REPORT: 22% Of Small Businesses Buy Facebook Ads

While 94 percent small businesses are aware of Facebook's targeted ad offerings, only 22 percent have used them.

More and more small businesses and local merchants are turning to Facebook ads and deals, pushing the social network closer to making a dent in similar offerings by Google, Groupon, and LivingSocial.

This comes from from the latest MerchantCircle quarterly survey of nearly 5,000 local business owners across the U.S. Sp,e 66 percent of respondents use Facebook for marketing, but while 94 percent are aware of targeted ad offerings, only 22 percent have used them.

Of those 22 percent, 65 percent said they would buy Facebook ads again, with 67 percent of potential returnees praising their ease of use and 65 percent happy with the ability to stop and start campaigns.

Of the 35 percent that will not be returning to Facebook ads, 69 percent reported a lack of new customers due to the ads, while 35 percent mentioned their high cost.

Pricing is no small factor, as MerchantCircle found that 61 percent of local merchants are spending less than $2,500 per year on marketing, and 73 percent have no plans to raise their budgets in 2011.

And 52 percent of respondents citing familiarity with Facebook and Google as a reason why they would opt for Facebook deals or Google offers instead of established incumbents Groupon and LivingSocial.

Those leaning toward Facebook deals pointed out a bigger audience size (26 percent), and better local targeting (21 percent), while the Google offers fans highlighted larger audience size (42 percent), and the search-engine giant’s brand reputation (34 percent).

Location-based marketing services slumped compared with the past quarter, with the most recent survey showing that 22 percent of businesses are using Facebook places to market their business, and seven percent are using Foursquare, compared with 32 percent and nine percent, respectively, in the January survey.

MerchantCircle vice president of marketing Darren Waddell said in a press release:

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. 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 toward a well-known brand such as Facebook when it comes to trying locally targeted display ads and group buying.

Readers, what do you think of MerchantCircle’s latest findings?