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Social Media for Small Business: A Historical Look

Social Media For Small Biz A History


This post is an edited and updated outtake of my MBA Thesis study: JOINING THE SOCIAL BANDWAGON: A BENCHMARK OF SOCIAL MEDIA USE AMONG LOCAL SMALL AND MEDIUM SIZED BUSINESSES. This piece looks at where social media fits in the history of small business marketing and why it is such a significant addition to the marketing mix.

Since its inception, small businesses have debated the value of social media and many were reluctant or slow to adopt a social media strategy or presence. Many sources show one main reason for this is the lack of a definitive way to track return on investment (ROI) (Michaelidou, Siamagka, & Christodoulides, 2011; Bulearca & Bulearca, 2010; Divol, Edelman, & Sarrazin 2012). It is difficult to connect social media activity directly to increased sales or revenue. Other published works (Holloman, 2012; Paine, 2011) detail methods to determine ROI, but they are very different from each other. There is no consistency in the advice that is out there. Businesses have tight budgets. Marketing departments have trouble selling a strategy where they cannot put the value on paper (Michaelidou, Siamagka, & Christodoulides, 2011). Other businesses that have adopted social media are using it in ways that extend beyond simple marketing. These companies say they have found some benefit in social media for managing customer relationships (CRM), competitive analysis, some aspects of SWOT analysis, customer service, public relations (PR), promoting word-of-mouth, and some aspects of human resources like recruiting.


The Problem Addressed In My Thesis Study:

One of the biggest problems for businesses interested in social media is that there are “experts” everywhere with their own blogs, websites, and consulting businesses, but no formal authority. Because of the infancy of social media for business, the existing peer-reviewed literature is minimal compared to general topics such as strategy and marketing. Much of the existing literature on specific business topics does not apply well to social media. It presents a completely different environment and dynamic. Within the literature that does exist, there is more actionable content for large organizations that have marketing departments than there is for small businesses with fewer resources. The literature needs to be expanded and updated to provide researchers with authentic, current, academic information. To do this, a benchmark needed to be established to gauge what small businesses are already doing, what social media networks they are using, how they are using them, and perhaps more importantly, where and how they are not. One of the unique aspects of studying social media use is that no human or business participation is required. Business activity on the Internet is widely observable to any person who wishes to find it. This research sought to use this method to answer these who, what, where, and how questions in order to provide a window to the social media opportunities that are underutilized, and to steer further research to find ways to make these opportunities more accessible for small businesses.



AOL Instant Messenger
In The Beginning, AOL Created Instant Messenger


Technology has drastically changed the way people live, relate, and do business, especially since the Internet became accessible and inexpensive. So began what has come to be known as the Information Age, “a period that will be characterized by the ability of individuals to transfer information freely, and to have instant access to information that would have been difficult or impossible to find previously” (Asur, 2012). In the first decade or so of the Internet, websites became a place to learn about businesses. For businesses, the focus was more on generating traffic to their website through search engine optimization (SEO). Having a website was equivalent to the old-fashioned standard of having an ad in the yellow pages. Not having a website was an indication that the business had fallen behind in embracing modern technology. The Internet had not yet provided a platform to support social networks, though. Early electronic forms of communication consisted of e-mail, chat rooms, and instant messaging services like AOL Instant Messenger. Online message forums or bulletin board systems provided the first web-based social systems, but they were dedicated to specific groups of people or topics. These boards became a new way for people to reach out and find others with similar interests. Early ways people connected to each other similarly to today’s social websites were through websites like classmates.com in 1995 and sixdegrees.com in 1997 (Foley, 2011). These were purely social, however. There was no medium that existed where businesses or brands to interact with consumers.

Businesses began to observe the Internet and the early social networks as a new opportunity to reach millions of eyeballs. Marketing departments started to try to figure out how to influence these consumers and harness this new media in a way that could create growth and increase profits. Not only that, but businesses found the Internet to be a place where they could observe competitors and how they used this new media differently and how consumers respond. A “vast amount of interaction which now goes on between individuals participating in web-based social contact or information seeking and sending behaviors has resulted in a virtual goldmine of information for those researchers who are interested in issues such as word-of-mouth, branding and the sociocultural aspects of consumer products” (Lee & Broderick, 2007). Social media as it is known now came along with the birth of Web 2.0, a new era of Internet where content was no longer solely created by businesses for consumers to see or access. The Internet became a platform where software could be built rather than installed on the PC desktop (Holloman, 2012).

Where at first, social networks existed as a medium for friends and schoolmates to communicate and share opinions, these networks quickly evolved into a place where consumers could create their own content about businesses and brands and their opinions about them. Their content became a large portion of the total amount of information available for any particular product or business. Businesses, especially large national brands, were forced into a position where they needed to counteract consumer content to preserve and try to control brand reputation. This required social interaction directly with customers. The role of social media for businesses began to expand from marketing to an opportunity for customer service, managing customer relationships, public relations, and even moved into a source for competitive analysis and human resources activity. Just like the transition from the yellow pages to web pages, companies without a Facebook page seem out of touch. In a quote from Cruz & Mendelsohn (2010), “Either they are not interested in the demographic that frequents Facebook and Twitter or they are unaware of the opportunity to get more exposure in a more interactive method.”

Not every social networking site is suitable for every type of business. This study looks at local SMEs and their use of three of the most popular social media networks: Facebook, Twitter, and LinkedIn, as well as a newer network, Pinterest. Each network fits a different type of niche in social media. This is an introductory look at these networks, their histories, and unique qualities for the layman or unfamiliar user.

