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Social media no success factor for SMEs

Small and medium-sized enterprises may well have an increasingly strong presence on social networks, but so far this has not led to any quantifiable business success. According to a comprehensive study by the University of Liechtenstein and the Vienna University of Economics and Business on the use of social media as a marketing tool, the basic requirements for effective marketing need to be optimized.


Small and medium-sized enterprises may well have an increasingly strong presence on social networks, but so far this has not led to any quantifiable business success. According to a comprehensive study by the University of Liechtenstein and the Vienna University of Economics and Business on the use of social media as a marketing tool, the basic requirements for effective marketing need to be optimized.

The use of social media has become one of the established marketing measures used by large corporations. To an increasing extent, small and medium-sized enterprises (SMEs) have also been getting in on the act. Despite social media being heralded in recent times as the ideal marketing tool for precisely this group of companies, SMEs have not yet been able to successfully harness these online communication channels. 





This is shown by a current study on marketing in social media carried out by the University of Liechtenstein in collaboration with the Vienna University of Economics and Business. Under the leadership of project managers Professor Sascha Kraus (Vaduz) and Dr. Isabella Hatak (Vienna), the study surveyed more than 400 decision-makers from companies of all sizes and sectors across the entire German-speaking area.





Two-thirds of the companies that participated in the study use social networks such as Facebook, XING, LinkedIn and Twitter to market their brand, products and services. The idea is to above all become better known, attract new customers and optimize customer relations. The great majority of the companies surveyed are also convinced that via social networks they can introduce new products and services to the market more quickly than with traditional marketing measures.


Doubts and deficiencies


Large corporations are the more active network users by some margin. In the case of SMEs, it is the cost factor of time that most often prevents them from being more fully engaged. At the same time, decision-makers at SMEs have their doubts about the benefits of this form of marketing. These misgivings are often based on the fear of the potential damage to their image arising from social media being used incorrectly.

As the study also shows, in the rankings of the most popular social networks for marketing activities, Facebook leads the way with 77 per cent, followed by XING with 69 per cent. Especially those companies whose products are aimed at private consumers favour Facebook. XING is used primarily by companies who sell their products to corporate clients. However, Twitter, Google+ and LinkedIn are also very popular. 





When it comes to the concrete evaluation and monitoring of social media use, the majority of the companies surveyed show a number of shortcomings. Only a third carry out quantitative evaluations of network use, and monitor clicks, friend requests or the number of user comments. The remaining two-thirds have no means for measuring success and are mostly unfamiliar with any such system. Practically no companies undertake qualitative, that is to say content-based, assessments of their activities on social networks. The academics at the University of Liechtenstein point out that, as a result, companies are missing the chance to improve their own activities. 


Potential for improvement

For economics researchers, the question is how marketing on social networks can be effective. A presence on social media is often extolled as a “panacea”, especially for SMEs, as it involves practically no costs, adequately addresses target groups and can be managed without investing too much time and energy. As the academics found out, this is no way reflects the reality. Up to now, using social media has only paid off for large corporations, in particular for those who use social media proactively and innovatively and demonstrate a willingness to take risks – in short, those who act entrepreneurially. 





In the cases of SMEs, however, it was not possible to identify any impact on corporate success. This could be down to the less favourable framework conditions, the lack of personnel resources for social media marketing and too little understanding among marketing staff of the material at hand. 





For social networks to become a successful marketing tool for SMEs as well, the general framework conditions must first be improved. What is required is a positive attitude on the part of the entrepreneur, an effective allocation of resources and a suitable member of staff with responsibility for social media who has enough free capacity and appropriate experience with the new media. What is required above all, however, is the will to act entrepreneurially and to create one’s own markets by looking ahead, according to the authors of the as yet most comprehensive academic investigation into the topic in the German-speaking world.

Further information
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Project managers of the study



Professor Sascha Kraus
Head of the Competence Center for Entrepreneurship and Family Business and associate professor at the Institute for Entrepreneurship at the University of Liechtenstein



Dr. Isabella Hatak
Assistant professor at the Institute for Small Business Management and Entrepreneurship at Vienna University of Economics and Business