Study shows 75% of SMEs spend over 10% of marketing budget on social media

Australian companies are now fully embracing social media, according to a new report conducted by Nielsen, which found nearly three-quarters of businesses allocated 10% or more to their marketing budget for social media, but corporates have more presence than SMEs.

The Nielsen-Community Engine 2011 Social Media Business Benchmarking Study comes just days after a separate report from KPMG found Australia’s largest banks are taking up social media more than ever before.

Peter Fraser, owner of digital reputation management company SR7, says this coincides with anecdotal evidence his firm is hearing, and says businesses see social media as a critical platform to maintain their brand image.

“Businesses, and particularly the businesses we work with such as the blue-chips, are revising their marketing strategies and the allocation of spend, whether redirecting current budgets or otherwise, to focus on social media,” he says.

The Neilsen figures show large businesses are making much more of an effort than SMEs, with 35% of large companies having a high social media presence than medium-sized companies.

Stephen Johnson, social director of Community Engine, which commissioned the study, says it is clear these larger businesses are now beginning to embrace social media and are becoming well versed in social products.

But for smaller businesses, they may just not have the time.

“I think when you weigh all of this up,” Johnson says, “bigger businesses don’t necessarily have a better grasp on that, but smaller companies don’t necessarily have the resources. For the smaller businesses, the question is, how do they create value without putting infrastructure in place?”

The Nielsen study reveals some significant improvements in the attitudes of SMEs and large companies to social media programs.

For instance, the amount of businesses dedicating 10% or more to marketing budgets for social media grew from 57% to 72%. And 44% of businesses expanded their budgets to include social media activities.

The study shows 14% of businesses use share buttons in their site, while 17% facilitate social shopping.

Johnson also points out that while 53% of businesses in 2009 lacked the knowledge to work with social media and implement new tools in their business, that figure has dropped to just 35%. And one-fifth of businesses now say they want to create their own networks, rather than work with external platforms.

“They’re not asking ‘how do we do social anymore?’ They’re just doing it. While people are wanting to know more, most businesses are at the very least considering social and more people are jumping it.”

The highest proportion of spending is going to Facebook advertising at 21%, followed by social media monitoring at 16% and using a corporate blog at 15%. Fewer businesses are putting money into YouTube, MySpace, Twitter and Flickr.

Social media also appears to be much more formal, with 17% of respondents having a formal social media strategy, and 24% at least having guidelines.

But Fraser says businesses are now viewing social media not just as an opportunity to converse with customers, but as a necessary investment.

“We are picking up a significant trend which is linked with the marketing side, as there is a growing awareness among executives about the risks involved in social media. Businesses are now looking increasingly at strategies to mitigate the risk of going social.”

Nielsen’s figures about what businesses are actually doing on social media seems to confirm this – the second highest activity in social media has been classed as “monitoring”, and is done by 26% of companies.

“Equally these large companies have more resources,” Johnson says. “Part of the problem in getting involved in social media is having resources. The focus should be less on broadcasting and selling and more around building value.”

One quarter of businesses use social media to react to customer comments, while 23% use social media to gain insight and research. And 43% see social media as a way to communicate with consumers, up from 28% in 2009.

“It’s not just about marketing,” Fraser says. “It’s not just having a Facebook page or a Twitter account – businesses are increasingly looking at overall business objectives. They want to see a return on investment.”

It has certainly become more important now to react to customer complaints much quicker. Last year, Harvey Norman avoided a possible catastrophe after it responded to a complaint about its advertising on Twitter.

The barriers to entry for social have dropped as well – last year 15% said they did not understand how to establish KPIs around social media marketing, but that’s dropped to 8%. And while 36% said last year their organisation was scared to try social media, that’s down to 25%.