Small Business Says Social Networking Doesn’t Work

October 15th, 2009 by Bob Bly

According to a new Citibank survey, more than three out of four small business owners have not found social networking sites to be helpful in either generating new business leads or expanding their businesses during the last year.

An article in Marketing Charts, sent to me by online media expert Sarah Stambler, reports: “Despite widespread consumer use and increasing marketing efforts on social sites among larger organizations, managers in small businesses apparently are not jumping on the (social media) bandwagon.”

Since small businesses have much smaller marketing budgets than large organizations, and since social media is supposedly free, you would think small businesses would flock to social networking sites and embrace social media marketing.

The only reason why they might NOT do so is lack of ROI: even with its low cost, if social media doesn’t generate results, small businesses are not going to use it. They simply cannot afford to waste their time or money on marketing that does not generate positive ROI.

Large organizations can get excited about social media and write articles about its importance, because large corporations often spend millions on marketing programs, like branding campaigns, that generate no discernible ROI.

Make sense? Am I right, wrong, stupid, or crazy?

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This entry was posted on Thursday, October 15th, 2009 at 8:47 am and is filed under Online Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

40 responses about “Small Business Says Social Networking Doesn’t Work”

  1. Steve Rainwater said:

    Hi Bob,

    I’m not suprised by this report because I personally don’t think social media is the right tool for generating sales / activity for many types of small business, at least in the B2B world I work in. But I think a larger principal at play here may be timing. In the B2B environment at least, this may not be a good time to credibly measure ROI for anything. Results are so unpredictable at the moment due to the place we are in economic cycles, and the particularly unnatural interventions which have occured during this economic downturn. slr

  2. Bob Bly said:

    Steve Rainwater: Oddly, when I read BtoB, it seems to me that big B2B companies are more enamored with social media than big B2C companies, though why social media is so hot in B2B is beyond me.

  3. Yolander Prinzel said:

    I would really love to know how these businesses were using social media. Social media is no different than networking in person and yet people treat it as though it’s an electronic sandwich board meant to spread their message and that’s all. You have to interact, care, be personable, have personality, and be a resource–just like when you network in person. Standing in the corner at a networking event and yelling your message just makes you look mentally deficient and it does when you do it online too.

    When used correctly, social media works. It has not, and probably will not, replaced traditional marketing methods–because it is not marketing. It’s as good if not better than traditional networking methods when used correctly because it has more reach.

    Of course, for some businesses, networking isn’t going to bring enough in sales to warrant expansion or boast huge profits, but it can for some. Others should just enjoy the couple more sales they wouldn’t normally have.

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  5. Steve Rainwater said:

    Hi Bob,

    I think you are right about the larger B2B companies being enamored with social media. I think it gives an illusion of activity and productivity they require, but perhaps very little ROI as you stated. I also think they feel better when they perceive are on the edge with the “next big thing.” Some companies I work with are smaller B2B companies trying to sell to larger ones. If they feel they should get involved in social networking at all it seems more for a concern of being left out / behind, as opposed to seeing any possibllity for quick, direct results.

    I have recently made a friend impatient with me because he wants me to initiate a social networking project with one of his B2C clients and while I trust his judgement as a professional in wanting to do something good for his client, I do not agree with him about the potential ROI, i.e. when they pay me, I don’t think they will be getting value, so I have avoided follow up on this. slr

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  10. Michael said:

    Interesting article, thank You. I’ve made a Russian translation of it and made a post in my Livejournal. Probably we’ll get an answer whether Russian small busines go on in social net marketing or not.

    The post is here

    http://mythos-mb.livejournal.com/20736.html

  11. Henry said:

    I just wrote a post about social media in business yesterday.

    My argument is that the best way to use social media for business doesn’t even require you to be on social media sites.

    Just offer exceptional products with remarkable customer service. If you get those right then people will be telling others.. on the social media sites and everywhere else.

    I think Social Media can help establish authority and knowledge, but it’s not a replacement for good business.

    If you’re looking for measurable ROI you need real direct marketing.

  12. Bob Bly said:

    Henry: it would seem you could get better results being more proactive. What you say is fine as far as it goes. But Ashton Kutcher has a million followers on Twitter. If he tweets about his latest movie, don’t you think that could get more buzz going than NOT being on Twitter?

  13. Henry said:

    Bob,

    Yes, you can improve good results by being proactive on twitter and facebook. But you need to have proven your value first.

    Ashton had a million fans long before he joined Twiter. He just got them all together in the same place.

    My guess is not many people heard of him for the first time because of Twitter. The new fans heard of him because he was already “newsworthy.”

