Digital advertising has been ubiquitous among large companies for a long time now, with in-house teams or agencies spending big on targeted campaigns to drive sales and, increasingly, build their brand. This is not necessarily the case for smaller businesses however. In our recent work with the IAB UK, we have been looking at if, and how, SMEs do use digital advertising and the barriers for those who do not.

Digital has allowed those with smaller marketing budgets to reach new customers who are interested in their products in a way that, for many, was out of reach before. This has gone at least some way to levelling the playing field. At the extreme end of this, a generation of start-ups and direct-to-consumer brands – like Just East, Asos and Happy Socks in Europe and international giants like Airbnb and Uber – have built their businesses on digital advertising, acquiring customers at phenomenal rates achieving apparent success seemingly overnight. What about for more ‘normal’ small businesses?

In our recent published study, we found that around ~60% of SMEs in the UK use paid digital advertising in some form. This is a lot – over a million – but it still means that ~40% of small businesses (mostly very small, <10 employees) are not using digital advertising. It may not be relevant for everyone, but digital advertising has helped a lot of businesses; so what is stopping the 40%?

One way to look at this is to consider the characteristics of the leading start-ups and direct-to-consumer brands mentioned above, who are making use of digital advertising. It is relatively common for founders to come from finance or consulting backgrounds, be comfortable with analysis, have a bent for making data-driven decisions – and also to come from marketing roles, including digital advertising and branding. Quite often with limited direct experience in their sector, they make a virtue of experimentation, adopting a trial and error approach to success, and this very much applies to digital advertising. Big funding rounds also help.

Contrast this with the ‘average’ small business. Our work showed that the main barriers to digital advertising were a lack of knowledge, with ad services often seen as complex and confusing, and concerns about cost and whether it would be effective. While an owner may have years of experience and know their market and craft inside out, they are less likely to be comfortable with marketing and with practices around experimentation and measurement and are more likely to be cash-constrained – especially now.

It can seem like a big ask for small business owners – with a lot else on their mind – to develop ad creative, navigate tools that are new to you to run campaigns, work out how to measure and understand the impact, and accept that this may not work straight away and will take trial and error to get a return on your (limited) cash. Digital advertising has done a lot for small businesses generally, but there is more for platforms, media owners, agencies, and government to do in terms of product developments, training, and support to level the playing field further.

Download the full study here to find out more.