Report: What Local Merchants Are Missing With Social Media

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Two-thirds of small local businesses are using social media for marketing. Yet despite this broad adoption, and an overall good perception of digital marketing effectiveness, results with social have been disappointing.

Street Fight Insights teamed up with Thrive Analytics to survey 500+ small business owners in the U.S. to understand their use of and attitudes toward digital marketing and e-commerce. To better serve these local merchants, companies in the value chain of the connected local economy should help them re-set expectations and fine-tune their social media marketing programs.

Sixty-six percent of small merchants told us they used social media for marketing, and over half of those that did used Facebook. LinkedIn and Twitter were also cited by roughly a quarter of respondents.

But similar to other digital media, small business marketers complained of the time it takes to manage programs and campaigns. And a shocking 38% said they had not seen any return on the money they’d spent on social media. What’s the problem?


Part of it is a disconnect between marketers’ expectations and social media strengths. The figure below illustrates what local merchants hoped to accomplish: their top priority was lead generation, followed by brand awareness and customer engagement. A fairly large number (37%) seemed to be using the medium without having any expectations at all.



What social media is good for
Consider what makes social unique among other digital or print media. The big brands I’ve worked with characterize the value of social media along the following lines:

  • Authenticity – either their own voice, or, better yet, advice from a friend
  • Viral pass-along – cultivating brand advocates as a channel for marketing
  • Using the social graph – better message targeting based on interests as well as activities and demographics
  • Engagement – as a medium, social blends content and communication
  • Mobile access – where users spend so much time

That’s the ideal. The reality of how marketers large and small use social media regularly boils down to:

  • A mediocre substitute for a home page
  • Cheap display inventory
  • “Social commerce” that fueled an overuse of daily deals, but also tapped into the productive utility of user reviews
  • House blogs and content marketing with limited reach
  • Customer service for companies with massive resources
  • In-app promotion and upselling for games

In theory, new customer leads and awareness will result from customers who act as brand advocates and pass the word via social media. And recurring customer value through repeat sales will arise from constant engagement. But that doesn’t sound like “friending” a stripped-down company page.

Making social pay off for local merchants
Yes, Facebook is also a big part of the problem. To improve its user experience – not to mention sell more ads – the big social network has throttled back the frequency of company page-driven communications. Although over half of small merchants we surveyed were updating their social media pages on a daily or weekly basis, only 20% were promoting their Facebook page via paid campaigns. With Facebook’s new rules, that means a lot of that work is going for nothing.

However, if you have to pay for Facebook ads, at least there are signs those ads are improving. Facebook just announced it was starting a limited trial of what it calls lead ads. These are mobile ads that make it easy for users to fill out a form. They promise to be a boon for local services for appointment booking. Earlier this spring, Facebook added click to call ads that are targetable by neighborhood. On-page reviews are fine – and Facebook’s experimenting with professional restaurant reviews – but that effort is probably better focused on Yelp.

While there’s a lot of buzz about adding buy buttons to Facebook pages, it’s never been clear that customers want to actually transact in a social media environment. Previous attempts at Facebook stores failed miserably. In that respect, small business expectations for social media are correctly aligned with the top of the marketing funnel. It’s just that user engagement may migrate off the page onto an ad.

David Card is Street Fight’s director of research.

Click here to purchase a copy of The Local Merchant Report 2015. Plus: Join us for a free webinar on key insights and strategies from the report Tuesday, June 30th at 1pm ET. Register here.