    Build value first then your worth being followed (or friended or connected)

  14. Briana said:

    Interesting… Interesting…I own a social media marketing company and I would like to add some comments on this topic… I think small businesses don’t understand the impact of social media marketing just yet, they think that by just putting up a profile of themselves they are going to generate leads..WRONG! I agree with Yolander completely! It does work, I have seen clients and prospect generate leads and closed deals from Facebook and their blog page, which is proof enough. I think the real issue is small businesses think it is a fad and will fade quickly, but again I disagree. It is definitely not something that works over night, but neither does traditional marketing efforts like direct mail. It is a tool that SHOULD be used to build brand awareness and network with clients and prospects. But patience and consistency is a must have! It’s just like with TV advertisements unless you are on the super bowl, your commercial doesn’t get recognized the first few times it is viewed by the consumer… it has to run over and over. Or joining a networking group, you don’t get a referral the first day you attend. Social Networking needs strategy, focus and needs to be put into the Marketing Mix. Its relationship building and word of mouth marketing applied to the Internet.
    Thanks for the opportunity!

  15. Wendy Sullivan said:

    Social media is not the be-all. It is merely a small part of any marketing campaign. A small business can have fliers printed up to hand out, but why not offer the same deal via a link on a social network?

    For businesses to believe that all they need is social media is a fallacy. It’s like dieting – everything in moderation.

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  17. Sheryl Tuttle said:

    What a great post. Social media certainly does seem to be all the buzz. I do outbound calling campaigns helping clients fill their sales pipeline, and while I embrace social media, I am curious about the future and how it will change outbound efforts.

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  19. Phil Wrzesinski said:

    Bob,
    The key to any and all marketing is in doing it right. Social Media such as Facebook, Twitter and blogs CAN bring you new business if you use them right. However, as with most things in this world, we are always trading time for money.

    Facebook and Twitter, because they are all about relationships, take time to build those relationships to the point of being able to do business. I think the survey mostly shows the impatience of small business owners to first research how to use the media correctly, second use it correctly, and third be patient enough to allow it to work.

    And this isn’t just exclusive to social media. If you ask 20 small businesses what marketing works best you’ll get 20 different answers because most marketers have no real clue how advertising works differently in different media.

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  21. Dr. George said:

    I think sometimes small businesses expect results from social media right away. That isn’t going to happen. It takes time to build a following.

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  25. Jess Sloss said:

    Most small businesses still believe that Social Media is (as one small busines owner put it to me) “Smoke and Mirrors and all that mumbo jumbo”

    I think they’re missing the boat.

    I truly believe that Social Media is the biggest opportunity for many small businesses. Most small businesses are based on relationships, a trust that has built up through shared personal experiences between the owner/operator and the customer.

    Social media offers businesses a way to use their personality and relationship building skills at scale.

    I work with a small team of media creators that exits ONLY because of social media. It’s what got us rolling, helped us make connections and build relationships. At the end of the day, it’s those relationships that bring in the sales, but it was ‘social media’ that got us those relationships.

    Cheers.

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  27. Filippos Koulyras said:

    I would like to know a bit more about the term small businesses. What is the definition and where is the border betwwen a small and a big business or company. Any numerics?

  28. Ash said:

    Of course, it doesn’t work. Networking is about expanding the possibilities of getting further in your career. In other words, you are only trying to make ONE sale–and that is you getting a better job, advancing your career, schmoozing, etc.

    Networking is NOT about constantly making new sales like selling tires, your consulting services, your product or whatever. Networking is about making one sale—YOU.

    People have totally missed the point of networking.

    If you want to sell a product or service, you should advertise.

    If you want to connect with people who are going to advance your career, then network.

    Social networking is not different.

  29. Nancy said:

    Anecdotally, as a former small B2C business owner, my blog, e-mail newsletters and twitter were transformative. I stopped nearly all other marketing.

  30. Victoria72146 said:

    Will someone please SHOW ME how social media has produced a client, an account or a project for their business. All the talk is about how it “works” and no substantiation. And, I don’t mean isolated situations where nerds are hiring other nerds to expound on the wonderousness of social media.

    As a marketing consultant, I work in the predictable and measurable. My small business clients can’t afford to spend hours and hours tweeting and making “friends” in far flung places. We have to invest in the sure thing, track the results, and refine our efforts. Social media hasn’t produced much in the way of results, as far as I can see.

    It IS NOT like networking, where you meet people face to face…as in human contact. Studies show that only 7% of communication is made of what you say. The rest is tone, body language, facial expression, etc. With real world networking you can establish actual relationships that lead to a referral or a client.

    I feel a like the little kid who shouted out “the emperor has no clothes!” Social media is going to prove to be the 21st Century’s equivilent of Salem Witch Trials, McCarthyism, the Red Scare, Terrorism, and Satanic ritual abuse. Prove me wrong, I’d love to hear it.

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