Small to medium businesses are still behind the eight ball when it comes to reaching consumers on social media, according to a report from Sensis and AIMIA.

The ‘2012 Yellow Social Media Report’, which surveyed 800 consumers and 1950 businesses, found that just 27% of small and 34% of medium businesses are harnessing the power of social media. While the numbers appear low, they represent an increase in social media activity for both groups over the past year, with participation rates up by around 10% each, and an increase in spend of $1360 for small and $10,420 for medium businesses.

Despite the increased activity, many still lack a concerted social media strategy, and most fail to measure ROI. A quarter of SMBs have no strategy and only 28% of small and 24% of medium businesses measure their ROI on their social media programs.

Commenting on the report, group manager, emerging business and innovation at Sensis, Simon Betschel says SMBs need to make more informed decisions about how to use social media to engage with consumers. “It’s clear there are huge opportunities for brands to connect with both current and potential customers, but businesses must be tactical in their use of these channels to ensure that their investment in this area contributes to their business both in the online world, as well as offline.”

It appears the intention is to do just that – 88% of small and 86% of medium businesses intend to invest the same amount or greater in 2013. The tactics chosen for their efforts need review, according to the report, which found that SMBs currently fail to provide the sort of information consumers look for when they use social media.

Consumers most commonly seek out giveaways and discounts from businesses and brands on social media, but only 34% of small and 27% of medium businesses offer these incentives to consumers on their social media sites. Instead SMBs most commonly encourage consumers to make online comments, ratings or reviews in order to generate word of mouth and engagement with their brands.

“The research indicates businesses are focused on establishing, maintaining and updating their social media presence rather than driving people to it,” Betschel adds. “Social media plays a critical role in marketing and reputation management, one that is being underestimated by many brands and businesses.

“There is a clear opportunity to build consumer relationships and sales through social media, however, businesses need to understand more about how and when to connect with their followers. SMBs and marketers need to respect how people view and value their social media interactions. The top reasons people use social media remain to catch up with friends and family, to share photos or videos, and to coordinate social events, however, approximately one in five are also using social media for commercial purposes, to follow their favourite brands, access special offers and make purchases.”