Although only 22% of local merchants say they have used Facebook Ads, nearly two-thirds of those who have done so (64.9%) say they would use the service again, according to a report by MerchantCircle. Meanwhile, 65.7% of surveyed local merchants say they use Facebook for marketing.
Below, additional findings from MerchantCircle's quarterly Merchant Confidence Index, based on a survey of 4,942 small, local business owners in the US.
Asked why they would use Facebook Ads again, surveyed local merchants cite ease of use (66.5%), followed by the flexibility to pause and restart campaigns as needed (64.8%).
More than one-half of local merchants (53.7%) cite Facebook's targeted display ad offering as a reason for continuing with Facebook Ads and 49.3% cite new business.
But not everyone has had success with Facebook Ads. Among the 35% of local merchants who say they would not advertise with Facebook again, 69.0% say Facebook Ads didn't help them to find new customers and 34.5% say the program was too expensive.
Top Digital Marketing Channels
Facebook is the top digital channel among local merchants (65.7%), followed by Google (53.3%), LinkedIn (45.7%), Google Places (38.8%), and Twitter (32.1%).
Meanwhile, adoption of location-based marketing dropped in the previous quarter: 22% of local businesses say they are now using Facebook Places to market their business, compared with the 32% who said so in in MerchantCircle's 1Q11 report; similarly, 7.3% are now using Foursquare, compared with 9% in 1Q11.
Local merchants have been equally cautious about using top group-buying sites Groupon (4.3%) and Living Social (3.6%) for marketing.
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Group-Buying Adoption Low, but Favorability High
Overall, fewer than one in ten local merchants (9.4%) say they have used some type of group-buying site; among them, 77% say they would offer a daily deal again:
Another 8.4% of local merchants plan to use group-buying sites in the next six months.
Among group-buying naysayers (those who wouldn't offer another daily deal), 42% say their efforts didn't produce new customers, 25% say the costs were too high, and 24% say group-buying is a losing proposition altogether.
Group-Buying Market Evolving
In the rapidly changing group-buying space, familiarity with well-known brands Facebook and Google may give those brands a long-term advantage over current market leaders Groupon and LivingSocial: 52% of local merchants say such familiarity would lead them to choose Facebook Deals or Google Offers over competitive offerings.
Other reasons for choosing Facebook Deals are bigger audience size (26%) and better local targeting (21%). Those more likely to use Google Offers cite Google's bigger audience (42%) and brand reputation (34%).
Few local merchants are experimenting with mobile: 18% report doing any sort of mobile marketing or advertising.
Lack of understanding is a barrier to mobile adoption: 71% of merchants say they don't have a good idea of how to reach consumers via mobile marketing.
Not surprisingly, local merchants say they are short on time and money for marketing:
- 61% are spending less than $2,500 a year on marketing.
- 73% have no plans to raise their budgets this year.
- 37% cite lack of time and resources as their top marketing challenge.
About the data: Findings are based on the sixth Merchant Confidence Index survey, fielded online from April 30 to June 6, 2011 among 4,942 local business owners across the US; 78% of respondents employ fewer than five people.