Thirty-nine percent (39%) of small business owners are seeing a return on investment from social media. That is according to a recent survey by Manta, released just last week.
Manta, an online small business community, surveyed more than 1,200 of its members to generate its quarterly Small Business Wellness Index, where these findings are from. Chart excerpt:
Now you might think that 39% isn’t so positive, if more than 60% are not seeing a return. However, let’s put it in perspective with the other findings of the survey. When you do that, the small business attitude toward social media looks far more positive.
Consider these additional findings:
- Small businesses are dedicating significant people to social media — Seventy-four percent (74%) of small businesses have at least one person dedicated to social media activities. Clearly, small business owners must think it is worthwhile to dedicate precious human resources to social media. Small businesses don’t have teams of people that they can deploy, like large corporations.
- Small businesses are spending significant time on social media — The overwhelming majority (81%) have increased the amount of time they are investing in social media or stayed the same, compared to a year ago (actually, 49% increased their time, and 32% are spending the same amount of time). Only 7% decreased the amount of time they spend on social media. So clearly, small business owners must be seeing some value if the vast majority continue investing time in social media. In a small business, time IS money. You don’t spend it without good reason.
- Small businesses plan to invest in social media for Q2 — When asked what they plan to invest in, during Q2 of 2013, social media was included along with online advertising and marketing as the second highest area. Thirty one percent plan to invest in generating sales, and 26% plan to invest dollars in online advertising/marketing/social media. By contrast, only 12% plan to invest in traditional marketing, and just 2% plan to invest in mobile.
- Some have been able to pin down a dollar return — Of those seeing a return on investment, thirty percent have achieved more than $2,000. Thirteen percent have achieved ROI of between $1,000 and $2,000.
Taken all together, it suggests that small businesses are seeing benefits, because they keep devoting the resources to social media. However, not as many have seen a clear return on investment from social media quantified in actual dollars.
Still, just because you can’t pin a dollar amount to it, doesn’t mean it is worthless. There are many activities in a business that add value but are hard to pin down in dollars.
One possibility is that small business owners are still experimenting to find what works best. After all, we know that social media is complex. Not every social site works for every business.
It takes time and knowledge — and trial and error — to figure out how to get a return on investment from social media.
Pamela Springer, CEO of Manta, notes that a shift is taking place, in her comments accompanying the release of the results. As small businesses experiment and figure out what works best for them, they will settle on activities that drive the most return for them, she observes. She says, “As a highly pragmatic and time-constrained group, small business owners are strategically adopting platforms that show real results for their business. However, social media is not a stationary phenomenon. As SMBs shift from the experimental stage to a results-focused phase, their social media usage will evolve to maximize the value.”
Other interesting factoids from the survey are that Facebook is the site small businesses have the most difficulty maintaining. LinkedIn and Twitter follow, in that order.
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Online visibility should be a main reason small businesses use social media. It is fast becoming THE way people find anything they are looking for. Without a true online presence, small businesses will get left in the dust. Thanks for your post, very very helpful!
Hi Anita, very interesting article thanks. If I understand correctly 61% have seen no return on their SM investment. And of the balance 70% have seen less than $2,000 flow into their bank account. So if we put the two together that means 88.3% have made nothing or less than 2,000. (70% of 39% = 27.3% + the original 61% = 88.3%). If that’s true, does it make a compelling case for small business to be involved in SM? I’m very doubtful! Also, they surveyed over 1,200 members but I couldn’t see anywhere the actual number of responses so I’m left uncertain about whether or not the number of respondents was sufficient to make the results indicative of the whole market. I suspect that those who had a good report to tell would be more inclined to take part, who knows? Lastly, it would be interesting to know the % that were B2B versus B2C. It seems that SMM can work well for B2C but do you have any experience of businesses that have made it work B2B? Thanks again for a very interesting article.
