New Advertising Trends Small Businesses Need to Know

By Shelby Jordan / 22 February 2021

There are more advertising opportunities available for small businesses today than ever before. New data reveals current advertising trends and best practices to guide small businesses in building an advertising strategy for the future.

Many major companies succeeded in delivering viral advertisements by capitalizing on current events and trends from 2020.

Following the hype of the final Avengers movie, Planters created a live-action video that killed off their long-standing brand mascot, Mr.Peanut. The video received over 7 million Youtube views and went viral on Twitter. 

As businesses across the globe scramble to embrace a fully remote work environment amidst the COVID-19 pandemic, Zoom launched a virtual background contest.  Over 2,000 Instagram users shared their most creative backgrounds for the chance to win a prize and help Zoom advertise their brand.

Instagram launched the #ShareBlackStories campaign to highlight black creators following the widespread protests against police brutality. The original post received over one million likes and encouraged users to leverage the platform to speak up for their beliefs.

Viral advertisements are definitely easier for large companies that already have the funds to create content and the loyal customer base to share it. Small businesses still trying to find their footing, however, face a bit more of a challenge. 

The Manifest surveyed about 500 small business owners to understand their approach to advertising and identify best practices and trends going into the new year. 

The data reveals several key trends across all of the advertising channels available. Small businesses can use the following to understand how to build an effective advertising strategy.

Our Findings

  • The majority of small businesses (55%) spent less than $50,000 on advertising in 2020 and only 11% spent more than one million dollars.
  • Most businesses with fewer than 10 employees (68%) spent under $10,000 on advertising 2020 with only 4% spending more than $100,000. Conversely, only 7% of businesses with more than 50 employees spent under $10,000 on advertising compared to 47% that spent more than $100,0000.
  • More than half of small businesses (55%) advertise on social media platforms, making it the most popular advertising channel. Furthermore, 45% plan to increase their investment in 2021.
  • Nearly half of small businesses (47%) allocate up to 30% of their ad spend to social media, compared to 39% that allocate between 31–70% and only 6% that allocate over 70%.
  • Small businesses prefer to advertise on Facebook (66%), Youtube (42%), and Instagram (41%) over other short-form video platforms like Snapchat (15%) and TikTok (12%).
  • About one-third of small businesses (32%) already advertise on digital video platforms and 35% plan to increase their video advertising efforts in 2021.
  • Of the 28% of small businesses that invest in print advertising, 24% plan to reduce their investment  in 2021.
  • As search results pages become more competitive, 19% of small businesses plan to do more PPC advertising to guarantee visibility on search. 
  • Despite the economic downturn due to COVID-19, 38% of small businesses increased their investment in advertising efforts and only 22% decreased their ad spend. 

Growing Companies Spend More on Advertising

A main challenge many new businesses face is a lack of resources. Owners have to prioritize their investments and for many, advertising does not top that list.

Most small businesses (55%) spent less than $50,000 on advertising in 2020 and only 11% spent more than one million dollars. 

The U.S. Small Business Administration recommends that small businesses invest about 8% of their gross revenue in marketing or advertising efforts, but some experts report that new businesses actually only invest about 2%.

Once a company has an established foundation with more financial flexibility, they can focus on advertising strategies designed to reach new customers. 

In fact, 68% of businesses with fewer than 10 employees spend under $10,000 on advertising. Only 7% of businesses with more than 50 employees have a budget that small.

Businesses with fewer than 10 employees spend less on advertising than businesses with more than 50 employees.

Similarly, only 4% of businesses with fewer than 10 employees spend more than $100,000 on advertising compared to 47% of businesses with more than 50 employees.

Daniel Cooper is the managing director on advertising strategy for Lolly Co, a technology consultancy founded in 2019. 

“For the first year or so, our primary method of finding new customers was through referrals,” Cooper said. “We noticed that good work equaled more referrals and because of that, our marketing and advertising budget was not big.”

