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Social media continues to gain traction in marketing strategies

Industry News

The recent Merchant Confidence Index survey found limited budgets and social websites' ease-of-use is changing the way businesses market to customers.

| February 22, 2011

MOUNTAIN VIEW, Calif. – MerchantCircle’s latest quarterly Merchant Confidence Index survey found that local merchants, who have limited time and money for marketing, are gravitating toward simple, low-cost online marketing methods such as Facebook and other social media, as well as tried-and-true methods such as search and e-mail marketing.

The survey, which was taken by more than 8,500 small and local business owners across the United States, also found new marketing services that are generating buzz in the  media, such as mobile marketing and group buying, are seen as unproven marketing methods to small businesses.

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

Key conclusions from the survey include:

Local businesses have little time or budget to devote to marketing. According to the MerchantCircle survey data, 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. These merchants are also price-sensitive: one quarter of merchants cite high costs as their chief complaint about online marketing (26 percent). Many merchants are also struggling to manage their existing programs and don’t have time to take advantage of new, unproven services, with lack of time and resources the top online marketing challenge for more than one third of merchants (37 percent).

Social media are now the top marketing strategy for local businesses. With its huge consumer adoption, ease-of-use and low barrier to entry, Facebook continues to be a popular way for merchants to market their business, with 70 percent using the social network for marketing, up from 50 percent one year ago. Facebook has now surpassed Google (66 percent) as the most widely used marketing method amongst local merchants.

Facebook Places has benefited from this high level of adoption, soaring past Foursquare to reach a 32 percent current usage rate, with an additional 12 percent citing plans to use Facebook Places in the coming months. While Foursquare’s usage is up from just 2 percent one 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, with nearly 40 percent of local merchants using the microblogging platform to build awareness and community around their products and services, up from 32 percent in quarter four of 2009.

Tried-and-true online methods trump new, unproven approaches. With little time and budget to devote to marketing, local merchants are slow to adopt unproven technologies such as mobile marketing and group buying and are relying on more familiar methods that have delivered results. Three of the top marketing methods for local businesses – social, search and email – are also cited as being the most effective, with 36 percent putting social networking in the top three, 40 percent citing search and 36 percent choosing email marketing.

In spite of the hype around mobile marketing, less than 15 percent of merchants report doing any sort of mobile marketing or advertising, and more than half have no plans to do so in the coming months. Lack of understanding remains a huge barrier to adoption: 74 percent of merchants state that they don’t have a good idea of how to reach consumers via mobile marketing.

Group buying will also take time to penetrate the local market. Only 11 percent of local merchants have offered a “daily deal” using a service like Groupon or LivingSocial, with an additional 20 percent planning to do so in the coming months. Results of group buying have also been mixed and may be hindering growth: 55 percent of people who have run a daily deal campaign said they would not do so again.

Use of traditional offline marketing methods continues to decline. Traditional offline marketing methods continue to decline across the board. Over the course of 2010, use of print advertising dropped by 33 percent (from 40 percent usage to 27 percent); use of print Yellow Pages declined 18 percent (from 45 percent to 37 percent); and use of direct mail decreased 26 percent (from 39 percent to 28 percent).

Don’t expect these methods to disappear anytime soon, however, as many continue to deliver results for local merchants. Twenty-four percent say that coupons or direct mail are still one of their top three most effective marketing tactics, 23 percent say print Yellow Pages are a top three tactic and 20 percent put print newspaper ads in the top three as well.

For more about the study, read the full press release by clicking here.
 

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