Report: Small Businesses Don't Consider Social Media Crucial

But 14 percent admit they're still not sure how to use it.

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A report by insurance provider Hiscox finds that small businesses consider word of mouth, not social media, essential.

What marketing tool can't small businesses live without? Here's a hint: It's not Facebook (or any other recent innovation). It's old-fashioned word of mouth, according to a new report.

Half of respondents in a survey by insurance provider Hiscox said word of mouth was a "must." More than half of the 304 businesses polled said they used social media, but just 12 percent called it a must-have—even though, as eMarketer points out, the goal of most social media marketing is to create word-of-mouth.

Fourteen percent of small businesses admitted they didn't know enough about social media to use it effectively.

The bigger the company, the more likely it was to use social media for business. While 53 percent of businesses with one to 249 employees had adopted social media, 62 percent of businesses with 50 to 249 employees were using it.

The most effective medium: Facebook, cited by 28 percent of respondents. It was followed by LinkedIn (18 percent), company blogging (8 percent), and YouTube (6 percent).

A separate report last month showed that Facebook, the most visited site on the Internet, is also among the most hated. And according to Inside Facebook, more than five percent of U.S. users, or some six million people, abandoned the site in May.

The Hiscox survey didn't mention Twitter, which—according to research last year—is just as well known as Facebook, and may be even more helpful for marketing. More than half of Twitter users surveyed said they follow brands on the platform, and this group is three times more likely to follow a brand on Twitter than they are to follow a brand on Facebook or any other social network. When asked "Do you follow/friend any brands or companies on social networks" 51 percent said they follow on Twitter, compared to just 16 percent on other social networks.

Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.