The short answer is: Yes it can be, if you do it correctly.
In March the Wall Street Journal sited statistics that points to a mixed result. According to the survey referred in the article, it showed 22% of 500 U.S. small companies made a profit last year from promoting their firms on social media, while 53% said they broke even. Another19% said they actually lost money. The survey was done by the University of Maryland’s Smith School of Business and Network Solutions LLC. Many small businesses selling products or services to consumers have adopted social media as one of their marketing tools because it is low cost and easy-to-use. A separate survey done by the same sponsor found that the number of small businesses (with less than 100 employees) using social-media as part of their on-line marketing strategy had doubled last year from 12% to 24%.
The key to positive results is regular interaction with consumers through such sites as Facebook and Twitter. It is a time investment as you build relationships, creditability, and exposure with the consumers before they become customers. In the same Wall Street Journal article on Mar 16, 2010, Stephen Bailey, who oversees internet marketing initiatives for John Fluevog Boots & Shoes Ltd, a footwear and accessories retailer in Vancouver, shared that his company saw a 40% increase in online sales in 2009 due to social-media marketing efforts.
The good news for small and mid size business is that most social media tools are free. With some creativity and passion about your product and service, you can make it a great marketing tool for your company.