Facebook Tops in MerchantCircle Merchant Confidence Index

MerchantCircle, an online network of local businesses, released the results of its Merchant Confidence Index survey which revealed that new local ad offerings from Facebook are seeing increased pick up and may even be putting the pressure on Google and Groupon.

"Facebook and other social networks have already established themselves as important marketing channels for local businesses, and the company is effectively parlaying this popularity into local ad sales," said Darren Waddell, vice president of marketing at MerchantCircle. "Most local merchants are working with very small budgets and tend to prefer marketing methods that are easy and familiar, so it stands to reason that many merchants will gravitate towards a well-known brand such as Facebook when it comes to trying locally targeted display ads and group buying."

Survey finding of note include:

- Only 22 percent of merchants report having used Facebook Ads since its launch, but nearly two-thirds (65 percent) of these merchants say that they would use the service again, citing ease of use (67 percent) and the ability to start and stop campaigns (65 percent) as the top reasons for continuing.

- 52 percent responded that familiarity with the Facebook and Google brands would lead them to choose Facebook Deals or Google Offers over competitive offerings. Other reasons for choosing Facebook Deals include bigger audience size (26 percent) and better local targeting (21 percent).

- While three months ago, only 50 percent of merchants who had tried offering a group deal said they would do so again, 77 percent now say they would be willing to offer another daily deal, citing effectiveness in customer acquisition (58 percent), favorable deal structure (30 percent) and profitability of the deal (24 percent) as their top three reasons. Among those who wouldn't offer another daily deal, 42 percent said that it was not effective in customer acquisition, 25 percent said it was too costly and 24 percent said they lost money.

- The popularity of location-based marketing services has also dropped over the past quarter. Data shows that 22 percent of businesses are using Facebook Places to market their business, while just seven percent are using Foursquare. This is trending downward from the last survey in January 2011, when 32 percent said they were using Facebook Places and nine percent said they were using Foursquare.

- MerchantCircle's data shows that local marketing budgets continue to be very small: 61 percent of local merchants are spending less than $2,500 a year on marketing, and 73 percent have no plans to raise their budgets this year. Time is also a critical issue for merchants, with 37 percent citing lack of time and resources as their top marketing challenge.