Small businesses in the U.S. believe that word-of-mouth is the hands-down winner in leading customers to them, a new survey reported by eMarketer shows. As a result, these companies have made social media their No. 2 online marketing tool, trailing only the company website in importance.
Contributing to the attractiveness of social media is the low cost in dollars, according to the American Express OPEN and Search Engine Marketing Professional Organization (SEMPO) survey. An overwhelming majority of small businesses (82 percent) said that word-of-mouth is the key source for new customers, followed by search engines/Internet (66 percent) and advertising (37 percent).
As of March 2011, 44 percent of respondents to the survey used social media for marketing, versus 28 percent who used search engine optimization and 21 percent who used paid search.
Looking ahead, more small businesses planned to add social media marketing this year than either search tactic.
Other research supports the OPEN/SEMPO survey findings. A survey in February by MerchantCircle found over 70 percent of U.S. small businesses used Facebook for marketing, while only two-thirds used Google and one-third used Bing.
Where social media showed some slippage in the surveys was in the area of generating leads. While 57.2 percent of business respondents to Ad-ology said that social media was at least somewhat useful at generating leads, the MerchantCircle survey found that local small businesses were more likely to say search engine marketing (40.2 percent) was an effective channel than social networks (36.7 percent).