will not even take over that 10% because it's not a replacement. If you have software product, you still need to build an excellent website for it. You still need to use AdSense to advertise your product etc.
Social might be nice addition but it's the last thing you should do, after researching the market to ensure you build a desirable product, building the product, building a website, advertising using traditional channels etc. This is not going to change.
My personal experiences with using social to market my windows software (i.e. using Twitter, Facebook's like buttons, Google+ buttons) was abysmal: I could hardly measure any incoming traffic to my website as a result of those activities (see http://blog.kowalczyk.info/article/8nqe/My-social-marketing-failure.html for details).
I'm not saying social doesn't work for anyone but I do think we're still in the hype phase, where people take the value of social on faith and when more people start measuring ROI of social marketing vs. other marketing, the enthusiasm for social will cool off significantly.