Small businesses maintain marketing budgets despite economic fears

LocaliQ released its second annual Small Business Marketing Trends Report on October 27, 2025, surveying over 300 small business owners about their marketing strategies, spending patterns, and technology adoption. The research reveals that despite 66% of small businesses viewing economic uncertainty as challenging in 2026, only 8% plan to decrease their marketing budgets.

The findings illuminate how small businesses with limited resources navigate an increasingly complex digital marketing landscape. Most companies surveyed operate with monthly marketing budgets under $1,000 while managing campaigns across multiple channels without dedicated marketing staff.

Social advertising overtakes search in popularity

Social media advertising now reaches 56% of surveyed small businesses, surpassing search advertising adoption at 45%. This marks a notable shift in channel preference that reflects several market dynamics.

The gap may stem from cost considerations. Recent benchmark data shows Facebook Lead Ads averaging $27.66 per lead while Google Ads costs rose 12.88% to reach $5.26 per click across industries in 2025. The cost differential creates accessibility challenges for businesses operating on limited budgets.

Platform usability also influences adoption patterns. Social advertising platforms offer familiar interfaces and simplified campaign creation compared to search advertising's technical complexity. Many business owners already use social platforms personally, reducing the learning curve for promotional content.

Search engine results page changes throughout 2025 may contribute to the shift. Google introduced AI Overviews and modified ad placements, potentially affecting advertiser confidence in traditional search marketing effectiveness.

The report found 90% of surveyed small businesses use Facebook for social marketing, up from 76% in 2024. Instagram follows at 74%, up from 63%. TikTok usage declined from 34% to 22%, potentially reflecting the platform's uncertain regulatory environment and increased competition requiring consistent content production.

Budget constraints define small business marketing

The research reveals 52% of surveyed businesses operate on monthly marketing budgets below $1,000. Half report no employees dedicated solely to marketing functions. These resource constraints force businesses to prioritize low-cost tactics while limiting investment in paid advertising channels that require substantial minimum spending.

Small businesses identified lead generation as their primary challenge, with 59% describing it as difficult for 2026. This concern intensifies for budget-constrained operations that cannot scale paid acquisition channels effectively.

The findings show businesses with monthly budgets below $1,000 are 45% more likely to lack dedicated marketing staff compared to larger operations. This creates operational challenges where business owners must balance marketing execution with other responsibilities.

Customer referrals remain the dominant lead source at 83%, up from 65% in 2024. For businesses with 10 or fewer employees, referral dependence reaches 87%. This reliance on organic acquisition methods reflects both budget limitations and the effectiveness of word-of-mouth for local businesses.

Digital marketing and online advertising rank as top lead sources for 46% of businesses overall. However, this percentage drops to 37% for businesses spending under $1,000 monthly, while rising to 71% for those investing over $10,000. The correlation between budget size and digital channel effectiveness underscores the resource intensity of paid acquisition strategies.

Video investment accelerates heading into 2026

Video marketing and advertising leads planned investment increases for 2026, with 53% of businesses planning to allocate more budget to the channel. Search advertising follows at 47%, with social media advertising matching that percentage.

Among businesses not currently using video marketing, 51% plan to begin investment within 12 months. This represents the highest adoption rate among non-users for any channel examined.

The video investment surge aligns with broader industry trends showing 21.9% growth in video advertising expenditure. IAB research indicates 86% of buyers plan to use generative AI for video creation by 2026, reducing traditional production barriers.

Video satisfaction rates reached the highest levels among surveyed tactics, suggesting businesses investing in the channel see measurable results. Reputation management tied for top satisfaction, with both channels showing strong performance despite relatively lower adoption rates.

Traditional media faces declining investment, with 24% of businesses planning to reduce spending in 2026, up from 16% in the previous year's report. This shift indicates continued budget migration from conventional channels toward digital video and social platforms.

AI adoption stabilizes at 60% usage rate

Artificial intelligence adoption held steady at approximately 60% of surveyed small businesses, maintaining levels from the previous year. However, usage patterns shifted significantly, indicating deeper integration into daily operations.

