Why small businesses are moving to social media advertising
We just did an assessment of advertising placed on social networking sites and were surprised to find that nearly 20% of all ad spending is by local businesses. Our assumption going into this research was that commercials on social networks were almost purely national. We’re estimating that local advertisers will account for about $641 million of nearly $3.3 billion this year trying to reach consumers via these sites.
It's interesting to see that small businesses already account for 20% of all social networking advertising. For a group that is continually identified as technological laggards it's a pretty eye-opening statistic. And this is ad spend, not use.
So why would technological laggards be turning to social media? I can think of a few reasons and would love your thoughts too.
1. Ease of use. Buying and placing ads is very easy on Facebook (I haven't tried it on MySpace). You can have your own ad campaign up and running in about 10 minutes from start to finish.
2. Low cost of entry. There's little at risk launching a campaign. Start with $10 or $100, you're not making a bet-the-house investment that needs to pay off. Small business wallets are typically referred to as "shallow" meaning that there isn't a lot of room for big, one-time charges, and there is greater opportunity for charging less per month over a long-term relationship. The ad platforms on soc nets fits ideally with this model.
3. Vanity/Buzz. Because the ads run where friends and family are online it can increase the cachet of the ad buy and make the SMB more "forward thinking" and progressive. The company "gets it" when running social media ads.
4. Results. Of course results are an important factor, and with 20% of social media spending coming from SMBs there must be a measurable return that keeps them spending. While I haven't seen any numbers on this it will be interesting to see how data from these investments pans out.
What else? What am I missing?
