Tap the Growing Local-Social Opportunity

Posted by Greg Sterling

Guest poster Greg Sterling is an Industry Analyst.View more from Greg Sterling at his blog, Screenwerk.The numbers are compelling. US teens spend roughly 25% of all their online time on social networks according to a new study by the Kaiser Family Foundation. And among social networks, as most people know, Facebook is dominant. The site has 350 million users worldwide and more than 130 million in the US.

One day in the very near future Facebook is likely to supplant Yahoo one of the top two Internet destinations, the other being Google. US Internet users spend just over six hours a month on the site. And roughly half of all Facebook users visit the site daily or multiple times a day.

There are also more than 70 million Facebook users who regularly access the site on a mobile device as well.



Twitter has also seen tremendous growth and adoption over the past year. While it’s far behind Facebook in terms of overall numbers there are almost 20 million Twitter users in the US and about 50 million globally (per Nielsen and comScore). Every day there are nearly 28 million “tweets” around the world.

Given their mindshare, ease of use and near ubiquity social media sites are an increasingly necessary, even essential, part of any online marketing program. Indeed, survey after survey reveals that ad agencies and large brand marketers intend to devote more of their efforts to social networks and related tools.

Symbolic of this “transition,” Pepsi decided to abandon Super Bowl advertising – for the first time in more than 20 years – in favor of social media.

Not just a big brand play, however, social media can be effectively utilized by small businesses and many are already taking advantage or intend to take advantage of Facebook and Twitter. A recent survey (November, 2009) of 831 US small businesses by email vendor Vertical Response found that “well over two-thirds of respondents report that they plan to increase their use of email marketing and social media in 2010.”

In a September 2009 survey I conducted among active MerchantCircle members (a more engaged group of small businesses) about 45% of the more than 2,400 respondents reported having a page on Facebook and a Twitter account. These results reflect a “vanguard” segment of small businesses but clearly point to where the market is headed.

Facebook has publicly stated that the company sees roughly 5,000 businesses set up a Facebook page on a daily basis. If that trend holds it would mean Facebook will become a data repository for more than two million (or more) US small businesses by the end of 2010. By comparison, the entire US yellow pages industry has roughly 3.2 million small business relationships.

MerchantCircle, which defines itself now as a small business social network, just announced that it had passed one million members.

In the offline world, most US small businesses report that a significant percentage of their customers come from “word of mouth.” The numbers vary but in some cases it can be up to 75% of new business coming from these types of existing customer referrals. In case it isn’t self evident, social networks and social media tools represent a parallel kind of phenomenon – online word of mouth – but amplified considerably: from one-to-one to one-to-many.

While the effectiveness of “advertising” on social networks (e.g., Facebook banner ads) is so far mixed, Facebook and Twitter should now be factored in to any small business marketing program. Facebook pages and Twitter accounts are free and represent powerful tools to acquire new customers and manage existing customer lists.

Through the acquisition of “fans” or “followers” small businesses can announce deals and sales or other events (e.g., opening of a new restaurant). Beyond new customer acquisition Facebook fan pages and Twitter can effectively become a simple “CRM platform” for existing customers as well, responding to complaints or answering questions and so on.

Yet while these tools are free and easy to adopt, there is still confusion about how to most effectively use them and how to measure their success. Enter third party publishers and marketing channels, which can facilitate adoption and management of Facebook and Twitter updates for time-starved small businesses.

In addition, for publishers finding that organic local search traffic (SEO) is increasingly hard to get from Google given how frequently now the first page of search results is dominated by Google’s own map and listings, social media sites offer an important alternative or supplemental source of traffic.

I could go on about how directory publishers and other types of local sites are also becoming more social too. But you get the big picture.

Social media have moved from a novel phenomenon into the American mainstream. Marketers large and small are obliged to follow the trend and take advantage of this growing local-social opportunity.

About Greg Sterling: Greg Sterling is the founding principal of Sterling Market Intelligence (SMI), a consulting and research firm focused on the Internet’s influence on offline consumer purchase behavior. He also is a Senior Analyst for Internet2Go, an advisory service from Opus Research tracking the evolution of the mobile Internet. Before SMI, Sterling ran The Kelsey Group’s Interactive Local Media program. Prior to The Kelsey Group, Sterling was at TechTV where he helped produce “Working the Web,” a national television show on e-business and the Internet. Before that he was a founding editor and executive producer at AllBusiness.com. And prior to joining AllBusiness, Sterling was a practicing attorney in San Francisco.