Facebook

social-icons-23Facebook was founded on 2006 as a way for students at Harvard to “rate” the attractiveness of girls in other dorms. It quickly became popular as a mechanism to communicate with all friends at the school, then among many schools, and now around the world. It is a source to share pictures and videos, thoughts and opinions, and general updates about what is going on in life. People whose profiles are connected on Facebook are referred to as “friends.” Friends may indicate that they “like” the post of another person, comment on posts, or share the post with their own group of Facebook friends. These are considered interactions, which indicate the popularity of the content that was posted. Businesses, companies, and brands may also participate on Facebook by creating a “page.” Individuals can express their liking for a company or product by “liking” that page, which will then show that page’s posts on the individual’s home screen, the “Newsfeed,” which displays all of that person’s friends’ and liked pages’ content. Individuals may also like, comment, and share business page posts. Businesses seek this interaction, also called engagement. Each time a fan interacts with the brand, other people (who may not like the page) will see that their friend likes that brand or product. Businesses can also increase their visibility by purchasing ads or paying a fee for promotion of certain content.

Facebook is attractive to businesses because it has over 800 million users (The Nielson Report, 2012). In 2010, it had over three million active pages, half of which were local businesses, and twenty million people becoming fans of pages every day (Cruz & Mendelsohn, 2010). Compared to traditional forms of marketing, the cost per impression for content on Facebook is a much better use of marketing funds. Facebook is suited for businesses catering to consumers [B2C] more so than businesses that cater to other businesses [B2B] (Holloman, 2012).

UPDATED STATISTIC: As of the first Quarter, 2015, Facebook now has over 1.44 Billion active monthly users! See how quickly things change!
http://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/

Twitter

social-icons-22Twitter is a micro blogging site that launched in 2006. Postings on Twitter are called “tweets,” which may not contain more than 140 characters and spaces. Tweets use hashtags (#) to link the tweet to a trending topic. For example, if a user wanted their tweet to be connected to a topic such as the Social Media Marketing World Conference in 2015, the hashtag “#SMMW15” should be used within the tweet. Tweets can also “tag” other Twitter users by mentioning their Twitter name or handle with an “@” sign before the name. According to Twitter’s website, “Twitter connects businesses to customers in real time—and businesses use Twitter to quickly share information with people interested in their products and services, gather real-time market intelligence and feedback, and build relationships with customers, partners and influencers” (About, 2012). Twitter also has more than 500 million users, though only 140 million users who are considered active (Asur, 2012).

Businesses who use Twitter may set up custom profile pages and use any of several analytics tools to determine the effectiveness of their Twitter usage. Companies may gain increased visibility through promoted tweets, promoted accounts, and promoted trends. Twitter is popular with Fortune 100 companies. Eighty-seven per cent of Fortune 100 companies used Twitter at the time of this study (Asur, 2012).

UPDATED STATISTIC: As of the first Quarter, 2015, Twitter now has over 302 Million active monthly users!
http://www.statista.com/statistics/282087/number-of-monthly-active-twitter-users/

LinkedIn

social-icons-24LinkedIn had an earlier start than either Facebook or Twitter, in 2003, but LinkedIn has always been a more specialized social networking site, for professional users, business networking, and making professional contacts (Foley, 2011). Still, LinkedIn’s users include executives from every Fortune 500 Company, and over 85 million members total (Foley, 2011). Individual business people use LinkedIn to meet new clients, employees, and service providers, to place themselves out there for others to find, and to follow industry-related conversations among connections and LinkedIn groups (Lacho & Marinello, 2010). Many businesses post job opening on LinkedIn as well.

UPDATED STATISTIC: As of the first Quarter, 2015, LinkedIn now has over 364 Million total users, now surpassing the number of active users on Twitter!
http://www.statista.com/statistics/274050/quarterly-numbers-of-linkedin-members/

Pinterest

social-icons-25Pinterest is a more recent addition to social media. The premise of Pinterest is for users to post or “pin” photos and videos to their “board” for others to view, like, and/or re-pin. Pictures may be linked from other websites, or uploaded directly from the user’s computer or mobile device. Users typically have many different boards of various topics and categories to organize posts with related images. Pinterest began as an invite-only network, so many interested users had to linger on a waiting list until they could begin exploring the site.

As a newcomer, Pinterest has fewer subscribed users than any of the above networks, and businesses are still trying to determine if Pinterest could be of use in their social media strategy. The Nielsen Company’s 2012 report indicates that businesses would be well served to utilize Pinterest if there is enough visual content to support their type of business. Comparing 2012 to 2011, visitors to Pinterest via personal computer were up 1,047%, via mobile app rose 1,698%, and via mobile web rose 4,225% (The Nielsen Company, 2012). These increases are exponentially higher than any other social network in the report. Seventy per cent of Pinterest users are female, 86% are white, and 55% between the ages of 25 and 49 (The Nielsen Company, 2012). Pinterest just recently allowed users to create business-specific accounts. At the time of this study, Pinterest did not yet offer any sort of paid promotion, but had opened up a capability for “rich pins” that can expand and offer extra details for recipes, product pricing and availability, and movie information (Rich Pins, 2013). Pinterest now offers promoted pins (https://ads.pinterest.com/)


In this study, it was important to understand the four social networking sites in order to appreciate the many ways in which businesses can utilize them. A benchmark of what businesses in Central Kentucky, my local market, were already doing revealed significant opportunities that had not yet been seized. In future posts, I will reveal some of the interesting data that came out of the study and discuss the opportunities that many small businesses are still missing out on. 

Written by Ali McGee Kelly


Studies and reports referenced above are listed here: http://www.essentiallyali.com/references2013/


 

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