The study, which examined 416 small businesses, found that 15% are now promoted on social networking sites compared to just 7% at the beginning of the year.
Start-ups rely on social networking the most with 22% using the sites, compared to 13% of home-based businesses and 11% of growing businesses.
The research also revealed regional splits in the take-up of social networking. London is leading the way, with 24% of businesses using it to promote themselves, followed by the South East and North West with 19% each, and Scotland at 8%.
Mick Hegarty, head of BT's Tradespace business social networking website, said: "More and more businesses are starting to use social networking platforms to win and attract new customers. But many are still failing to realise the full potential of the web to help them compete and thrive in our changing world.
"Smaller companies do much of their business through relationships and referrals and professional networking enables them to play to their strengths whenever they interact with customers, suppliers and business partners."
It was also revealed that only half of the businesses surveyed have a website for their company.
BT has launched a new platform on BT Tradespace, which allows companies to create personalised URLs in which customers can browse for products or services.
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