Digital Marketing, Clutch Report

Small Business Digital Marketing & Social Media Habits in 2016: A Survey

March 22, 2016

by Sarah Anyan

Product Manager

How important is digital marketing for small businesses? What role does social media play in small businesses’ marketing strategies?

Clutch surveyed 352 owners and managers of small businesses in the US to determine how they incorporate advertising and marketing into their business plans.

In particular, the study explores

  1. Impressions of digital marketing effectiveness in the small business market.
  2. Small business’ digital marketing habits and priority channels.
  3. Why small businesses focus on social media the most to fulfill digital marketing goals.
  4. Social media habits and best practices for small businesses.

The majority of survey respondents are businesses with 1-10 employees and less than $1 million in annual revenue, which matches the makeup of the 2013 US Census Bureau data on small businesses.


Small Businesses Do Not Budget Enough For Advertising and Marketing

Annual spending on advertising and marketing remains low in the small business market, with 69 percent dedicating less than $10,000 in 2015 and only 22 percent plan to increase their advertising and marketing budget in 2016.

change in advertising and marketing spend 2015 to 2016  - Clutch Small Business Survey 2016

Small businesses’ spending patterns for advertising and marketing, while low, are a product of their environment. According to US Census Bureau data, small businesses with 1-10 employees usually net less than $1 million in total annual revenue. Smaller budgets mean stricter business policies on spending, and resources for advertising and marketing often are cut first.

“Most small businesses seem to cut their marketing budget first. But, in reality, they should be increasing it. It’s actually very easy to avoid going over budget when it comes to marketing because the results of different marketing efforts are easy to measure. For example, if you start a paid social media advertising campaign but realize follower engagement has not changed, you can shut it down quickly. You can see where your money is going and scale from there.”
Marty McDonald, Co-founder and CEO, Bad Rhino

Two factors influence small businesses’ advertising and marketing spending patterns: (1) not realizing how advertising and marketing can benefit them and (2) not knowing how to develop an effective strategy.

“I recommend that a business put 10 percent of its total revenue toward marketing. And, if they don’t, they’re holding business back. … Educating small business owners about marketing and showing them how to measure the success of their campaigns is the only way to increase the budget.”
Joshua Dirks, Co-founder and CEO, Project Bionic

Unfortunately, our study shows that nearly 60 percent of small businesses plan to maintain their current spending on advertising and marketing in 2016 and 13 percent will actually decrease their budget.

What budgeting strategies should small business implement to ensure advertising and marketing remains a priority?

 1.) Understand what success means to your business.

The amount of money needed to implement effective advertising and marketing strategies depends on your business goals. Does the small business want to grow its email list? Attract more customers? Build brand awareness? Increase sales and profits?

“Most small business owners, first, need to define what success would look like for their business, and, second, need to plan how to measure results.”
Joshua Dirks

2.) Test different advertising and marketing strategies to see which are most effective and thus should receive the most financial attention.

“Test and then test some more. … It’s easy to spend a couple hundred dollars to find out whether your efforts generate good returns. The testing process allows you to learn what works and find ways to improve.”
Steve Pearson, CEO, Friendemic

3.) Understand what your audience wants the most, and focus your advertising and marketing strategy on fulfilling their wishes.

Planning an advertising and marketing strategy based on your business’ key audience will keep expenditures low.

“It’s important to produce content that your audience actually wants to see and distribute on their channels. This is important for small businesses with tight budgets that cannot afford to waste marketing spend.”
Anthony Gaenzle, Owner, AG Integrated Marketing Strategists

Many Small Businesses Still Forgo Digital Marketing

Small business commitment to digital marketing remains low. Less than half of small businesses, 44 percent, engage in digital marketing activities, which include search engine optimization (SEO), social media, paid online advertising, email marketing, content marketing, and company website and mobile app usage.

digital marketing engagement - Clutch Small Business Survey 2016

As more people look to the Internet to find products and services and answer questions, traditional marketing, on its own, has become less effective. In fact, a 2015 survey by the Halverson Group on behalf of IZEA found that paid social media advertising is more effective than traditional marketing.

“It’s really sad that the most powerful marketing leap in our history has gone under utilized by the very people who have the most to gain.”
Joshua Dirks

“Small businesses need to understand the value of digital. Passing out flyers can be expensive, and word of mouth is great, but it only gets you so far. Digital can be affordable and lead to growth in website traffic, brand recognition, search rankings, and sales.”
Anthony Gaenzle

Industry leaders posit that low or nonexistent engagement in digital marketing in the small business community is a product of the overwhelming nature of new digital technologies.