Content creation leads AI applications at 81%, up dramatically from 52% in 2024. Design follows at 54%, with social media management at 35%. The increases suggest businesses moved beyond experimental AI usage toward practical workflow integration.

Time savings motivate 84% of AI users, up from 61% previously. Idea generation ranks second at 78%, up from 50%. These efficiency gains become particularly valuable for businesses operating without dedicated marketing staff.

The stabilized adoption rate combined with increased usage depth suggests AI has transitioned from experimental technology to established marketing infrastructure for small businesses. European research shows 85% of advertising companies now deploy AI-based tools, indicating widespread market acceptance.

AI implementation faces accuracy challenges. Research published in July 2025 found 20% of AI responses about PPC strategy contain inaccuracies, with error rates varying significantly across platforms. This underscores the need for human oversight in AI-assisted marketing workflows.

Unpaid tactics dominate channel mix

The most utilized marketing channels skew heavily toward unpaid strategies. Unpaid social media marketing reaches 66% of businesses, followed by email marketing at 53% and SEO at 53%. These tactics require time investment rather than monetary expenditure.

Website chat and online listings show the lowest satisfaction rates at 19% and 18% dissatisfaction respectively. This may reflect measurement challenges, as brand-building tactics produce indirect results that are difficult to attribute directly to revenue outcomes.

Businesses operating on budgets below $1,000 monthly show notably lower search advertising adoption at 30%. This leaves 70% of budget-constrained businesses without access to a channel that drives direct conversion when users actively seek products or services.

The reliance on unpaid tactics creates efficiency challenges. Many free strategies require substantial time investment and specialized expertise to execute effectively. Without dedicated marketing staff, business owners must develop these skills while managing other operational responsibilities.

Small businesses reported spending 1-10 hours weekly on marketing activities, with this rate reaching 72% for companies with 10 or fewer employees. Limited time combined with diverse tactical requirements often prevents small businesses from achieving optimal execution across multiple channels.

Marketing tools and technology adoption

Website analytics usage reached 70% of surveyed businesses, representing a 50% increase year-over-year. Design tools like Canva follow at 63%, up 47% from the previous year. These increases indicate growing recognition of data-driven decision-making and professional content creation requirements.

Lead management software adoption remains surprisingly low at 32% despite businesses identifying lead generation as a primary challenge. This gap represents a potential opportunity for small businesses to improve conversion rates and customer relationship management.

Social media scheduling tools reach 56% adoption, while customer relationship management systems are used by 42% of businesses. Email marketing platforms show 41% utilization. These tools address workflow efficiency and automation needs for resource-constrained operations.

The tool adoption pattern reflects a pragmatic approach where businesses prioritize free or low-cost solutions with clear usability benefits. Professional-grade marketing technology requiring substantial investment or technical expertise sees lower adoption rates.

Marketing partnership relationships decline

Only 34% of surveyed businesses currently work with marketing partners, representing a complete reversal from 60% in 2024. This dramatic shift may reflect budget pressures, increased confidence in internal capabilities, or changing service provider dynamics.

Among businesses using marketing partners, 59% work with one or more providers, while 20% engage four or more partners simultaneously, up from 9% previously. This suggests businesses maintaining partner relationships are expanding those arrangements rather than reducing them.

Price ranks as the most important factor when selecting marketing partners, followed by proven results at 80% considering it "very important." Reporting transparency ranks third. Small businesses prioritize clear value demonstration and cost efficiency over comprehensive service bundling.

The "one-stop shop" concept shows lower priority at 74% importance overall, with only 38% rating it "very important." This indicates businesses prefer specialized expertise over consolidated service delivery when choosing external marketing support.

Economic uncertainty shapes conservative planning

Economic conditions rank as the top challenge facing small businesses in 2026, with 66% describing it as somewhat or very challenging. This represents a significant increase from 48% in 2024, reflecting concerns about inflation, tariffs, and potential supply chain disruptions.

Despite economic anxieties, budget planning shows cautious optimism. While 39% plan to increase marketing budgets, 54% will maintain current spending levels. Only 8% plan decreases, down from 16% in the previous year's report.

