JOINING THE SOCIAL BANDWAGON: A BENCHMARK OF SOCIAL MEDIA USE AMONG LOCAL SMALL AND MEDIUM SIZED BUSINESSES

1. Joining the Social
Bandwagon: A Benchmark
of Social Media Use
Among Local Small and
Medium Sized Businesses
By
Ali McGee Kelly
June 14, 2013
MANAGEMENT DOSSIER/CAPSTONE: BUSM 650

2. Quick History
• Businesses and the Internet – originally just
web pages & contact information
• Like virtual Yellow Pages
• Internet gradually became more interactive

3. Internet Meets Social
• Instant Messaging – ex: AOL IM
• Chat Rooms
• Message Forums
Mid 90’s
• Social networks emerge
• Businesses did not begin to use social
networks for business until after Y2K

4. Web 2.0 - Social Networks

5. Why Should Businesses be
Interested in Social Media?
•
•
•
•
Two-way interactions with consumers
Enables more accessibility and transparency
Inexpensive Marketing, CRM, PR, and WOM
HUGE audience
– More than 850 M people use Facebook each day!
– Twitter has over 140 M active users
– LinkedIn: over 200 M active & educated users
– Pinterest has a growth rate of over 1000%!

6. The Nielson Report, 2012

7. The Smartest
Advertising Dollars
You Can Spend.
• Facebook charges
$8.00 for every 1,000
views of a sponsored
story.
•$1 Million will buy
125 Million views.
•What else can $1
Million buy?
•
Two 30 second commercials on prime-time television (American Idol slot
on the US Network Fox, 19.5 million viewers).
•
6.5 color page ads on People Magazine. (Circulation 3.5 million).
•
10 full page color ads on the New York Times newspaper (Week day print
circulation around 780, 000).

8. About Facebook
• FB “is” social media to most people.
• On the forefront of social media marketing.
• Originally an online community of college
students.
• Now, used by both personal users and
businesses.
• “Likes,” “Friends,” “Fans”

9. About Twitter
•
•
•
•
•
•
•
Microblogging Site
140 characters & spaces per “tweet”
# Hashtags
@ Mentions
Mostly public accounts
Pay for promoted tweets
“Tweets,” “Retweets,” “Followers.”

10. About LinkedIn
• Oldest of the popular social networks
• Used by professionals for networking and job
searches
• Newsfeed like Facebook
• Friends are called “Connections”

11. About Pinterest
• One of the newest social networks
(other than Google +)
• Originally invite-only
• Users “pin” pictures and video to pin “boards”
of different themes
• Followers may “like,” “comment,” or “repin.”
• Recently allowed business pages.
• Enormous growth

12. The Problem
Small Business & Social Media
• Small Budgets and less resources to commit
• Untrained – don’t know how to best use social
media
• Inconsistent advice from “experts”
• Difficult to measure effectiveness
without expensive software
• Difficult to calculate ROI

13. About This Study
• Set a benchmark of how Central KY
businesses are using social media
• Contribute to the literature on
social media
• Provide baseline data for future
research
• Demonstrate virtual observation as
a legitimate research method.

14. Research Questions & Findings
• Q1: Does the category or nature of a business
correlate with the level of engagement
demonstrated in social media?
• H1: Restaurant & Entertainment businesses
would have higher levels of engagement.
• Result: Not enough of this type of business in
the sample to make a conclusion, but:

15. Research Questions & Findings
• Q1 Results
Scale: 3-15
Scale: 2-10
All Low

16. Research Questions & Findings
• Q1 Results
Scale: 2-10
• An average was taken for the scores in each
type of engagement, then added for a total
score.
• Retail appears to engage fans more than other
types of businesses on Facebook & Pinterest

17. Research Questions & Findings
• Q2: Does a higher number of followers and
fans correlate to higher levels of customer
engagement?
• H1: No
• Result: Yes

18. Research Questions & Findings
• Q2 Results
For Facebook

19. Research Questions & Findings
• Q2 Results
For Twitter

20. Research Questions & Findings
• Q2 Results
For Pinterest

21. Research Questions & Findings
• Q2 Results
Total
• Positive correlation with all comparisons
• Highest correlations with Twitter followers
and RTs & Pinterest Followers and Likes.