Cooper admits that the company’s approach to advertising has shifted as they’ve grown. His team has recently ventured into social media marketing, link-building and SEO services, and additional digital ads to reach new customers. 

Small businesses looking to expand their customer base should invest in a strong advertising strategy that can scale as they grow.

Social Media is the Most Popular Advertising Channel for Small Businesses

Many people rely on Facebook to check in with family, Instagram to keep up with friends, and Twitter for recent news or trends — in fact, more than 80% of every generation checks social media daily.

With usage rates continuing to rise, small businesses recognize the importance of a strong social media presence compared to other advertising opportunities.

55% of small businesses advertise on social media, making it the most popular channel in 2020.

Social media is currently the most used advertising channel for small businesses, and that trend will continue into 2021.

Over half of small businesses (55%) already advertise on social media platforms and 45% plan to increase their investment in the new year.

45% of small businesses plan to increase their social media advertising in 2021.

Social media advertising offers direct access to customers and helps small businesses gain important insight about their audience.

There are dozens of tools available to help small businesses understand their customers by measuring how they react to and engage with their content. Companies looking to invest more should also consider partnering with a social media marketing agency

Eric Clay is the CEO of digital marketing firm Vale Creative. He believes that social media advertising is critical for small businesses, especially following the COVID-19 pandemic.

“Companies can no longer rely on traditional advertising strategies like trade shows or in-person events,” Clay said. “The most important thing small businesses can do is make sure they are advertising on the right social channel for their business.”

Based on Clay’s experience, business-to-consumer (B2C) companies will find Facebook or Instagram most effective and business-to-business (B2B) companies should focus on building a LinkedIn presence. 

When creating a social media advertising strategy, small businesses should first think about their target audience and identify which platforms they are most likely to use. 

Experts recommend Facebook to any small business looking to reach a wider range of people.

“With over two billion users, Facebook is a powerhouse,” said April Maccario, founder of advice blog AskApril. “It’s easy to create an account for free and with the option to have paid ads, you can be sure your ads get stuck on people’s minds.”

Every social media platform offers specific advantages and disadvantages when it comes to advertising. Small businesses looking to directly reach their customers and grow their audience need to include social media in their advertising strategy.

Most Small Businesses Pay to Advertise on Social Media

As more small businesses flock to social media to reap the benefits of engaging with their customers, the competition increases.

Many platforms offer paid advertising options that give small businesses more control over their content and help them compete on social media. 

Small businesses invest in paid social media advertising at different levels:

  • 47% of small businesses allocate up to 30% of their total ad spend to social media advertising
  • 39% of small businesses allocate between 31–70% of their total ad spend to social media advertising
  • 6% of small businesses allocate over 70% of their total ad spend to social media advertising. 

While social media is an important aspect of an effective advertising strategy, it wouldn’t be wise to allocate all of your advertising budget to paid social media campaigns. Instead, use social media to supplement other efforts. 

Sophie Bowman, founder of Brand Branding PR, believes social media advertising is essential, but only if it has a point. 

“Many brands still run social media ads simply to gain brand awareness and attract more followers,” Bowman said. “That’s great, but what's the point if you don’t have a bigger objective or a funnel to transition users to customers?”

Bowman recommends focusing on conversions. Before running a paid social media ad, establish a clear objective and call to action to ensure return on investment such as capturing data or measuring website hits. 

Additionally, it’s important for small businesses to identify which platforms match their company objectives. 

Facebook is the most popular social media platform for paid advertising: 66% of small businesses pay to advertise on Facebook compared to Youtube (42%), Instagram (41%), and other short-form video platforms like Snapchat (15%) or TikTok (12%).

Small business pay more to advertise on Facebook, YouTube, and Instagram compared to Snapchat or TikTok.

Each of these platforms can help small businesses reach specific consumer groups.

“A brand targeting a younger market would be best suited for TikTok where as a brand with a target consumer age of 24–34 could expect a higher return from Instagram,” Bowman said. “YouTube works well for everyone, especially how-to videos.”

