Effects of Social Media and Return on Investment for Small Businesses - Literature review Example

Effects of Social Media and ROI for Small Businesses There is no denying the fact that modern media are not static and passive like a newspaper advertisement, a radio or television commercial or a magazine pamphlet. One quintessential aspect of the modern social media is that almost all of its attributes be it textual or visual could be readily shared and saved using an array of electronic gadgets and platforms like mobile phones, tablets, laptops, digital cameras, etc. So if there were one term that could be used to grasp the ubiquity of social media, it would be ‘instant dissemination’. Going by this versatility of social media, the way people research, access and purchase products and services around the world is fast changing (Cass, 2007, p. 11). Hence, as expected and would be deemed to be commonsensical, businesses, whether big or small simply could not expect to thrive and survive competition if they do not customize their approach in consonance with these pressing consumer trends and practices (Cass, 2007, p. 9). Especially in case of the small businesses, which have fewer resources to spend on infrastructure, consumer education, communication, and marketing and after sales service, social media offers a range of salubrious opportunities and possibilities. However, it does need to be mentioned that the positive advantages facilitated by the social media to the small businesses are qualified and subject to an array of initiatives, choices, precautions, objectives and constraints. Before delving on the effect of small media on small businesses, it is imperative to gauge the extent to which the small businesses are turning to social media for accomplishing a range of objectives and activities. As per a report published in Forbes, nearly 54 percent of the small and midsize businesses do actively ascribe to social media to advance their scope and this figure is expected to soar every year (Diana, 2010). What is even more impressive is that the engagement of small businesses with social media is not lethargic and intermittent, but rather happens to be really prompt and regular, considering the fact that nearly 35 percent of them have been found to be posting regular inputs and updates on social media sites such as Twitter, Facebook, YouTube and LinkedIn (Diana, 2010). Indeed, social media must be doing something good to these small businesses as 60 percent of them have acknowledged that social media has positively and propitiously influenced their business prospects (Diana, 2010). In a British study focusing on 269 small and midsize businesses, 46 percent accounted that an active engagement with social media has enhanced their brand awareness and 36 percent agreed that they have been able to grab much new business owing to social media (Diana, 2010). However, one simply cannot trust the positivity of social media for small businesses by merely considering only those who succeeded. As could be considered to be a commonsensical premise, there must be many small businesses which must have failed to considerably benefit from social media owing to a variety of mistakes and flaws in their strategy. As already mentioned that small businesses are marked by limited resources, they could only benefit from social media if they could use it to leverage business in a cost effective way and assure a favorable return on investment. In that context it would be pragmatic to delve on the varied benefits that social media offers to small businesses and how the small businesses could glean these benefits while assuring an optimal return on investment. One salient advantage of social media to the small businesses is that it could be easily used to reach a diverse and widely scattered customer base as social media as compared to the conventional media has a larger reach and a higher sharing potential (Coleman, 2012). One direct and immediate advantage of social media initiatives to small businesses is that they instantly enhance brand awareness and visibility (Coleman, 2012). Besides, if these initiatives and updates are accompanied by promotional activities, incentives, discounts and freebies, a small business could expect a ready customer response in a matter of hours if not minutes. Yet, it does need to be mentioned that social media postings and updates and the customer interest in no way obliterate the need for fundamental business requisites like a high quality product or service, competitive pricing and prompt after sale support and service (Vaynerchuk, 2009). Only those small businesses manage to glean the positive effects of social media that take care to abide by the other essentials of business. This is so because social media is a two edged sword. If small businesses could use social media to disseminate information pertaining to their products and services, the disgruntled customers and competitors could as easily assess social media to voice their objections regarding these products and services. Hence, in the case of a short sighted small business, social media could also turn out to be the originator of much negative publicity and a fast shrinking customer base (Vaynerchuk, 2009). A shortfall which in the case of the conventional media remains confined to a single customer, in case of the social media, rapidly becomes the talk of the town. Irrespective of its gargantuan potential, many small businesses