March 15, 2023

New Research: Digital Advertising Helps Level the Playing Field for U.S. Small Businesses

By Data Catalyst Institute

Washington, DC (March 15, 2023): A new Data Catalyst Institute (DCI) research report quantifies the value digital advertising provides small business advertisers (ad buyers) and publishers (sell ads on websites, YouTube, and apps). The report “Maximum Impact: How Digital Ads Level the Playing Field for U.S. Small Businesses” found 57% of advertisers and publishers earn more than $50,000 per year from buying and selling digital ads, respectively. Eighty-two percent of advertisers say digital ads help them reach customers more effectively than traditional ads like billboards and television. In contrast, 80% say digital ads help them compete with larger companies.

“Digital advertising is the great equalizer for small businesses,” said Beth Egan, Associate Professor of Advertising at Syracuse University’s S.I. Newhouse School of Public Communications, who consulted with DCI on the project. “Whether using ads to reach your target audience cheaper and more efficiently than traditional advertising or selling ad space on your website, app, or social media accounts, digital ads help entrepreneurs get started, find customers, make money, and compete with much bigger brands.”

The report also highlights how digital ad publishing helps small businesses like apps, blogs, and YouTube channels find revenue streams quickly and easily. With access to capital still a significant hurdle for Black and Hispanic business owners, ad sales revenue also represents, significantly, an alternative to investment capital. Seventy-two percent of Black-led SMB publishers, 65% of Hispanic-led SMB publishers, and 71% of publishers generally agree they would not have been able to launch and sustain their business without revenue from digital advertising.

“Ad revenue provides an alternative form of ‘seed funding’ for minority-led businesses that frequently face difficulty securing traditional startup capital or financing,” said Dr. Mark Drapeau, Editor In Chief of the Data Catalyst Institute. “Revenue driven by selling digital ad space is an easy and effective way for bloggers, YouTube personalities, app publishers, and startup founders to monetize their digital platforms right out of the gate.”

“Digital advertising works so well for small businesses because it can drive significant value with a minimal investment,” said Rob Retzlaff, Executive Director of the Connected Commerce Council, which sponsored the research. “There have never been more choices, better return on investment, or an easier way to compete than digital advertising to find new customers and grow. And it has never been easier to turn a blog or app into revenue than by selling digital ads.” 

More key findings from this research include the following:

SMB Advertisers 

  • SMB Advertisers estimate their businesses have grown 39% in the past two years because of digital advertising.
  • 78% of SMB Advertisers agree that digital ads contribute more revenue to their business than traditional offline ads.
  • 80% of SMB Advertisers agree that digital ads help their company compete with much larger competitors.
  • SMB Advertisers use an average of four digital advertising platforms (e.g., YouTube, Instagram).
  • 64% of SMB Advertisers use more than two digital ad platforms.

SMB Publishers 

  • 92% of SMB Publishers say digital advertising revenue contributes to the company’s revenue.
  • SMB Publishers estimate their businesses have grown 40% in the last two years because of digital advertising.
  • 71% of SMB Publishers say they could not have launched and sustained their business without revenue from selling digital ads.
  • 91% of SMB Publishers report that it was easier or about the same level of effort to sell digital ad space in 2022 compared to previous years.
  • Without the revenue generated by selling digital ads, 75% of SMB Publishers would be unable to produce and/or share as much content as they do now.

To view the report, click here.

Inquiries: media at datacatalyst dot org or contact at datacatalyst dot org

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