Local Merchants Highly Dependent on Social Media at Time of Uncertainty for Platforms | Street Fight

Local Merchants Highly Dependent on Social Media at Time of Uncertainty for Platforms

Local Merchants Highly Dependent on Social Media at Time of Uncertainty for Platforms

Local merchants have become increasingly dependent on social media for marketing and advertising. As Street Fight prepares the survey for its annual Local Merchant Report, we’ll be looking to see if that’s still the case, or if privacy, fake news, and brand protection controversies have diminished its appeal. We’ll also be checking in on spending, marketing management tool adoption, and new technologies and tactics.

I’m always looking for good sources of customer information, and in preparing our local merchant survey, I encountered a cool data site from Womply, an SaaS company that sells marketing and management tools for small businesses and marketing services for credit card processors. Using data from its 40 processor partners, Womply’s Small Business Almanac aggregates monthly sales data from millions of small local merchants in the U.S. Companies can use it to take the pulse of business conditions in 18 industry categories across all 50 states, to better understand trends, and to prioritize their own sales and marketing efforts. For example, the Almanac says the average U.S. small business had about $49,000 in monthly revenue in Q1, with bars at $31,000, restaurants at $54,000, and fast food at $29,000. Health and beauty businesses, at $14,000, were much smaller. You can look at daily revenue, too.

Naturally, this variation in revenue alone affects the local merchant’s ability to spend on marketing and commerce tech, in addition to industry, location, and variations in customer type. Last year, of the 250 local merchants we surveyed, a little over one third said they would spend less than $1,000 on marketing for the year. At the same time, about 30% of those small businesses spend over $25,000. They’re the best prospects, as they use the broadest variety of marketing tactics, and more of them are likely to increase spending, as shown in the figure below.

But we also saw a pattern of spending momentum. That is, we observed a steady progression of that tendency—the more they spend, the more they said they were likely to increase spending. This implies that suppliers that can hook a customer with a relatively low-cost marketing program can grow along with them by selling additional complementary services.

Due to their budgets, time, and small or non-existent marketing staffs, local merchants are rarely considered early adopters of new technology. So while it may be counterintuitive, in fact local merchants took to digital marketing and advertising faster and more aggressively than multi-location brands. Nearly three quarters (and 86% of the ones with larger budgets) use Facebook or other social media for marketing regularly, and the number that used paid Facebook ads has doubled in the past few years. As shown below, most local merchants rate social media their most effect tactic.

Drilling into their use of social media, we found that a similar 40% rated a free Facebook company page and paid Facebook advertising as their most effective social media tactic, with Instagram, YouTube, or Facebook videos, and Twitter not far behind. Well over half of the local merchants with larger budgets had paid Facebook ads at the top. That’s a pretty heavy dependence on a company that’s been in the news for all the wrong reasons lately, and Street Fight will be surveying customers large and small on whether that’s affected their attitudes toward Facebook as a marketing platform.

We’ll also survey local merchants about the following:

  • Interest in the SMB OS concept. Suppliers are offering SaaS-based tools that integrate the “tech stacks” of marketing with back-office functions like accounting, billing, staff scheduling, and the like. Such solutions promise ease of integration and analysis but could lead to inferior individual services and vendor lock-in.
  • New technologies on their radar. Last year, local merchants told us they were highly interested in mobile push marketing, real-time location data, and mobile payments and wallets. Adoption of all three has been sluggish, but we’ll see if momentum is building, or if some other technology is the shiny new thing.
  • Continued alignment with supplier priorities. Our recent vendor-focused State of Hyperlocal Report (free download here) showed that suppliers’ R&D investments were pretty much in line with customer needs and new tech interest. We’ll look for potential disconnects and opportunities.

David Card is Street Fight’s director of research.

Click here for more on the Street Fight Insights report, The Local Merchant Report 2017.