Small businesses that plan to include social media in their strategy should pay to advertise on platforms their target audience uses most.

Video Advertising Is a Growing Trend

Video platforms allow small businesses to promote their products with both copywriting and visual content.

Nearly one-third of small businesses (32%) advertise on digital video platforms like Youtube, making it the second most popular advertising strategy behind social media marketing. 

Additionally, 35% of small businesses plan to do more video advertising in 2021.

Over one-third of small businesses plan to increase their advertising on online video platforms in 2021.

Experts predict video advertising to be one of the bigger trends in the new year due to its numerous benefits:

  • Increased user engagement 
  • Combined visual and narrative
  • Expedited sales funnel for customers
  • Increased brand awareness

Dave Nilsson, founder and director at SEO agency The Converted Click, believes that brands should definitely invest in video advertising because by 2022, videos are expected to account for 82% of internet traffic.

“Small businesses should use Youtube, TikTok, and Snapchat videos to amplify their marketing efforts,” Nilsson said. “Businesses can add a fun element to marketing campaigns through TikTok videos or partner with creators to boost brand visibility through user-generated content.”

It’s important to note, however, that video advertising works better for some industries and business models than others.

Similar to his views on social media marketing, Eric Clay believes that B2B and B2C companies should approach video advertising differently.

“B2C companies should absolutely have a presence on Youtube, Snapchat, and TikTok,”  Clay said. He does recommend, however, that B2B firms focus more on organic and paid LinkedIn advertising. 

“Even if your B2B prospects are on TikTok, they probably aren’t there to evaluate your revolutionary new cybersecurity software,” Clay said.

While video advertising can help with brand building, small businesses should consider whether video is the best way to present their product or service to their target customers. 

Print Advertising is On the Way Out

Signage, flyers, and direct mail are some of the oldest advertising tools still widely used by today’s marketing experts. 

Print advertising is still the third most popular advertising channel — 28% of small  businesses include print advertising in their marketing strategy. 

Even as we move closer to a digital society, there are still numerous benefits of print advertising. To name a few:

  • Consumers view print ads with more credibility
  • Print ads have more influence 
  • Consumers approach print with longer attention spans
  • Print advertising includes a variety of smaller channels
  • Consumers are more likely to act on print ads

Print advertising doesn’t just include magazine and newspaper ads. Small businesses can also invest in local flyers, signage, and billboards.

Many experts still believe traditional approach to marketing has its benefits, but some small businesses feel differently.

Nearly a quarter of small businesses (24%) plan to reduce their investment in print advertising in 2021. 

24% of small business plan to reduce their investment in print advertising in 2021.

Some small businesses use social media to share their digital images and promotional flyers in place of print efforts. Targeted social media advertising  can help small businesses reach readers on specific topics or customers in a certain location the same as print advertising campaigns..

Gilad Rom is the founder of Huan, a company that sells smart tags to help find pets that go missing. Rom believes that the ability to target specific groups is a huge benefit of social media advertising. 

“With targeting you can ensure your ads reach the right audience who will be the most receptive to your message,” Rom said. “This makes social media advertising not only effective, but highly cost-efficient.”

While there are benefits to print advertising, companies like Huan experience the same results through targeted social media strategies. 

Other small businesses might be following the same path — choosing to reduce their investment in print mediums in favor of more robust social media efforts. 

PPC Advertising Offers New Opportunities For Small Businesses

Google results pages have changed considerably in the past decade. Until 2012, users were presented with a list of links to relevant web pages after searching for a specific word or phrase. 

Since then, Google has added several new features designed to present users with the information they are looking for without having to click through to another page. 

This has decreased the opportunity for small businesses to appear near the top of search results pages. PPC advertising is one of the only guaranteed strategies. 

About 1 in 5 small businesses (19%) plan to do more PPC advertising in 2021. 

Nearly 1 in 5 small businesses (19%) plan to do more PPC advertising in 2021.

