Constant Contact Finds That Small Businesses Need Big Social Media Help

by Trefis Team
Constant Contact
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Constant Contact Inc. (NASDAQ:CTCT), which helps more than half a million small organizations worldwide connect with their customers through a suite of online engagement marketing tools recently published results of a survey indicating a disconnect between perceptions of social media marketing initiatives’ success among British businesses and the reality.

Constant Contact offers a complete set of online marketing tools, including email, event, social media and mobile marketing, and competes with Groupon (NASDAQ:GRPN), Living Social, Eventbrite, iContact, Surveymonkey as well as (NASDAQ:CRM).

We currently have a $30 Trefis price estimate for Constant Contact, which is nearly 79% above its market price. Online content marketing accounts for all of its value.

Among the small businesses surveyed, almost a third opined that marketing on social networks like Facebook (NASDAQ: FB) has not helped them in any way while a fifth believe that they’ve done a great job so far. The survey delves deeper into the causes for this difference of opinion and reveals several misconceptions and shows that businesses have actually been doing better than they think.

The survey looked into how small businesses in the UK are using social networks like Facebook and infers that Britain’s small businesses are not familiar enough with Engagement Marketing to realize that they are doing it. Also, they tend to overestimate what is needed for success. According to the survey, a fifth of the businesses that use Facebook as a tool believe that success equates to 500 likes, shares or comments on a post. In contrast, a much smaller number of 10 likes or comments can result in outstanding results. A potential reason for this misconception could be the lack of analytics to back their perceptions.

Customer growth through strategic moves to drive earnings

The company has performed well over the past quarter Q2 2012 and its customer base grew to 525,000 paying customer at the end of June 2012, which was in line with our expectations. The reported figure excludes Single Platform customers.

The company offers a Social Campaign product which is free for users if they have less than 100 fans. The charges increases with an increasing fan base. The product lets users to customize, schedule and measure the performance of their initiatives.

As per the indications of the survey results, the Social Campaign product has a big untapped market, with lot of potential for further growth as more businesses turn to social media platforms for marketing purposes. Coupled with Save Local, it offers a good chance for small businesses to get measurable results with new planned campaigns. Since the survey was conducted in the UK, whose market is relatively underdeveloped when compared to the US, we can safely assume similar results would be possible from other markets. Aggressive promotion of the product by the company to Small and Medium Businesses (SMBs) can result in the company exceeding our expectations and touch 840,000 paying customers by the end of our forecast period.

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