Social network tops directories as best marketing tool, according to new research.

Over one third of UK small businesses say that they now use Facebook Inc to drum up new customers – more than local directories such as Yellow Pages and Thomson and substantially more than print or online advertising.

Research by technology company BaseKit has found that 36 per cent of small businesses in Britain use the social network to market themselves, where just a quarter say they rely on local directories as a source of new customers.

Increasing popularity for Twitter

Twitter has also become popular with small businesses and their owners – over one-in-six use the site to scout for new customers and to market their services and the micro-blogging site is fast catching up with those who say they use print (21%) or online (20%) advertising for their marketing.

Simon Best, co-founder of BaseKit said: "Small businesses are shifting their marketing to lower-cost media like Facebook and Twitter and away from legacy media like the directories. They tell us that one-to-one marketing is their most efficient and most successful way of generating new business – the fact that Facebook has become the number one source of new business within just a few years of its creation is remarkable."

Some are not online at all

The report also found that while vast numbers of the UK’s 1.1 million small businesses are online and are using sites such as Facebook successfully, there are still 660,000 that have yet to get themselves online at all. This is despite the fact that three quarters of those that do have a site say it has become critical to drumming-up new leads and to their reputation as a company.

"The simple truth is that, for a small business with customers who may be under 40, if you’re not on the web then you are more-or-less invisible. We believe that every small business in the UK should be able to take advantage of the power of the internet as a tool to grow – and should be able to create a professional website cost-effectively," Best concludes.