PPC advertising offers small businesses more control than other strategies. Search engine marketing consultants can help small businesses get the most out of their campaigns.

Rebeca Sena is an architectural marketing consultant at GetSpace.digital, a marketing agency for architects and designers. Sena believes that the benefits of PPC advertising are two-fold. 

First, paid ads on Google search pages can result in quick sales.

“PPC advertising is a great way to find the first clients in a competitive industry,” Sena said. “Many small companies can use it to circumvent the lengthy and costly process of leading potential customers down the sales funnel by hitting sales keywords on Google.”

Second, PPC campaigns can be easily tested and optimized.

“When using paid ads, it’s crucial to focus on gradual improvement by performing A/B tests,” Sena said. “Combining regular, experimental tests with best advertising practices to target well-described client personas can be a cost-effective approach to building results over time.”

While PPC advertising requires more of a direct financial investment than other forms of advertising, it allows small businesses to have more control over their campaigns.  

The COVID-19 Pandemic Increased the Need for Advertising

As COVID-19 spread quickly through the greater part of 2020, small businesses across many industries experienced the effects of the worst economic downturn since the Great Depression

With many businesses struggling and consumers trying to save money, it would be logical to assume that small businesses reduced their advertising spend to adjust to the new economic environment. 

Our data, however, tells a different story.

In 2020, more small businesses increased how much they invest in advertising channels (38%) than decreased (22%).

More small businesses (38%) increased their advertising spend during the pandemic than decreased (22%).

The pandemic forced people inside and many turned to their digital devices — the average American adult now spends over 16 hours a day on digital platforms.

Small businesses recognized the opportunity and instead of saving money by reducing their advertising budget, focused their efforts on continuing to reach customers through a digital medium. 

Nick Gellar is a co-owner of parking enforcement company, LMS Parking. His company’s advertising has increased.

“COVID-19 actually helped our advertising because people are home all the time and more glued to their phone, which is great for anyone in advertising,” Gellar said.

Kamaldeep Singh, founder of digital advertising agency Zhoustify, had a similar experience in 2020.

“Our advertising budget continues to grow as everyone stays at home,” Singh said. “Despite what some experts may say, marketing is at an all time high for many industries — the pandemic has actually improved results for our clients.”

The spread of COVID-19 increasingly pushed consumers online. As long as social distancing and stay-at-home orders continue, small businesses can expect to see increased opportunity for digital advertising. 

Advertising is Key for Small Businesses 

Because there are so many channels available, small businesses have a lot to consider when crafting an advertising strategy that effectively reaches and resonates with their target audience. 

These current industry trends can help small businesses identify which advertising opportunities they should prioritize to meet their company objectives.

  • Growing companies spend more on advertising as they aim to expand their customer base and scale their operations.
  • Social media is the most popular advertising channel among small businesses because it offers the ability to directly reach and interact with customers.
  • Small businesses are paying to advertise on social media platforms most popular with their target audience.
  • The ability to blend both strong copy with a visual narrative is appealing for small businesses, making online video advertising a growing trend in the industry. 
  • While there are still benefits of traditional print advertising, many small businesses are choosing to reduce their investment in print mediums and instead focus on social media. 
  • Despite the cost associated with PPC advertising, small businesses plan to invest more in paid search to ensure they appear on competitive search results pages.
  • Small businesses increased their advertising efforts during the COVID-19 pandemic as consumers spend more time online. 

A strong advertising strategy will be key for small businesses looking to grow in the new year. 

About the Survey

The Manifest pulled this data from a survey of 500 small business owners and managers in the United States that work at companies with fewer than 500 employees.

Fifty-three percent (53%) of respondents are female; 47% are male.

Twenty-six percent (26%) are 18 to 34; 50% are 35 to 54; 24% are 55 or over.

Seven percent (7%) of respondents’ businesses have 1 employee; 36% have 2 to 10 

Respondents are from the South (35%), Northeast (23%), West (22%), and Midwest (20%).

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