Why Facebook is the #1 Marketing Tool for Small Businesses

Facebook Emineo MediaDespite a plethora of social networks and location-based services being launched every other month, Facebook continues to be the #1 Marketing Tool for small businesses. These are the findings of a MerchantCircle survey which queried 8,000 small businesses about the adoption of various marketing products. The survey reports that as many as 70 percent small businesses use Facebook to promote their business – up from 50 percent a year ago.

It’s yet another indication of the how the world’s leading social network has come off age – many businesses say that Facebook now ranks ahead of Google, the leader in online advertising.

Facebook has always been popular amongst business users but it lacked the killer punch of an attractive location-based service. Facebook Places filled the gap and it’s no wonder that it’s sucking small businesses away from Foursquare, Gowalla and others.

Survey Findings

Nearly 32 percent survey respondents said they’ve used Facebook Places. Overall, around 70 percent of those surveyed use Facebook.com for promotions. It’s no mean achievement to beat Google, which accounts for 66 percent share.

It’s understandable that most small businesses operate on a shoestring budget for their marketing campaigns. More than 50 percent of local merchants’ marketing budgets were less than $2,500 in 2010, and nearly every three in five businesses do not plan to increase those spends this year. While 26 percent of the survey respondents cite high costs as the major deterrent to online marketing, another 37 percent say they don’t have the time and resources to use social media as an online marketing tool.

Facebook Places

When Facebook Places was launched, critics were quick to write it off as yet another location-based service. However, it has proved to be a master stroke for the world’s leading social network. Nearly 32 per cent of survey respondents are promoting their business through Facebook Places and an additional 12 per cent plan to use it in the coming months.

Though Foursquare is widely regarded as the world’s most popular location-based service, it leaves a lot to be desired for business users. In contrast, Facebook Places has been a blessing in disguise for the world’s leading social network and there are ominous signs that it will continue to rule the small to medium-size business segment for the next several years.

Facebook vs. Google

The survey confirms that search marketing is still #1 means to achieve overall effectiveness in online marketing. Nearly half of respondents (40 percent) said that Google helped them generate the biggest return on investment. IMO, it’s not an either/ or proposition between Facebook and Google. While the former brings the power of social media, the latter helps boost a small business through SEO and viral search.

The Groupon Threat

Groupon was all the rage amongst small businesses last year. However, a recent study indicates that Groupon promotions were unprofitable for 32 percent of the businesses surveyed and over 40 percent of those businesses indicated they would not run a comparable promotion again.

IMO, Groupon isn’t really a threat for Facebook. In fact, it’s unfair to compare the two as one is merely a deals and discounts service while the other is a full-fledged social media platform for businesses with several value-adds such as Facebook Places, Facebook Deals etc.

Do you use Facebook for online marketing? Do you consider it to be a better online marketing tool than Foursquare and Groupon? Please share your opinion by leaving a comment below this post.

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