August 15, 2011, 2:00 PM

Facebook realizes that for small businesses, location is a big deal

The social network now allows marketers to target consumers based on their ZIP code.

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Facebook Inc. now allows marketers using the social network’s self-service ad placement tool to target consumers with ads based on the consumer’s ZIP code.

The social network says it added the feature, which is only applicable to U.S. shoppers, because it was one of marketers' most frequent requests. Facebook previously only allowed advertisers to target consumers based on their city, state, province or country.

Unlike Google AdWords, which allows a marketer bidding for paid search ads to affix a radius around a particular ZIP code to target a specific area, marketers on Facebook can select select one or multiple ZIP codes to target.

The social network’s new refinement feature could be particularly appealing to small businesses, a group that’s been reluctant to embrace social marketing. A June Pitney Bowes Inc. survey found that small business owners prefer e-mail marketing to other channels, such as social media and direct mail. 20% of survey respondents said they market on social media, compared with 60% that use e-mail.

If Facebook is able to attract more small business advertisers it could bolster the social network’s advertising business, which already accounted for 31.2% of all online display ads U.S. Internet users viewed during the first quarter, according to web measurement firm comScore Inc.

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