Impact Of Social Media Marketing on the Financial Performance of SMEs in the Retail Industry in Nigeria

Abstract

This research investigates the impact of social media marketing on the financial performance of Small and Medium Enterprises (SMEs) in Lagos, Nigeria. In an increasingly digital world, SMEs must adapt to new marketing strategies to remain competitive. Social media platforms such as Facebook, Instagram, and Twitter offer cost-effective means for these businesses to increase their reach, engage customers, and ultimately improve financial outcomes. The study aims to identify how social media marketing enhances sales, customer base growth, and profitability for SMEs, as well as the challenges these businesses face in leveraging these platforms.

A mixed-methods approach was employed, with data gathered from 23 SME owners in Lagos via structured questionnaires distributed through Google Forms. SPSS was used for quantitative analysis, focusing on descriptive statistics and financial performance indicators, while qualitative data was analyzed thematically to understand the challenges and opportunities faced by SMEs. The study draws on theories such as the Resource-Based View (RBV) by Barney (1991), emphasizing that digital marketing capabilities are valuable, rare, and provide SMEs with a competitive edge.

The results indicate that 73.9% of respondents found that social media marketing "Extremely" improved their business's financial performance. Key social media platforms—Facebook, Instagram, and Twitter—were used by 95.7% of the SMEs surveyed, with 60.9% reporting "Extremely" positive impacts on sales revenue and 78.3% experiencing increased profitability. Despite these successes, challenges such as lack of technical skills (87%) and high advertising costs (91.3%) were significant barriers.

The study recommends that SMEs invest in digital skills training and leverage advanced analytical tools to measure the return on investment from social media campaigns. Additionally, government policies should provide financial support and training programs to reduce advertising costs and improve digital infrastructure for SMEs. Future research should explore emerging platforms like TikTok and conduct longitudinal studies to capture the long-term impact of social media marketing on SME performance. This research contributes to a growing body of literature on digital marketing and provides practical insights for SMEs seeking sustained growth in a competitive market.