Despite its growing adoption by the Inc. 500, social media still confounds companies that are struggling to determine whether the ROI is worth their investment of time and money.
When asked to indicate their concerns about social media, respondents said their biggest worry is return on investment (59%) a 23% jump from last year, according to the University of Massachusetts’s Social Media and the 2016 Inc. 500 study.
This annual study by the school’s Center for Marketing Research analyzes and evaluates social media usage among the fastest growing small companies.
Is the ROI There?
Of those using social media, LinkedIn remains the most popular platform for the fifth consecutive year with 94% adoption. The second most utilized platform is Facebook (88%), a 6% increase from 2015. Twitter remains at 79% adoption for the third consecutive year.
The most notable change from 2015 is the rapid increase in adoption of Instagram, which jumped from 32% in 2015 to 46% in 2016, making it the fastest growing social media platform among the Inc. 500.
The study also indicates that companies are limiting their use of social platforms and choosing the ones that work best for them.
“Whenever we ask about ROI or effectiveness of social media, we get mixed messages,” according to study co-author Nora Ganim Barnes, Ph.D. “I think we still lack good metrics when it comes to the relationship between online efforts and sales. There is definitely the feeling that social media helps get the word out and increases brand awareness.
“When it comes to sales, we hear some say that social networking sites (mostly Facebook) drive purchasing. In the absence of the long awaited ‘buy buttons,’ it’s hard to know.
“Everything I’m seeing suggests that there will continue to be a lack of differentiation between major platforms with all facilitating picture sharing, video, messaging etc. That will probably result in some focusing on fewer platforms. It looks like Facebook will be a winner in that movement, while Twitter may be one of the fatalities.
“If businesses do not see the value for branding or sales and can get more ROI from Facebook and Instagram, you may start to see that movement. The politics you see on Twitter right now may scare some businesses away. The question becomes what is the liability when a business is attacked by a politician via a tweet? We’ve seen stock prices drop, sales impacted….it’s become a messy playing field since its use by politicians,” she said.
The study found that:
- 94% of the Inc. 500 have a LinkedIn account, 88% have a Facebook account (up 6%) and 79% have Twitter accounts.
- Use of blogs increased for the first time since 2013, currently at 42%.
- 50% of Inc. 500 companies have a written social media policy incorporated into their business plan (up 17%), 21% have a stand-alone social media policy, (up 9%).
- 39% have a strategy in place in the event of an online crisis/firestorm, (up 12%)
- Instagram is the fastest growing social media platform with a 14% increase in adoption in one year.
- The top 3 concerns regarding the use of social media are the return on investment, time allocation and resources devoted to social media. The top benefit is building brand awareness.
The dramatic increase in the adoption of Instagram suggests that businesses are still exploring new platforms while holding onto all previous accounts, according to the study.
Companies may be entering a period of great reflection, reevaluation and realignment of how new communication tools enhance not only brand awareness but sales. They will consider consolidation of accounts to enhance ROI.
With the ability to target using platforms that attract either mass markets, or niche markets, according to the study authors, social media efforts can become more efficient and possibly more effective in generating sales or easing concerns about the return on investment.