New Research Quantifies Value of Digital Ads as Policymakers Consider Upending Digital Ads Market
Washington, DC (March 15, 2023): As state and federal policymakers pursue several policy proposals that would change the small business digital advertising marketplace, new research quantifies for the first time the enormous value digital advertising provides both 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,” published by the Data Catalyst Institute on behalf of the Connected Commerce Council (3C), 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, while 80% say digital ads help them compete with larger companies.
“Our report details very specifically how digital advertising boosts small businesses’ bottom lines, helps them earn revenue, grow and succeed,” said Rob Retzlaff, 3C Executive Director. “Unfortunately, some Members of Congress and regulators have blinders on and continue to pursue legislation like the American Choice and Innovation Online Act and the Competition and Transparency in Digital Advertising Act, that would make digital ads more expensive and less effective for small businesses. Changes like these would cost small businesses $500 billion in sales over five years.”
The report also highlights how digital ad publishing helps small businesses with apps, blogs, newsletters, 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 represents an alternative to loans or outside investments. Seventy-two percent of Black, 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.
“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. “Whether using ads to reach your target audience more effectively and efficiently than traditional advertising or selling ad space on your website or app, digital ads help entrepreneurs get started, find customers, make money, and compete with much bigger brands.”
“Digital ads provide small businesses with incredible value, including the ability to grow faster and compete with much larger brands,” said Dr. Mark Drapeau, Editor-in-Chief of Data Catalyst Institute. “While protecting consumer privacy is important, lawmakers must appreciate that the data behind digital ads drives so much success for small businesses, which will likely suffer if data becomes restricted or harder to use.”
And contrary to some policymakers’ claims that only Google and Meta dominate the digital ads marketplace, competition among digital ad platforms is rampant. On average, small advertisers use roughly four digital advertising platforms at any given time, with 64% using more than two digital ad platforms. Twenty-seven percent buy on six or more platforms. Besides Google and Meta, these include Amazon, YouTube, Pinterest, Instagram, Twitter, Apple, Microsoft, and LinkedIn.
Methodology:
This study was conducted from Sept 6, 2022, to Oct 2, 2022, with a total sample size of 2,428 SMBs of which 1,616 were SMB Advertisers (margin of error +/-2.4%), and 1,524 were SMB Publishers (margin of error +/-2.5%).
