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SMBs Love Social Media, But That Love Still Doesn’t Include Social Ads

80 percent of SMBs are on social media regularly, but they view it as a ‘free’ source of leads.

SMBs are putting more emphasis on both mobile marketing and social media as a way to drive traffic, but a report from Thrive Analytics shows that many don’t have a mobile strategy to speak of and social media ad spending is low even if its use is growing.

The survey found that 80 percent of SMBs use social media in some form, that’s 20 percent more than the amount that have a website. Those that do expect it to generate leads (70 percent) build awareness (57 percent) and engage their customers (57 percent), yet only 19 percent have ever paid for social media ads.

“Many SMBs are now considering social media a standard component of their marketing mix, since many view it as a ‘free’ source of leads,” said Jason Peaslee, managing partner of Thrive Analytics. So while SMBs are understanding the importance of social media to drive leads, they’re tending to view it as a passive, “free” resource rather than spending money on promoted ads.

Nevertheless, SMBs are still spending money on social media marketing services, according to a report from BIA/Kelsey last summer, so it’s clear that the aspect remains an important part of their targeting strategies.

Instead of ads though, their social media budgets are going towards managing their presence, something that Peaslee says they still struggle with. “About half of businesses still report that their biggest challenge with social media is the lack of time to manage social channels properly.”

SMBs’ aversion to social media sites’ ad offerings appears to be a part of a larger distaste for display ads. And as with most reasons brands and marketers of all stripes withhold ad dollars: they’re not sure if they work or not.

The survey found that many SMBs don’t have a solid way of measuring the effectiveness of their ads. Only 38 percent use foot traffic as a metric for ad reach and almost 75 percent don’t use any sort of tech to track what drove customers to the store.

Finally, mobile marketing also shows some discrepancies between how important SMBs think it is and what they’re actually doing about it. Almost 50 percent of respondents thought that mobile was the biggest area of growth in terms of marketing and driving foot traffic, but the same percentage had no mobile optimized site or app and most had no mobile strategy to speak of.

Mobile payment use is also fairly low (but growing) among SMBs with 38 percent accepting them. The respondents did understand their potential and 23 percent said that mobile payments would factor into their success in the future.

Aside from these disparities, overall local marketing spend is strong for SMBs 42 percent said it is a priority, up from 35 percent in Thrive’s report from last year. “Digital media continues to be SMBs’ main focus when it comes to marketing, especially with newer businesses.” said Peaslee. “As SMBs view local advertising as a more strategic source of leads and essential for keeping up with competition, more dollars are being invested across a growing number of channels.”

Other findings from the study include:

  • SMBs will allocate on average 14-15 percent of their total expenses to marketing related activities.
  • Currently 36 percent of businesses utilize online ratings and reviews, marking a modest 20 percent year-over-year growth rate.
  • SMBs biggest hindrances to growth include lack of funding (43 percent), lack of resources (32 percent), and not investing enough in marketing (29 percent).
About The Author
Daniel Parisi Daniel Parisi @daniel_parisi_

Daniel Parisi is a New York City-based writer and recent graduate of the University of Maryland. Daniel specializes in coverage of mobile payments, loyalty programs, and the Internet of Things.