The 'Aquent Orange Book 2008-2009' survey found that between 2% and 7% of UK candidates and employers use social networking websites for recruitment purposes.
However, 39% of German candidates, 34% of French candidates, 30% of Polish candidates and 23% of candidates from the Netherlands rated social networking sites as a preferred method of job seeking, as did 13% to 18% of employers in these regions.
Stefan Ciecierski, European managing director of Aquent, said: "As a new tool for talent acquisition, social media has yet to be fully tested or quantified in the UK -- and almost all feedback is anecdotal.
"For employers, it remains hugely labour-intensive, can be frustrating, and poses very real risks of brand damage and internal misuse.
"Candidates, on the other hand, expose themselves to potential discrimination and can also damage their employment prospects because their online footprint may not come across very favourably."
However, Ciecierski believes that despite its flaws, social media is "worth exploration and investment, especially as avenues like job boards and print media are becoming less effective and more expensive".
Aquent's survey also found that the demand for skilled digital specialists across London continues to increase. This has reportedly led to high rates of staff turnover and short lengths of employment.
The average length of service was found to be two years for staff in corporate sectors and digital agencies.
Meanwhile, staff turnover rates of 20% and greater were recorded for a quarter of digital and marketing staff in digital agencies.
Ciecierski said: "These high rates of employee churn have an obvious raw cost to the business, but at a deeper level they will harm the competitiveness of many agencies at a time when securing market share is increasingly critical."