Understanding Facebook’s Place as a Small Business Marketing Vehicle

In this regular Street Fight feature, local marketing gurus David Mihm and Mike Blumenthal kick around some of the biggest ideas affecting the local search ecosystem and the broader industry. Send us an email or leave a comment if you have specific topics that you’d like them to touch on in future columns!

David: Well, Mike, I write to you from sunny, 70-degree Portland this week. We seem to have skipped Spring and jumped straight to Summer.  How’re things in upstate New York?

Mike: Here we have bi-polar weather… warm and sunny one day and friggin’ freezing rain the next… if I wanted rain I would come your way.

David: Ha. Well, we hope not to see it again out here til the fall. Facebook seems to be having its share of sunny days–its stock reached an all-time high this past week, it’s bringing millions of small business advertisers onboard every quarter, and Mark Zuckerberg’s trip around the country has gotten positive attention.

Mike: No rain until Fall? I don’t believe you.

David: There have been a number of studies and articles about small businesses’ relationship with Facebook in the last couple weeks as well, which I thought we might discuss in this installment.

Mike: Facebook seems to be doing better than Yelp on all fronts; stock price, ability to attract and keep SMBs AND, at least recently, the ability to generate significantly more leads than Yelp in the local world I look at. While they are not yet anywhere near Google’s ability to generate leads, I have, over the past 6 months, started to see them surpassing Yelp in driving local key performance indicators on the pre-sale side.

David: Yes, it appears Yelp is in a permanent winter of discontent that began in 2014, as Google and Facebook continue to eat the lion’s share of paid local advertising.

Mike: I have been on the hunt for successful Yelp SMB advertisers but have yet to locate anyone. Perhaps someone reading this can send a few my way so I can analyze them.

David: But back to Facebook. 🙂

Mike: One thing that I often see in some of the conflicting SMB surveys around Facebook is the high willingness to use but the often low reported return on spend. Do you have a sense of why that is? Do you think it a function of the surveys or of SMB expectations and behaviors?

David: Facebook has rightly taken a prime position in the marketing toolkit for business owners. As social media has fragmented, it remains the most frequently-used player (even when Facebook’s own Instagram offers better organic visibility to many sizes of business in many industries).

I think the frustration with ROI is largely one of expectations. Thinking back to some of our earliest Local U events, the lure of the Facebook “Like” was just overpowering in the late 2000’s. Business owners felt that if they got someone to Like them, it gave them a direct channel to communicate with those customers.

The reality today, according to most studies, is that business post visibility is a single-digit percentage. While I expect most business owners realize that Facebook is filtering their content at some level, I doubt many of them would believe just how filtered it is.

Consequently, business owners are understandably frustrated when only one or two customers see, let alone comment on, their average post.

Mike: And yet with some engagement and a small amount of post boosting, I have seen a number of SMB clients get more new leads from Facebook than Yelp. Ah, the power of scale.

David: Well, that’s the key. I agree, the ability to overlay geographics, demographics, and lookalike audiences makes the Venn diagram of customers you can reach on Facebook amazingly tight. As long as business owners go into Facebook with the expectation that success won’t be free, but can come quickly with a modest budget, the percentage that perceive positive ROI from the time and money they spend on the platform will rise.

Mike: SMBs need to better understand that the new “sales funnel” is no longer just pre-sale but expands and scales into the post sale arena as well and creates a virtuous cycle. If they understood that they could better align their expectations, expenditures and successes. This graphic shows it well.  

David: Right. Greg Sterling (and others) have referred to this new funnel as a marketing pretzel.  From that standpoint, I don’t know that Facebook necessarily requires a cohesive “strategy,” but a conceptual awareness of its highest-and-best organic use as a loyalty/advocacy platform (instead of a leads platform) would also align expectations closer to reality.

Mike: Clearly though Facebook is adding functionality to move into the pre-sale side of the funnel with things like enabling some users to order food directly from its app right from the main navigation. They seem very focused on specific transactional opportunities as they compete for share “above the fold” in the funnel.

David: They’re no dummies–they know that’s where small business demand is highest–new business and new customers. The transactions Facebook facilitates surely have immediate impact for the limited set of businesses for which they’re enabled.

I do find it strange, though, that they still haven’t made local discovery a core part of the mobile experience. There’s so much opportunity for them given the tremendous amount of data they’ve collected over the years (both GPS via Messenger and affinity via friendships and reviews).

Google may always be better for long-tail searches (or at least for the foreseeable future), but for all kinds of popular consumer categories, Facebook’s gotta have at least as good, if not better, results.

Mike: On the review front, Facebook has made significant gains vis a vis Yelp and is mentioned by many consumers as their preferred site to leave reviews.

I would think that Facebook’s gain in the local discovery area might negatively impact Yelp more than Google. Although Google is probably looking over their shoulder as well. I think you will see significant new SMB-focused products being released by Google over the next 3-6 months.

For agencies and small businesses I think the lesson here is to leverage the tools at hand and understand how the tools were designed to be used. If you use Facebook the way it is currently intended to be used you can achieve gains inexpensively but probably not freely.

After more than a decade in local search, David Mihm now runs Tidings, an email newsletter platform for small businesses that leverages their everyday social media activity, and his own weekly newsletter, Minutive. In 2012, he sold his former company GetListed.org to Moz, helping over 3 million businesses get better visibility in Google and other search engines. Along with Mike, he’s a co-founder of Local University. 

Mike Blumenthal is a co-founder of GetFiveStars, a feedback and reputation platform, and LocalU, which provides small business and agency training in sustainable local search marketing. His motto: All Local All the Time.  He writes at his blog and does a twice a week podcast about Local marketing. 

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Got an idea for what you want Mike and David to discuss next time? Send it to either [email protected] or [email protected], or just leave a comment below and we’ll put it in the hopper!