Next social media
wave: Small businesses
They're already using their pages to promote themselves
By Diego Vasquez
Jan 26, 2012
Big businesses have been using Facebook, Twitter and other social media to promote their products for months if not years. Now comes the next wave in social media advertising. Small businesses are poised to see an explosion in spending on social media, which will increase sevenfold by 2016, to $7.8 billion, according to a new report from Borrell Associates, the Williamsburg, Va.-based local advertising tracking company. Borrell finds that 80 percent of small businesses intend to use social media by the end of 2012 and that roughly two-thirds already have a social media presence of some sort. These businesses have an average of 4,000 followers. Their main objective in buying social media advertising is not to promote, which they can already do for free on their social network pages, but rather to reach out to new customers. Greg Harmon, senior research analyst at Borrell Associates, talks to Media Life about what's spurring the rise in small business interest in social media, how it differs from large businesses, and what sort of return on investment they receive.
What’s the most interesting or most surprising thing you learned from this report?
The most surprising aspect of this now fully emerged phenomenon is the rapidity, depth and breadth of adoption that we are seeing by SMBs across the nation.
What's the most important thing media buyers and planners can learn from it?
Along with the impending death of mass media and its one-to-many model of one-way communication comes a related event—the death of the “one-buy solution.”
The complexity of media mixes has increased exponentially with the explosive growth of social media, particularly Facebook, and emerging platforms over the last several years. Media planning now involves incorporating the many “buys” that are not so much media buys in the traditional sense, but the establishment of appropriate client “presences” on multiple platforms.
Facebook and other social media do not necessarily involve a media buy, but they certainly involve spending.
How exactly do small businesses spend on social media -- what platforms are they using?
The short answer is that local SMBs are buying, using and experimenting with social media in a myriad of ways. One element that particularly struck me was the extensive use of Twitter by small and highly targeted local businesses.
What sort of return do small businesses receive on their social media investments?
It’s interesting to look at the data and see that “sales” is not the top item in measurement for local SMBs but rather “new customers.” Not that the local SMBs don’t expect sales, but they seem to know that building new relationships with new customers will do that automatically. New customers are the key return on social media.
Additionally, there is no question that direct metrics will be increasingly important in the future. Google, Facebook and others offer levels of transparency and accuracy in metrics reporting that far outstrip metrics that have been historically used by local newspaper, TV, radio and other media.
While these new metrics will affect buying behaviors, the fact is that many local businesses still operate in an environment where information choices are still fairly traditional. In Smalltown, not everybody crosses the street staring down at a smartphone, trying to locate a restaurant or place to buy shoes. Despite this, the actual and intended increases in spending for social media are very strong.
We know from anecdotal reports that many local SMBs see social media as a relatively costless element in their tool kit, yet one that garners direct and observable results. They like that a lot.
Have small businesses embraced social media more quickly or at the same rate as large ones? Why?
Social media in general have had a rapid but not unprecedented growth curve, with 2010 and 2011 as watershed years. There can be little question that companies across the board, big, small and medium, have embraced social media.
The interesting “adoption” issue is not how size affects adoption but rather type of business. Dramatic variances exist between different verticals and their adoption and use of social media. Restaurants and entertainment venues are among the strongest adopters, while auto parts and some sectors of finance are less adventurous.
Do small and larger businesses employ similar social media advertising strategies? Why or why not?
I think size does have a dramatic effect on how social media are used. Not only are larger companies able to fund more sophisticated products, but also the issues of how and where they want to interact with customers and prospects appears to be quite different from the needs of truly local SMBs.
Are there certain types of businesses (auto, clothing, etc.) that are more likely to invest in social media? Why?
Yes. There’s a strong correlation between social media use and business types.
Those most attracted are the consumer-facing, high-interaction (food and entertainment, for example). They seem to have the opportunity to drive a lot of immediate response from fans and thus seem to be the strongest adopters.
Anything else you found really interesting about the study that you think bears discussion?
Many factors contributed to the breakout years for social media in 2010-2011. These years not only saw explosive growth in social media, but also the introduction of the iPad and growth in smartphones and associated data-pack service agreements. These mobile media are moving toward and beyond the critical adoption of levels of 30 percent to 40 percent in local markets.
Social media use by local businesses appears to us to track closely with consumer adoption of mobile platforms in local markets. And social media use by consumers seems related to the ease of access to mobile platforms—notebooks, tablets, and smartphones.
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