Small Businesses Spend More on Social Than Any Other Media

BIA/Kelsey Survey Finds Social Is No. 1 in Usage and Spending

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Social has become the top media platform for small and medium businesses when it comes to usage and spending, according to a new report from research firm BIA/Kelsey.

The report found that 74.5% of small and medium businesses -- defined as those with fewer than 100 employees -- now use social media to advertise or promote their businesses. This is up from 71.7% last year.

Small businesses also spend an average of 21.4% of their total media budgets on social, more than on any other media platform, according to the survey. This is up from 18.9% last year.

"Social has been on a tear for about five years now, and it has gotten to the point where it is now the most-used category in terms of reach, and it also now commands the largest share of budget of all categories," said Steve Marshall, director of research at BIA/Kelsey. "Social is No. 1 in both reach and spend -- that is a first."

The survey, "Local Commerce Monitor," is now in its 18th edition. This year's report was based on an online survey of 546 small and medium businesses, conducted in July. Just over half of the businesses (52.2%) serve primarily consumers; 30.8% serve consumers and businesses equally; and 15.6% serve primarily businesses. The remainder of respondents were unsure.

In one of the key findings, small and medium businesses now use social more than any other media platform for business purposes. For example, small and medium business usage of print and outdoor advertising combined totaled just 59.3% this year, down from 63.0% last year.

In terms of spending, small and medium businesses spent a total of 18.5% of their total media budgets on print and outdoor advertising this year, down from 20.9% last year.

"What's happened is that print and outdoor together have switched positions with social in terms of reach and share of spend," Mr. Marshall said.

"Social is now the dominant media category for SMBs. It's a convenient and user-friendly platform by which they can connect with their local market. It's very inexpensive -- which is a big deal -- and there are low-participation barriers," he said, meaning just about anyone can produce a social media ad or promotion.

In terms of small and medium business usage of social-media channels for business purposes, Facebook pages came out on top (55.1%), followed by LinkedIn ads (31.0%).

However, noted Mr. Marshall, "We believe the great majority [of LinkedIn ads] are going for HR and personnel and are not designed to drive sales."

Tying for third place were Facebook ads and regular tweets or retweets on Twitter, both cited by 20.0% of respondents.

However, while small and medium businesses are embracing social media to promote their businesses, they are still not as confident about the ROI of social compared with other more established platforms.

Only 26.2% of small and medium business users of social media rated it as "extraordinary" or "excellent" in showing ROI, which was about in the middle of the pack, Mr. Marshall said. He noted that the score is a composite, taking into account 11 different social media platforms.

The top-three channels cited by small and medium businesses for delivering ROI were online banner or display ads containing video (with 59.3% of respondents giving this an "extraordinary" or "excellent" rating); streaming audio advertising (57.7%); and offers distributed on smartphones or tablets (54.0%).

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