• by Erik Sass , Staff Writer @eriksass1, July 15, 2011

Owners of small businesses are lukewarm about social media, even as they recognize its potential for connecting with existing customers and reaching new ones, according to a survey of 304 U.S. small business owners and managers by Hiscox. The findings suggest how far social media still has to go in proving its utility, especially in the area of measuring and demonstrating ROI.

Overall, 47% of small business owners and managers surveyed by Hiscox said they don't use social media for business purposes at all. Though that number sounds discouraging, looked at in glass-half-full mode, it means that roughly 50% are indeed using social media.

The more troubling findings came when Hiscox took a closer look at the attitudes of owners and managers who are using social media: just 12% described social media as a "must" for their marketing and promotional strategies, compared to 50% for word-of-mouth recommendations. Notwithstanding the obvious potential for overlap between social media and WOM, the social media number is low enough that, at least for this survey group, it still looks like a largely experimental exercise -- something which they could just as easily do without. 24% said they do it "when they have the time," and 14% said they just don't know enough about social media. Clearly, these numbers still leave a large proportion of small business owners who are just not impressed with social media so far.

Among those who are using social media, 19% use Facebook, 15% use LinkedIn, and 4% use Twitter. 28% said they considered their company's Facebook page the most important social media channel, compared to 18% for a company page on LinkedIn, and 8% for a company blog. 10% said they use social media for research purposes.

Some of these figures differ from those in other surveys I have covered recently. In May, for example, I reported on a survey by Webs which found that 69% of small businesses were using social media. The Webs survey did turn up similar ambivalence about its effectiveness: of the small business owners surveyed by Webs, 59% said social media has "not met" or only "slightly met" their expectations as a marketing tool, and 43% said they currently allocate 10% or less of their marketing budgets to social media.