Social Media Now Top Marketing Pick for Local Businesses

Social media marketing is the big winner with local businesses in the marketing method sweepstakes, according to a new survey. But social media’s win comes at the expense of traditional offline marketing methods, which continue to decline.

The survey data revealed that local merchants, who usually have very limited time and money for marketing, are increasingly gravitating toward marketing methods such as Facebook and other social media, as well as toward tried-and-true online methods like search and e-mail marketing.

[Why You're a Fool If You're Not Using Twitter]

According to the MerchantCircle quarterly confidence index of 8,500 small and local businesses across the U.S., more than half of local merchants are spending less than $2,500 a year on marketing, and 60 percent have no plans to raise their budgets this year. This places a premium on cost-effective marketing.

Facebook is the clear category leader, according to the survey. Because of its huge consumer adoption, ease-of-use and low barrier to entry, the social media network continues to be a popular way for merchants to market their businesses, with 70 percent using Facebook for marketing, up from 50 percent a year ago.

Facebook has now surpassed Google (66 percent) as the most widely used marketing method among local merchants, the survey showed, and is almost neck and neck with Google Search (37 percent versus 40 percent) as being one of their top three most effective marketing tools.

Facebook Places has also benefitted from this high level of adoption, soaring past Foursquare to reach a 32 percent current usage rate. While Foursquare’s usage has inched up from just 2 percent a year ago, use of the location-based service has remained steady at about 9 percent over the past two quarters.

Twitter has also grown in popularity over the past year, MerchantCircle said, with nearly 40 percent of local merchants using the platform to build awareness and community around their products and services. This is up from 32 percent in the last quarter of 2009.

Offline marketing has been the loser with local businesses.  During 2010, print advertising dropped by 33 percent, use of print Yellow Pages decreased 18 percent and use of direct mail fell by 26 percent.

“Online marketing continues to be a challenge for most local businesses, and many merchants are working with very small budgets and almost no marketing resources,” said Darren Waddell, MerchantCircle’s  vice president of marketing. “The marketing methods we see gaining the most traction are therefore the ones that offer merchants simplicity, low costs and immediate results.”

• Facebook vs. Twitter: Where Will Businesses Advertise in 2011?
• Social Media Set to Surpass Search Engines as No. 1 Marketing Tool
• 5 Customer Strategies for the Digital Age