22. Research Questions & Findings
• Q3: Does the frequency of content correlate
to higher customer engagement?
• H3: Yes
• Result: Confirmed

23. Research Questions & Findings
• Q3 Results
For Facebook

24. Research Questions & Findings
• Q3 Results
For Twitter

25. Research Questions & Findings
• Q3 Results
For Pinterest

26. Research Questions & Findings
• Q3 Results
Total
• All positive correlations
• Pinterest shows much higher correlation
coefficients overall than Facebook or Twitter

27. Research Questions & Findings
• Q4: Does the frequency of content correlate
to a higher number of followers?
• H4: Yes
• Result: Confirmed

28. Research Questions & Findings
• Q4 Results:
• All Positive
correlations

29. Research Questions & Findings
• Q4 Results:
• Pinterest, again, appears to have a stronger
correlation between the variables than
Facebook or Twitter.

30. Research Questions & Findings
• Correlation
coefficients
for all
variables,
Q2-Q4
• Pinterest is
a strong
leader

31. Research Questions & Findings
• Q5: Among CRM, marketing, customer
service, PR, and HR, what are local SMEs’
primary uses of social media?
• H5: There would be a higher occurrence of
use for marketing than of any of the other
potential uses for social media.
• Result: Confirmed

32. Research Questions & Findings
• Q5 Results
• Marketing activity was observed more than
any other business activity

33. Research Questions & Findings
• Q6: Have local SMEs adopted Pinterest yet as
a social media tool to attract and engage
customers?
• H6: Not yet.
• Result: Confirmed

34. Research Questions & Findings
• Q6 Results
• Only 16%
of local small
businesses have
a Pinterest
profile.
• While it was expected for fewer businesses to use Pinterest,
this number is much lower than any other network.
• Only two of the eight businesses were professional servicebased.

35. Findings & Conclusions
• Central KY businesses show less use of social
media networks than expected.
• Slow acceptance of Pinterest, and lower than
average usage of Twitter.
• 87% of Fortune 100 businesses use Twitter

36. Findings & Conclusions
• However, Pinterest is showing huge growth in
users, and the highest correlation with
follower engagement than Facebook and
Twitter.

37. Findings & Conclusions
• Data on the most engaging type of business
needs further study due to the low number of
restaurant and entertainment businesses
randomly selected for the sample.
• Many businesses seemed to be unaware of
the many potential uses for social media such
as customer service.

38. Five Recommendations
1. It is impossible to know if you are missing any
business leads on social media if you do not
have a presence there. Businesses should at
least create a profile with contact
information on the major social networks so
potential customers have the opportunity to
find the business and make contact if they
wish. Mere virtual presence is better than no
presence according to Naylor et al (2012).

39. Five Recommendations
2. Professional service-based businesses should
recognize that they are at a disadvantage on
social media because there are fewer
opportunities to connect with customers
with visual content like pictures and video.
There should be some focus in their social
media tactics to include visual content.

40. Five Recommendations
3. Among the three variables that
demonstrated positive correlations with each
other, businesses only have control over one:
level of activity. There is a very good chance
that increasing the frequency and quantity of
content posted on different social media
networks will lead to more followers and
more engagement from fans.

41. Five Recommendations
4. Don’t forget that social media can be used
for more than just marketing. As more (and
younger) consumers are reaching out to
businesses on social media for customer
service, businesses need to be ready to meet
that need. Social media is just that: social. It
is meant to be a place to foster relationships
and build communities, connect with existing
customers, and attract new employees.

42. Five Recommendations
5. Take another look at Pinterest. It is the fastest
growing social network. The data shows that
content on Pinterest correlates more with number
of followers and follower engagement than both
Facebook and Twitter. Businesses should consider
this and try to find a way to use Pinterest to their
advantage. Also, consider the fact that relatively
few businesses are already using Pinterest and it
could be a good strategic move to differentiate a
business compared to competitors.

43. Implications
Pinterest is on the rise.
• Fewer than expected are using Pinterest
• Pinterest has a higher correlation with
follower engagement
Therefore
• Pinterest has the potential to be a better
option for businesses than Facebook or
Twitter

44. Implications
Central Kentucky businesses have not yet
recognized the value of social media
•Lower than expected current level of use
•Have not shown that they are taking advantage
of the many uses of social media
•Social media is an increasing unavoidable
necessity in today’s economy. It is expected that
local businesses’ adoption of social media will
be increasing for the foreseeable future.

45. Closing
•
•
By way of virtual observation, this study
demonstrates that valuable data can be
collected with this method, and
that there is a vast amount of room for growth
for businesses in Central KY regarding how and
how often they use social media.