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50% of SMBs Don’t Advertise on Facebook, 31% Spend <$50 Monthly

Since 2012, organic reach on Facebook has steadily declined, making it harder for small businesses to reach followers and new prospects without paying to do so. While Facebook claimed its motivation to limit business-related posts was to improve the user experience, the company’s desire to grow paying advertisers was equally influential.

The company responded to the uproar from businesses, but continued making it harder for these businesses to reach followers without paying for it. Today, according to a new study from Alignable, half of SMBs pay for Facebook Ads, and of this half, the majority (61%) only spend between $50 and $1 each month.

Alignable studied over 1,200 local businesses who are existing Alignable users, and explored how they use Facebook for marketing. B2B and B2C businesses spanning multiple industries were included in the study, all of which were based in North America and employ under 50 people.

When asked to rank the biggest successes these businesses had with Facebook last quarter, “generating awareness” was at the top of the list, while “paid advertising” was number five of the six featured in the chart. Given Facebook’s massive audience, building awareness isn’t much of a surprise, but the lower rank of paid ads is interesting.

Facebook-Alignable-Chart-1

Even though Facebook is adding about 500,000 new advertisers every six months, the study looks to be pointing to some sort of hesitation among SMBs when it comes to advertising on the platform. The lower rank of paid advertising as a success factor on Facebook, the fact that half of SMBs still aren’t buying ads, and of those that are, the majority aren’t spending big, points to some kind of roadblock.

This isn’t to say that Facebook hasn’t been successful with its ad offerings. However, what may be keeping them from being more successful are a plethora of viable reasons. Limited budgets, lack of understanding/know-how, and unclear ROI are some of the common roadblocks when it comes to SMBs.

But the way these businesses are using Facebook could be having an impact on ad spending as well. In December 2015, LSA’s Greg Sterling explored Facebook’s application as a CRM tool. In discussing Facebook’s new customer communications tools, Greg said:

What’s interesting to me about these developments is that they take on a CRM-lite quality. Pages are now a more robust way to manage customer interactions. The history and contextual information about customers and prospects is part of that functionality.

The CRM use case could be contributing to a population of non-advertisers using their Facebook page strictly as a customer engagement platform. This could only increase given the company’s recent changes to Messenger, making it function more like a customer service tool for enterprises.

These tools may account for “user engagement” ranking higher than “paid advertising” on the chart featured above. Whatever the case, Facebook remains an integral part of the SMB marketing strategy and will likely only become more so.

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