Social media has become an important platform that people all over the world use to connect and share information. This form of ‘user-generated communication’ has become a dominant source of information, pushing companies to rethink traditional marketing strategies in order to remain competitive in the digital world. Businesses have begun to manipulate the functions of social media by delivering relevant, useful and consistent content to build a loyal audience — with an aim to drive lucrative customer actions. Consequently, content marketing has gained traction as a critical element of a successful digital marketing campaign and an important tool to drive engagement on social platforms.
Small enterprises face numerous challenges in the promotion of their businesses. Limited financial resources and competition with larger companies limit the active growth of small businesses. Marketing is one of the problems commonly faced by small businesses as a result of their financial inability to appoint marketing staff to oversee promotional activities. Owing to the popularity and prevalent use of social media, small businesses are actively embracing social media as a potential marketing platform due to the ability to effectively run marketing activities on limited budgets and resources. However, the extent of the effectiveness of social media content marketing for small businesses remains unclear; with limited research existing on the measurement of return on investment from social media strategies for small businesses.
Calculating returns on social media marketing: ROIs
Increase in sales: Social media content is shown to have a positive impact on sales. A 30-month case study of an Indian Ice cream manufacturer revealed a 40% sales revenue growth rate, with Facebook and Twitter conversations significantly contributing to the total revenue generated from social media campaigns. A 2018 case study of a small Dutch business that investigated Facebook marketing revealed that content marketing on Facebook resulted in a 9.21% conversion rate. Furthermore, a study examining the use of content marketing within the consumer and corporate sectors revealed that content marketing led to an increase in hit rate by 30%. Other case studies reflected the high ROI that could be achieved from social media content marketing through reports of increased revenues of up to 80%.
Reduction of marketing costs: Small businesses can reduce the cost of advertising and cost of customer retention by using efficient social media content strategies. Participants of a 2016 cross-sectional study investigating the effects of social media use on brand equity in three star hotels in Nairobi County asserted that social media content marketing offered a cost-effective method of advertising their brands . A case study of a small real estate business in Luhačovice showed that positive results from social media content marketing can be achieved with significantly low initial investments. Furthermore, smaller businesses can attain business value from social media content marketing by implementing relevant content strategies that can substantially decrease marketing costs and contribute to revenue growth through increased sales.
But are monetary gains the only way to measure returns on social media marketing?
An online questionnaire of 202 participants revealed that 86% of content marketers identified brand awareness as a top goal of content marketing. Therefore, in order to measure the returns on content marketing, businesses must first establish what needs to be measured (Return on objectives — ROO).
Brand Engagement: Case studies of 5 American SMEs showed that business value from social media marketing is derived from high levels of customer engagement which is influenced by the businesses’ ability to provide relevant and useful content to its audience. A 5-month qualitative study that executed a Facebook content strategy for a children’s health magazine resulted in a 46.5% expansion of the business’s fan base with a 2.1% increase in engagement levels.
Brand Awareness: Although brand awareness may not contribute to a direct increase in sales, it is a critical part of the sales funnel that can be achieved through the delivery of effective social media content. Implementation of a 7-step framework designed to create social media buzz around the case brand resulted in a 49% increase in brand awareness. A self-administered questionnaire surveying 50 participants found that social media content marketing has a strong impact on brand awareness and brand trust, consequently impacting customer acquisition and retention rates. However, it must be noted that the relationship between social media content and brand awareness varies for B2C and B2B business. A survey of 68 Swedish B2B companies concluded that social media content does not influence sales through brand awareness as the factors involved in B2B purchasing are more complex than B2C. However, results revealed that there exists a positive relationship between social media content and trust, which has an impact on purchasing based on relationship building.
Brand Loyalty: There exists s positive relationship between social media content and brand loyalty. A mixed method study carried out through surveys, interviews and case studies revealed that engagement through social media content nurtures brand loyalty and results in higher buyer loyalty. Other case studies showed that using social media content to develop a sense of community led to long-term loyalty from customers, thus improving customer engagement with promotional activities. Furthermore, an online survey of 322 users of retail services revealed that effective social media content strategies build a positive brand image among customers, resulting in a certain level of brand loyalty and a higher likelihood of purchasing services and/or products from the business.
Electronic Word of Mouth (eWoM): Social media content can benefit businesses in the form of eWoM. A mixed method study examining the impact of social media content on restaurant business showed a positive relationship between social media content and eWoM. Furthermore, results confirmed that eWoM played a critical role in attracting new customers, thus increasing revenue. These results were supported by a quantitative study surveying 350 customers of a small Iranian jewellery design company, which demonstrated the positive impact of eWoM on customer attitudes towards the brand and customer purchase intentions. Moreover, case studies demonstrated the impact of negative EWOM on sales, with participants citing around 5% drop in revenues as a result of the creation of negative EWOM.
The relationship between ROO and ROI
Customer investments in the form of brand engagement, brand awareness, loyalty and word of mouth have a significant impact on the purchase decision funnel, consequently affecting revenue.
A quantitative study examining the effect of firm-generated social media content on spending, cross-buying, and customer profitability concluded that investing in social media content marketing leads to strong customer relationships which have an impact on revenues and profits. Furthermore, it was revealed that positive customer engagement with brand content on social media is converted into eWoM, resulting in purchase proposition.
The relationship between content and returns
Effective social media content has an impact on various ROI and ROO metrics such as relationship building, eWoM and brand engagement. A mixed method study exploring the relationship between social media strategies and customer purchase intentions revealed that relevant content had a large impact of customers’ purchase intentions. Relevant and useful social media content plays a critical role in the customers’ information seeking process leading to higher response rates and better customer relationships. Information quality has a key impact on brand loyalty as demonstrated by the results of case studies of Turkish SMEs whose inability to achieve high ROI/ROO using social media content was attributed to the use of formal language and creation of unattractive content. There exists a need for a cautious use of promotional content to ensure positive brand attitudes among consumers.
The returns on social media content marketing extend beyond the ROI from sales to the fulfilment of marketing objectives such as brand loyalty and brand awareness. Effective use of social media content marketing can prove advantageous to small businesses in communicating their message to their target audience as well as in cultivating customer relationships and brand loyalty.