Digital Ads Taxes Threaten Small Business Growth

Data-powered digital advertising has been a game-changer for small businesses, allowing even the smallest companies to affordably reach the right customers and compete with much larger brands. But now, proposals to tax digital ads threaten to drive up costs — making it harder for small businesses to connect with customers and grow. 

The stakes are high, and understanding what’s at risk starts with recognizing just how crucial digital ads are to small businesses.

How Digital Ads Support Small Business Growth

Many small businesses can’t afford TV campaigns or newspaper ads. Data-powered digital ads offer a cost-effective alternative — they use non-personally identifiable data to connect businesses with the right customers, helping small businesses stretch limited marketing dollars by reaching the people most likely to be interested in their products and services. 

To better understand just how much digital advertising helps small businesses connect with customers and grow, we surveyed over 1,200 small and mid-sized businesses (SMBs) that use digital ads — and the findings speak for themselves:

• 82% said digital ads directly contributed to their 2023 revenue growth
• 69% use digital ads specifically to find new customers
• 59% say digital ads deliver better ROI than TV, radio, print, and out-of-home ads.

In addition, digital ad partners often offer data analysis that helps SMB owners understand how well their ads are performing and adjust accordingly. As one Virginia-based SMB advertiser explained, “Digital advertising provides me with ROI data that legacy advertising methods (e.g., print) cannot.”

Another national survey of 4,000 U.S.-based SMB leaders shows how digital ads drive small business growth, competitiveness, and resilience — even amid inflation, supply chain issues, and other economic uncertainty. According to the findings, among SMB leaders who use digital ads:

• 75% say digital ads help them compete with much larger companies. 
• 76% say the ads are important to their company’s success.
• 70% report that personalized ads and analytics help their business reach new customers efficiently.

“Digital ads give my small business clients the ability to reach people quickly and bring in more revenue,” says Salil Gandhi, an Illinois-based digital marketing expert. “They are absolutely critical to small business success in a constantly evolving economy.”

The Cost of Taxing Data-Powered Advertising

Any proposed taxes on digital advertising would raise costs, limit reach, and make it harder for small businesses to succeed.

Small businesses are already dealing with rising costs, supply chain issues, and economic uncertainty. A tax on digital ads would force many to cut back on advertising, raise prices, or even shut down. Instead of making the tools small businesses rely on less accessible, lawmakers should support access to affordable digital advertising — not tax it.

Lawmakers Must Reject Digital Ad Tax Proposals That Hurt Small Businesses

Digital advertising helps small businesses do more with less — enabling them to find new customers, stay competitive, and make the most of limited resources. But taxing digital ads would make this critical tool more expensive and less effective, and force small businesses into a lose-lose scenario: advertise less or raise prices on customers.

Instead of imposing new burdens, lawmakers should reject digital ad tax proposals and focus on policies that protect consumer privacy while supporting small business growth.