fail to benefit from social media simply because they forget that social media happens to be a content based platform. The minute some entrepreneur posts content at a social media website, one automatically becomes a publisher. Hence, social media does benefit small businesses to attract customer interest, but only in the case of those businesses who know how to engineer their content to build the right image, to target the right customer base and to send the desired message (Geho, Smith & Lewis, 2010). It is a fact that most of the people coming at social media websites are too busy, stressed and time starved to spend their time on some worthless post. Hence, successful small businesses using social media do look to it that the message delivered by them addresses the customer needs, is engaging and customer centered. Social media only allows a small business to post content at a social website. Whether the customers get interested in that content and end up making a purchase, it is for that business to assure. Hence, in case of small businesses resorting to social media, it is not viable to quantify the return on investment in a strict sense, at least during the initial stages, because social media is a highly volatile and unpredictable space and much depends on the acumen, astuteness and strategy of the people managing the social media initiatives. Yet, going by the wide reach and low cost of the social media participation, the return on investment in the case of a well planned marketing initiative could far exceed to what one could expect from the conventional media (Geho, Smith & Lewis, 2010). The other major advantage of social media to the small business is technological in its scope and perspective. Using social media necessitates the small businesses to introduce technological innovations and infrastructure within their framework and to impart the requisite digital literacy to their personnel (Lacho & Marinello, 2008). Technology is a great equalizer in the sense that it enables the small businesses to compete with the larger companies on the basis of their innate ingenuity and imagination, thereby rendering to them a scope to carve out a space for themselves in the marketplace (Lacho & Marinello, 2008). Besides, the inculcation of the affordable technological gadgets like computers, smart phones, tablets and the accompanying software has a positive spillover impact on all the aspects of business, bringing in a kind of confidence, creativity and efficiency. This also gives flip to the communication and efficient information management within the small businesses as social media is a technology driven entity. However, these technological inputs do only have the desired impact if the concerned personnel do have the requisite information literacy and information management skills. Besides engaging in social media allows the small businesses to readily access the feedback and customer views regarding their products and services thereby making way for a fast pace of innovation and adaptation (Coleman, 2012). Social media also allows the avid followers and fans to have a say and participation in the designing and planning of new products, thereby making the consumers an integral part of the larger community that defines a small business (Cass, 2007). Besides, a direct engagement with customers through social media has one other advantage that these customers considering themselves as a part of a small business to whose products they ascribe to, contrive their own inputs and updates like videos and load them on the social media sites like YouTube. Sometimes, the technologically proficient customers go as far as designing apps and software that not only enhances the products features, but this also allows the small businesses to access these technological innovations for free, hence allowing them to exponentially enhance the return on investment. Hence, it goes without saying that small business could resort to social media to create awareness regarding their products. However, while doing so they need to be conversant with the customer psyche and the formatting of updates that attract customer attention and expenditure. Engagement with social media also makes the small businesses technology savvy and facilitates a direct customer participation in product creation and promotion. References Cass, John. (2007). Strategies and Tools for Corporate Blogging. Boston: Elsevier/ Butterworth Heinemann. Coleman, Alison. (2012, August 14). How Social Media can Benefit Small Business. The Guardian. Retrieved August 18, 2012, from http://www.guardian.co.uk/small-business-network/2012/aug/14/small-business-benefit-social-media Diana, Alison. (2010, September 14). Social Media has Scorching Impact on Small Biz. Forbes. Retrieved August 18, 2012, from http://www.forbes.com/2010/09/14/social-media-facebook-linkedin-twitter-entrepreneurs-technology-informationweeksmb-growth-lessons-10.html Geho, Patrick R, Smith, Sara & Lewis, Stephen D. (2010). Is Twitter a Viable Commercial Use Platform for Small Businesses? An Empirical Study Targeting Two Audiences in the Small Business Community. Entrepreneurial Executive, 15, 121-127. Lacho, Kenneth J & Marinello, Craig. (2008). How Small Business Owners can use Social Networking to Promote their Business. Entrepreneurial Executive, 15, 57-60. Vaynerchuk, Gary. (2009, October). Taking Control of Your Brand: Building your Business In a Digital World. Success Magazine. Read More