Facebook Ads Gaining Popularity Among Local Businesses

    June 9, 2011
    Chris Crum

22% of local merchants have used Facebook Ads, and two-thirds of them would use them again, according to a survey from MerchantCircle. The firm’s quarterly Merchant Confidence Index, a survey of about 5,000 local business owners across the US, finds that Facebook ads are gaining popularity due to ease of use, and the ability to start and stop campaigns (the top reasons cited).

Darren Waddell, vice president of marketing at MerchantCircle, tells WebProNews, “The surveys continue to show us that local businesses have very limited budgets, and social networks have become a mainstream marketing method for them.”

Of the 35% of merchants who said they wouldn’t advertise with Facebook again, 69% said the ads didn’t help them acquire new customers and 35% said they were simply too expensive.

Facebook Ads

MerchantCircle also found that “familiarity may favor Facebook and Google in the daily deals market,” a bold conclusion, based on the success of industry leaders (in this particular space) like Groupon and LivingSocial, the former having just filed for an IPO and the latter being integrated into a new offering from Amazon (an investor in the company).

“For local merchants, familiarity with huge social network brands like Facebook, their ease of use and the large audience they offer certainly play into the decision on which locally targeted ads and group buying deals to try out,” Waddell tells us.

52% said the familiarity of the Facebook and Google brands would lead them to choose Facebook Deals or Google Offers over competitive offerings. Business owners also cited bigger audience size (26%) and better local targeting (21%) as reasons to use Facebook Deals. Bigger audience (42%) and brand reputation (34%) were the top reasons for using Google Offers cited by those most likely to do so.

77% of those who have done daily deals say they’d be willing to offer another one, citing effectiveness in customer acquisition (58%), favorable deal structure (30%) and profitability of the deal (24%) as top reasons.

Out of the ones that wouldn’t offer another daily deal, 42% said it wasn’t effective in customer acquisition, 25% said it was too costly and 24% said they lost money.

The survey found that print advertising dropped from 27% to 24%, use of print Yellow Pages declined from 37% to 29%; and use of direct mail decreased from 28% to 26%. Interestingly, the popularity of location-based marketing services has also dropped over the past quarter.

The survey found that 22% of businesses are using Facebook Places to market their business, while only 7% are using Foursquare. In January, 32% were using Facebook Places and 9% were using Foursquare.

In fact, mobile marketing in general doesn’t appear to be doing as well as one might think. Only 18% of merchants reported doing any sort of mobile marketing or advertising whatsoever. This may have a lot to do with limited budgets and a newer, untested medium. 71% said they don’t have a good idea of how to reach consumers via mobile marketing and 61% are spending less than $2,500 a year on marketing. 73% have no plans to raise their budgets this year.

The results of the Merchant Confidence Index also found that merchants remain cautiously optimistic about the economy and revenues, while hiring is holding steady. 57% of small business owners expect revenue to improve or slightly improve over the next three months, over which time, 90% of merchants expect to keep headcount the same or add jobs.


Chris Crum
Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.