“For many small business owners, digital marketing is intimidating. If you’re not a digital native, or if it’s not something you grew up with, it can be too much.”
Steve Pearson

In reality, digital marketing is easier than most people think. Services offer easy-to-use software and tools for creating and managing email newsletters, building websites and mobile apps, scheduling social media posts, and tracking relevant metrics.

“Most digital marketing platforms offer business owners a self-serve method, but many people don’t take the time to educate themselves. … They are sitting on the sidelines, missing out on what could have been a boon for their business.”
Joshua Dirks

Impending growth is evident in the small business digital marketing space. In 2016 alone, an additional 18 percent of small businesses plan to engage in digital marketing activities. And, by 2017 or later 70 percent plan to implement a digital marketing strategy.

digital marketing adoption trends - Clutch Small Business Survey 2016

Digital marketing opens up many opportunities for small businesses.

1.) Small businesses gain a competitive advantage when potential customers can find them online, and this, in turn, can increase sales.

Let’s say you own a mom-and-pop pizza restaurant in Washington, DC. In order to compete with the large chains that populate the area, such as Domino’s, Papa John’s, or Pizza Hut, you need to be found online easily when the hungry denizen searches for nearby pizza shops on a smartphone.

“A large percentage of local businesses don’t understand that digital marketing can lead to their business being found over the competition. A pizza joint may have the best pizza in town, but if their website and other digital touches aren’t optimized for search, the competition will be the one getting your business.” – Anthony Gaenzle

2.) Small businesses can target a niche audience easily and tailor their activities to meet specific needs.

The ability to target a particular audience facilitates the formation of trusting relationships between a brand and its customers, as well as reduces the cost of marketing overall. Less money is wasted distributing content, products, and services to uninterested people and more time is spent building relationships with engaged parties.

Small businesses in particular have strict targeting needs because they often cater to a single geographic location or a niche interest group.

“An example of a local business is a car dealership that does most of its business within 35 miles of the dealership. This pool of potential customers is often difficult to target. But, if a business uses social media, it can target people who live within a certain radius of the dealership only.”
Steve Pearson

3.) Digital marketing efforts are easy to track, making it simple determine a specific strategy’s effectiveness.

“A/B testing can be done to understand what marketing messages work with a business’ target consumer groups. This can save a business a lot of money and still result in better, more targeted leads.”
Joshua Dirks

Small Businesses Say Digital Marketing Correlates With Business Success

Small businesses agree that digital marketing is imperative to business success, and they have faith in their ability to execute an effective strategy.

Nearly all small businesses, 82 percent, claim that digital marketing is important to their company’s success. And, more than half of this sample, 48 percent, say digital marketing is very important, as opposed to somewhat important.

The same amount of small businesses (82%) also believe they are effective at implementing digital marketing strategies. There is room for improvement though. More than half of this sample (48%) say they are somewhat effective, as opposed to very effective.

impressions of digital marketing effectiveness - Clutch Small Business Survey 2016

impressions of implementing digital marketing strategies effectively - Clutch Small Business Survey 2016

Small businesses in the initial stages of planning a digital marketing strategy should heed five pieces of advice.

1.) Define unique strategies for each digital marketing tactic.

Digital marketing tactics are interconnected, from social media marketing, to content marketing, to SEO, to paid online advertising, to email marketing.

For example, if a business creates stellar content, it should develop a strategy to market that content. This may include reaching out to influencers so they promote the content on their channels, re-purposing it on SlideShare, enacting a public relations push to get earned media coverage, and more.

2.) Prioritize the marketing channels you use based on business goals and proven success rates.

“You don’t need to have an AdWords campaign, an SEO campaign, and a social media campaign when you first start off, but it’s important to understand how they fit together.”
Marty McDonald

3.) Verbalize goals before launching a digital marketing strategy.

“Don’t do any marketing unless you can verbalize your goals. … I see far too many small businesses that don’t know what they’re trying to get out of their marketing efforts. This makes it very difficult to see success.”
Steve Pearson

4.) Know what you want to measure to track success.

Relevant metrics depend on business goals.

“You have to know what you want to measure. Many small businesses only think in terms of sales, but many different activities contribute to getting sales, such as collecting email addresses and engaging with influencers on Twitter.”
Marty McDonald

For example, if a business wants to raise brand awareness among a certain group of influencers, it should track impressions. On the other hand, if a business seeks to boost sales, it should look at conversions.

5.) Find an expert.