It’s my understanding that Manta got over 1200 responses. According to the full survey results they sent me:
There are many things it’s impossible for small businesses to place a dollar figure on, but are still valuable. Traffic back to one’s website; brand visibility and recognition; better customer satisfaction – just to name a few. For instance, my company (B2B) spends a lot of money and time on social media for those types of reasons. Even though we haven’t attached exact dollar numbers on it, it’s very valuable to my business. I know I’d need to spend a lot in advertising, for instance, to attract similar traffic, but I haven’t been able to calculate it.
Small businesses in particular often lack the software systems and the time needed to track ROI.
So I don’t agree with your conclusions. I think there’s more to the issue, and lack of specific ROI doesn’t equate to “doubtful” that it makes a compelling case.
Thanks for your comment, Tom.
Great points. thanks for balancing my perspective Anita
I guess my perspective is SMB owners (and large corporations) have been happy with 1-2% response rates. And rarely look at what you have done, Tom — flip it — are we happy with 98% failure rates?
It all depends, in my mind, in how you use those responses. 2% in direct mail can be powerful if you have a great process that keeps the customer engaged. Same thing for social media, i believe. But I like the way you think and the hard questions you ask. Thanks for reminding me to scrutinize results!
One more thing! Hey a “return on investment” indicates a profit I think (I’m no investment expert!). I.e. I invest $100 and get $110 back I’ve got a 10% ROI. Does the report above really mean a ROI in that sense or simply that some money has flowed into the bank account, regardless of whether that represents a profit or a loss? If the latter is the case then I think it may be misleading to state that 39% made a ROI. But hey, maybe I’m just being anal. Still, as a business owner I like to measure ROI rather than just sales. Best…
Great point you raise.
As I point out below under patmcgraw’s comment, ROI is not defined and could be interpreted in a number of ways.
Could you define “return on investment” in regard to this report? Does this mean that the full time employees and all those hours of work generated $2000 or generated $2000 in revenue above the costs invested?
That’s a great question. I checked the survey results that Manta sent me when writing the story, and here’re the exact questions and answers:
I am afraid they do not clarify things much. The question could be taken in a number of ways by respondents: sales, profits, or even a recoupment of expenses, I suppose.
Thanks for looking into this – greatly appreciated.
I think this points out the critical need for better tracking and measurement – and with this audience, I wouldn’t limit that to just social media. And I think this also addresses the need for marketing to step up and develop ways to capture and report this information up to senior management/ownership in order to prove their value.
Unfortunately, there still seems to be a rush to launch social media campaigns that are more about pushing out content rather than engaging the audience in a dialogue so that relevant information can be shared so that trust can be built and opportunities to work together can be identified.
We (marketers) have a lot of opportunities staring us in the face to improve performance and generate measurable results.
Great Post! I’ve recently interviewed 100+ Small Businesses and I’ve noticed that the ones having success have a clear social plan, a system in place and measure analytics. Those not having success yet are typically not engaging and pushing there product or service, thus not building a community. I’d bet with minor tweaks this number could spike!
Thanks for your comment.
My thought on this is there’s real value to be had from social media, but not for 100% of businesses. I think every small business needs to look at its own business and determine how (if at all) social media fits in with the overall marketing plan. But then, no marketing strategy/tactic in the world will be useful to 100% of businesses – it’s always going to vary. Some will get great benefits from advertising, some from email marketing, some from a network of partners or distributors, etc. It all depends on your business.
I agree that a good social media plan and analytics would help small businesses a lot — to understand what they are getting from social media and how exactly it benefits the business.
Social media is just an extension of your word of mouth marketing, which is known as a very profitable marketing approach. I’m really hoping to see this percentage increase with time because I know the 61% not getting a return have room for improvement.
I am most definitely part of that 39% Several years ago I hired a Social Media manager and have been thrilled with the investment. Almost 80% of my business comes from clients who have found me firm through social media. It is an investment, for sure, but I have found the return on that investment is significant. In addition to generating new clients, by creating a consistent social media presence I have developed a reputation among my followers as a reliable source for industry related insights and I am able to maintain engagement even when our transaction is complete. Most, if not all, of my clients remain “followers” and “friends” after we’ve placed them in new positions. This allows us to maintain a relationship with often results in future business.