Social media engagement will surpass online advertising for the first time in the latest study of the Inc. 500 companies. These leaders say they will ratchet up their engagement with consumers. They forecast that social will generate more sales this year than advertising by 38% vs. 24%.
This is a sharp departure from 2014 when online advertising garnered 40% support while social media platforms were favored by only 14%.
The Inc. 500 Study 2016, conducted by The Center for Marketing Research at the University of Massachusetts Dartmouth, found these key findings:
- 93% of the Inc. 500 have a LinkedIn account, Facebook presence increased 2% to 82% and Twitter holds at 79%
- Blogging declined among the 2015 Inc. 500 for the second year in a row. (A decline in blogging was also recorded among the 2015 Fortune 500.)
- 12% of the 2015 Inc. 500 have a stand alone social media policy (up 5%), 33% have a written social media plan (up 16%) and 27% have an online crisis management strategy (down 7%).
- Instagram continues its popularity among this group with a 7% increase, now at 32% adoption.
The top two concerns regarding the use of social media are time allocation for social media and the ROI while the top benefit is increased exposure and building brand awareness.
“There is still a lot of uncertainty surrounding the use of paid social vs unpaid social, social commerce, social media plans, and ROI. We can see movement in tool usage again with blogging continuing it’s decline and Instagram the new darling. The move to quicker, faster vehicles parallels the concern about the resources spend on social. This is still a moving target,” said Dr. Nora Ganim Barnes, director of the Center, and co-author of the study.
Twitter’s Rapid Decline
As to the most effective social media platform, Facebook is still number one, as reported by 48% of those interviewed. Only 14% of executives view Twitter as the most effective platform, which declined 36% after an 11% decline in 2014. (Twitter usage has declined by half according to Business Insider). Twitter’s market value has dropped from a high of $40 billion in 2013 to $10 billion today.
Building brand awareness is still the most important reason for using social media.
LinkedIn maintained the number one spot, as reported by respondents, for the 4th consecutive year with an adoption rate of 93% (down 1% from 2014). Twitter remained the same this year at 79%, Pinterest dropped 1% to 29%.
The following saw increases in adoption: Facebook (2%), YouTube (5%) and Instagram (7%). Google+ accounts increased from 43% to 64% but continue to be the most likely social media accounts to be inactive.
What Does This All Mean?
Social media ROI still remains an elusive target for many companies. While the Inc. 500 reports they are ratcheting up their social media engagement, they also say sales are measly from these platforms.
23% report that less that 1% of sales derive from social media, which is an improvement over last year, which came in at 44%. Only 7% report deriving more than 10% from sales, a slight improvement from last year.
On the other hand, more companies this year (32%) report they don’t know, almost double the number from last year (18%)
This translates into a lot of uncertainty about the role and effectiveness of social media. If just 7% of the fastest growing companies in the U.S. can only achieve 10% + of their growth from social media, than what are the odds of success for smaller companies?
The Inc. 500 companies seem to be taking in on faith that social media will contribute a bigger portion of their sales mix as they step up their engagement on social media while decreasing their online advertising spend.