Survey: Merchants Gain Social Media Sophistication, Rate it Most Effective Tactic

Local merchants we surveyed continue to rate social media as their most effective marketing tactic. They’re getting more sophisticated in how they use it, too, as they add paid campaigns, social brands other than Facebook, and video. 

Street Fight will be releasing a series of research reports based on the survey of local small businesses we recently completed. We showed preliminary results to executives that attended our Rocky Mountain Retreat, and we’ll do analysis posts like these throughout the first half of the year. In February, we surveyed just over 250 owner/operators and decision makers at U.S. small businesses across a variety of industries – including retail, financial services, business or personal services, restaurants, etc. – about their marketing and e-commerce efforts. About one-third of the respondents were sole proprietors, and another third had 20 or more employees. Nearly 30% said they spent over $25,000 a year on marketing.

Over the past several years, Street Fight has seen these local merchants shift their marketing budgets away from traditional media like newspapers, print Yellow Pages, and local broadcast towards digital marketing and media. That trend continues. Nearly three-quarters of the businesses we surveyed said they used social media regularly, and half used e-mail. Only a quarter said they used local TV or radio ads, and one in five used print newspapers or shopping flyers.

That’s because they find digital marketing more effective. As shown in the figure above, when asked to rate their top three most effective tactics, most cited social media, with many also listing email. All told, local merchants continue to rate digital higher than traditional, an attitude we’ve seen in previous Street Fight surveys over the past few years. That’s in contrast with big brands and multi-store retailers that, though they rate email highly, reveal a certain inertia in hewing to traditional media. To be sure, both small and large local marketers say they’re increasing their digital spending.

Another trend illustrated by the latest local merchant survey is an apparent drop-off in the perceived effectiveness of search engine optimization. Eighteen months ago, small businesses had SEO right up there with social and email marketing, but it seems to have moved back in the pack recently. This is likely due to shifting consumer search behavior and the rise of mobile search, or it could be a result of an increasing focus on online-to-offline conversion. All of these are tricky to address, but present opportunities for suppliers of marketing technology and services. Half of the local merchants we surveyed said SEO was where they needed the most help, and another third called out paid search. Social media marketing was cited by fewer than 10%, though 29% mentioned reputation monitoring and review generation.

That level of detail on user-generated content illustrates their growing sophistication in all types of social media marketing. As shown in the figure above, our recent survey reveals a broader use of the medium, including more variety in platforms and formats. For example, in our 2014-15 Local Merchant Report, fewer than 20% paid for Facebook ads, while this year that figure doubled. And, as illustrated, they rated it their second most effective social media tactic. Compared to earlier research, Pinterest and LinkedIn usage appears about the same, but Twitter is up, and Instagram has exploded. Marketing via messaging is only just starting.

Other social media tidbits from the survey include:

• Another sign of sophistication is a shift in expectations for social media marketing. Not too long ago, local merchants thought social media was going to be a big lead generator. They’ve correctly tempered that: their top social marketing objective by a large margin is brand awareness, though some still expect leads or actual sales. They don’t seem to expect to use it for customer support or retention, however.
• Social media tools remain the top means of managing marketing and advertising for local merchants. That’s true for those with larger marketing budgets, though over half of them also use a digital dashboard for ROI analysis.

Agencies, publishers, and other marketing suppliers should zero in on social media as local merchants’ top digital and overall marketing tactic. Helping them integrate it with email and direct mail via synchronized campaigns could be a big opportunity, and they’ve explicitly identified review generation and reputation management as areas where they need help. They appear open to solutions for converting general awareness into solid leads, and proving conversion – probably through coupons rather than beacons or behavior modeling based on location data.

David Card is Street Fight’s director of research.