“There are tons of examples of small brands that used digital marketing to grow their shares into big time players. … [They] entered very cluttered spaces and made a huge impact by knowing how to leverage digital media. But, they knew how first, and this is the key. If you don’t know, does this mean you just stay on the sidelines? No! Go find a coach or trainer and get in the game. The cost could be your business if a competitor takes action while you return to your normal routine.”
Joshua Dirks

Social Media Is Preferred Digital Marketing Channel for Small Businesses

Small businesses choose social media as the digital marketing channel of choice for 2016. Specifically, 73 percent of small businesses currently use or plan to use social media in 2016.

Having a company website (65%) and email marketing (57%) follow to fill out the top three most popular digital marketing channels in the small business market.

priority digital marketing channels - Clutch Small Business Survey 2016

While social media is a good starting point for small businesses, industry leaders emphasize that it is most effective as part of a larger digital marketing strategy.

“Social media needs to be approached with caution. It should be used to enhance your website and other content, not as a standalone marketing tool.”
Anthony Gaenzle

The designation of social media as the digital marketing channel of choice in the small business market gives rise to numerous questions.

  • How many small businesses use social media?
  • How often do small businesses post content and engage with followers?
  • What metrics are most important for small businesses seeking to track the success of their social media efforts?

Overall, there is room for growth in small business social media usage. Only 57 percent of small businesses have a social media presence.

social media engagement - Clutch Small Business Survey 2016

Small businesses that fail to create profiles on relevant social media channels forgo a crucial opportunity to engage with their target audiences, develop a unique story, and create a face for their brand.

“What social has done for the Web is what color did for TV.”
Joshua Dirks

Industry leaders were shocked that social media engagement was not more robust, especially since creating a company profile on Facebook, Twitter, LinkedIn, or Instagram is free of cost.

“I think it’s tragic. Small businesses have so much to gain from social media marketing and almost nothing to lose. … There’s no excuse for any business not to have at least a basic profile page on major networks that lists your business name, address, phone number, hours, and website. … I would encourage business owners to at least take this first step.”
Steve Pearson

Low or nonexistent engagement in social media marketing is even more surprising when you consider the benefits it offers small businesses.

1.) Foster community by building relationships between brands and their consumers.

“Social media allows you to build a voice for your business and tell your story on your terms.”
Jeff Gibbard, President and Chief Strategist, True Voice Media

It is the only marketing platform that enables direct communication between a company and its target audience.

“The social aspect of social media is very important. You create communities that you can sell to. If you approach it with the mindset, ‘sell, sell, sell,’ you likely will turn off your audience. But, if you educate your audience about what you do and share success stories, then you’re on the right path.”
Marty McDonald

2.) Be found by potential customers to expand business following.

“Social media is another way for you to get your name out there. People find you on social media, not in the yellow or white pages like it used to be. Now, consumers are spending time with social media. It’s often where they go to look for businesses they need. … Just having a presence and being there to be found is a benefit.”
Steve Pearson

3.) Target the people who need a business’ services the most, in order to generate leads and increase conversions.

“Social media is very targeted, especially the paid opportunities, which makes it a good resource for targeting specific people, groups, or areas and driving relevant traffic to your website.”
Jeff Gibbard

Small Business Social Media Engagement Will Increase In Future

Social media in the small business market has a bright future. Nearly 75 percent of small businesses plan to implement a social media marketing plan by 2017 or later.

social media adoption trends - Clutch Small Business Survey 2016

Small businesses looking to jump into the social media game should consider advice from industry leaders.

1.) Understand the social media channels that are important for your business.

The social media channel that best fits a business’ needs varies based on industry focus, goals, audience, and type of content produced.

For example, business-to-business (B2B) companies may benefit more from LinkedIn, while business-to-community (B2C) companies may see better engagement on Facebook.

Another factor to consider is the type of content your business produces the most. Images are ideal for Instagram or Pinterest, while long-form, expert content fits LinkedIn’s format better.

2.) Plan ahead. Prioritize social media goals, and outline the necessary actions to attain them.

“Start small, build a foundation, and try to learn what works and what does not. Being goal-oriented is very important, especially when you first start off.”
Jeff Gibbard

Selecting a social media platform is one important step in the planning process.

“Not everybody needs to be on every channel, but they need to focus on the channels that will give them the biggest returns.”
Marty McDonald

“The problem with [being on too many social media platforms] is that it becomes difficult to manage, especially if you can’t check in on a regular basis. I recommend starting off with one platform, like Facebook, using it correctly, and then building out from there.”
Matthew Goulart, Founder, Ignite Digital

3.) Identify relevant influencers and actively reach out to them.

“A retweet from [an influencer] or a mention from them on social media could dramatically increase your business’ traffic.”
Matthew Goulart

Facebook Tops List of Popular Social Media Platforms

The most popular social media platforms for small businesses are Facebook (89%), Twitter (49%), and LinkedIn (42%).

popular social media platforms - Clutch Small Business Survey 2016

What factors contribute to this prioritization of social media platforms in the small business market?

