Local businesses pick social media marketing as budgets squeezed

Social media marketing is fast becoming the channel of choice for local businesses facing restrictive budgets and limited resources.

So says a new survey of local merchants by MerchantCircle, which finds that they are increasingly gravitating towards the efficient, low-cost offer of social networking sites, as well as the tried-and-tested digital marketing staples of search and email marketing.

More than half of the 8,500 small and local businesses surveyed across the US are spending less than $2,500 each year on marketing, while 60% have no plans to increase their budgets this year.

Of all the categories, Facebook marketing shone as the clear winner among local businesses. The social network has surpassed Google as the most popular tool for reaching consumers – little surprise given its massive consumer adoption and low barrier to entry. Some 70% of marketers now use Facebook, up from 50% this time last year.

In line with this high level adoption comes growth of Facebook’s location-based service, Facebook Places, which has soared to a 32% current usage rate. This contrasts with competitor service Foursquare, which has crept up from 2% last year to plateau at 9% over the past two quarters.

Twitter marketing has similarly grown in popularity over the past year, climbing from 32% in the last quarter of 2009 to 40% current usage by local merchants seeking to build awareness and community around their product or service.

As local businesses move increasingly towards social media, their use of traditional marketing channels is in turn falling. During 2010, print advertising dropped by 33%, use of print Yellow Pages decreased 18% and direct mail marketing fell by 26 %.

“The marketing methods we see gaining the most traction are the ones that offer merchants simplicity, low costs and immediate results,” said Darren Waddell, vice president of marketing at MerchantCircle.