Small businesses and entrepreneurs have increasingly been using social media integrated in the marketing and promotional campaigns. But social media for small business is still quite new for a lot of entrepreneurs.

There are plenty of small business owners that believe they should be doing social media as a form of marketing and customer interaction. But as The Wall Street Journal points out in their latest social media for small business story, there’s growing concern of the return on investment for many of these entrepreneurs.

The story highlights two newer forms of social media for small business – Groupon and Foursquare. Groupon is a way for a small business to offer special coupons to its customers at a discount price. So where’s the social media play? Here’s the catch: The discounted rate only kicks in if a predetermined set amount of these coupons are purchased by a set time. If not, the discount and/or coupon is not valid. Bottom line – if the customer wants their (significantly discounted) coupon to work they need to get a bunch of others to sign up to purchase the discounted coupon, along with the company itself. The best way to accomplish this is via social media methods such as Twitter and Facebook.

So here are the ROI issues as it relates to Groupon. Even if enough people purchase the significantly discounted coupon (which is subsidized by the company, by the way), is that enough for the small business to make money at a point that the Groupon experience is worth it in the first place? According to the small business mentioned in The Wall Street Journal story, it’s really only good ROI if a certain percentage of those people (that bought into the Groupon promotion) turn into repeat business. For that particular small business, at least, the ROI has yet to be established.

Here’s how Groupon works:

So let’s move on to Foursquare, which is actually one of the larger social media marketing buzzwords in 2010. In its simplest form, Foursquare is a GPS-enabled technology that allows businesses to reward customers whenever they arrive or even drive by a certain pre-loaded location. As an example, a customer can get additional coupons sent to them (either through email or mobile marketing) if they arrive at a retail location several times. Whether or not Foursquare is effective is highly dependent upon a small business’s ability to be creative with its promotions, ability to effectively reach a sufficient number of people via social media and the number of locations available to people.

What is Foursquare:

Both Groupon and Foursquare can be categorized in the “still too new to be a hit” section of social media for small business, but they both offer exciting new opportunities. No doubt, more people are taking to marketing over social media and even via mobile devices. As a small business owner or entrepreneur we recommend that you test both of these but be cautious about throwing all of your marketing eggs into either basket.

Have you had success with either Groupon or Foursquare? Please leave a comment and let us know.