“I think people generally go toward the things they understand the most or have heard of before. The most common social media networks are Facebook, Twitter, and LinkedIn, so this makes sense. Whether they are the right channels for the business is another question.”
Jeff Gibbard

The social media platforms on which a business focuses largely influences its success.

Based on insight from industry leaders, we compiled a list of questions small businesses should ask themselves throughout the social media channel selection process.

1.) Where is your audience?

Because social media has the power to create community and expand a business’ following, it is important to identify the channels current customers use the most.

“Wherever you see a concentration of your target audience you should be on that platform. You should be growing and nurturing that audience so that you become an authority in their eyes, and then they will reciprocate in the form of revenue.”
Matthew Goulart

2.) Who is your audience, and how do they consume content?

B2B and B2C companies attract different audiences, produce different types of content, and work toward different goals. Social media platforms’ features may correspond to a specific type of business better than others.

Businesses that produce long-form content may find better traction on LinkedIn than Twitter.

On the other hand, businesses that emphasize customer service, such as Uber, Lyft, airline companies, or restaurants, may benefit from Twitter because its open platform allows a business to reach out to anyone.

Finally, businesses that heavily rely on images to share their story may opt for Pinterest or Instagram over Snapchat, since images disappear within 10-seconds on this platform.

4.) Can a review site function as a social media channel for your business?

“Some review sites should be considered social media channels for businesses as well. For example, if you are a restaurant owner, Yelp is a form of social media and should be prioritized as a social channel. Even though many people don’t think of Yelp as social media, it has many social elements.”
Steve Pearson

No Universal Rules Govern Social Media Activity, Engagement Levels Vary

The frequency of social media activity varies based on the type of business and its overall goals. 35 percent of small businesses post content and engage with followers on a weekly basis, while only 26 percent engage multiple times a day.

frequency of social media engagement - Clutch Small Business Survey 2016

Every business uses social media to accomplish different goals.

These goals may include,

  • Generating leads
  • Raising brand awareness
  • Boosting website traffic
  • Improving customer loyalty
  • Researching audience engagement with your brand

However, regardless of goals, some general rules will ensure a business’ social media activity is useful, not a nuisance, to its audience.

  1. Determine the time of day when your audience is most engaged on each platform, and post content at that time.
  2. Do not post too frequently.
  3. Focus on the quality of content shared, not the quantity.
  4. Vary post frequency based on the social media platform used.

On Facebook:

“We noticed that if you post more than twice a day, more ‘unlikes’ occur than ‘likes.’”
Matthew Goulart

On Twitter:

“It comes down to how much energy you can put into the platform. We usually advise between 10 and 20 posts on Twitter per day because it broadens your reach. But, you have to make sure these posts are effective.”
Matthew Goulart

Small Businesses Track Number of Views To Gauge Social Media Success

How can you tell if a social media strategy is effective? Only 11.5 percent of marketers can prove the quantitative impact of social media, according to a survey by Duke University’s Fuqua School of Business, the American Marketing Association, and Deloitte.

When tracking their social media efforts, small businesses focus on number of views (51%), posts (34%) and interactions (34%), and audience growth (32%) the most.

social media metrics - Clutch Small Business Survey 2016

Small businesses should identify metrics that correspond with their goals.

For example, a business that wants to generate sales should track the number of people who signed up for their email newsletter or bought products from their website as a result of social media activity. On the other hand, a business looking to generate chatter should look at the number of impressions, shares, and comments their posts receive.

Overall, tracking the number of posts is not very effective. Instead, tracking interactions reveals whether people are taking action as a result of what you post.

“The number of posts, in and of itself, is not a very important metric. If I could post once a month and get a million views or post 1000 times a month and get a million views, I’d rather do the former because it’s much less work. Having quality content that people want to see and engage with is more important than just mass quantity.”
Steve Pearson

About the Survey

The study consisted of 352 owners or managers of small and medium businesses in the US.

The majority of businesses, 73 percent have 1-10 employees and less than $1 million in annual revenue.

According to the 2013 Census Bureau Statistics of US Businesses, nearly 80 percent of small businesses are composed of fewer than 10 employees, which matches our survey sample. The remaining businesses, 26 percent, have between 11 and 500 employees.

The survey was conducted throughout January 2016.

company size - Clutch Small Business Survey 2016

total company revenue - Clutch Small Business Survey 2016

Published March 22, 2016

To request additional information or provide feedback on this survey, contact [email protected].

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