Businesses increasing budgets primarily seek to drive more leads and sales at 57%. This growth-oriented motivation indicates confidence in marketing's ability to generate revenue despite uncertain economic conditions. Those decreasing budgets cite economic pressures as the primary factor at 57%.

The data suggests small businesses view marketing investment as essential rather than discretionary. Maintaining or increasing budgets during economic uncertainty indicates strategic commitment to customer acquisition and brand building as competitive advantages.

Maximizing budget efficiency ranks as a significant concern, particularly for businesses with smaller monthly allocations. This focus on return on investment drives tool adoption, channel selection, and partner evaluation decisions across the small business landscape.

Performance metrics and measurement priorities

Sales and revenue metrics rank as "very important" for 78% of surveyed businesses, closely followed by return on investment at 73%. These bottom-line indicators take precedence over intermediate metrics like engagement or awareness.

Conversion rate and cost per lead rank as important metrics, with both directly tied to online advertising performance. Website traffic remains a priority despite declining organic search trends throughout 2025.

The emphasis on direct revenue attribution creates challenges for brand-building tactics that produce delayed or indirect results. Reputation management and social media marketing, while important for long-term business health, face measurement difficulties that may contribute to their lower satisfaction rates despite effectiveness.

Marketing measurement confidence has stalled despite increased data availability, with 54.1% of marketing professionals reporting no change in measurement confidence year-over-year. This industry-wide challenge affects small businesses particularly acutely given their limited analytics resources.

Time to insight and attribution accuracy remain ongoing challenges. Small businesses often lack the sophisticated measurement infrastructure necessary to connect marketing activities with business outcomes across extended customer journeys.

Industry context and implications

The LocaliQ research arrives as digital advertising markets face significant transformation. Global social media users reached 5.66 billion, representing 68.7% of global population, while AI platform adoption surpassed 1 billion monthly users.

Five major trends are reshaping advertising by 2030, including AI creative dominance, biometric measurement standardization, and fragmented privacy regulations. Small businesses must navigate these industry shifts while operating with constrained resources.

Brand marketing research shows up to 6x greater long-term sales impact compared to short-term performance tactics, yet small businesses prioritize immediate lead generation due to cash flow requirements and measurement capabilities.

Platform evolution continues reshaping available tactics. Google Ads celebrated 25 years in October 2025, marking transformation from manual optimization to AI-powered automation. Meta expanded advertising capabilities across Threads and improved value optimization for app advertisers.

Small businesses face mounting complexity as marketing data quality issues affect 45% of business decisions, creating challenges for organizations without dedicated analytics teams.

The research underscores a fundamental tension in small business marketing: the need for sophisticated, multi-channel strategies conflicts with limited budgets, minimal staffing, and constrained time. Success requires strategic prioritization, efficient tool utilization, and focus on tactics delivering measurable returns.

LocaliQ, a digital marketing solutions platform, conducted the survey during 2025 to understand small business marketing strategies and inform 2026 planning. The company operates as part of Gannett, providing advertising and marketing services to businesses across North America.

Timeline

• October 13, 2025: Meta announces Q5 marketing opportunities with lower CPMs for late December through mid-January period
• October 15, 2025: Digital 2026 report reveals 5.66 billion social media users, 68.7% of global population
• October 21, 2025: Marketing measurement confidence stalls with 54.1% reporting no change year-over-year
• October 23, 2025: Google Ads marks 25th anniversary with focus on AI-powered automation
• October 27, 2025: LocaliQ releases second annual Small Business Marketing Trends Report surveying 300+ businesses
• May 19, 2025: Google Ads costs rise 12.88% to $5.26 average CPC across industries
• September 5, 2025: Marketing data quality research shows 45% of decisions based on unreliable information
• September 11, 2025: Meta introduces new advertising formats for Threads including carousel ads
• September 14, 2025: Five major trends identified reshaping advertising by 2030 including AI creative dominance
• September 28, 2025: Pixis analyzes $996 million in Google Ads spend revealing dramatic industry cost variations
• July 10, 2025: WordStream study reveals 20% error rate in AI responses for PPC strategy guidance
• August 28, 2025: Australian digital advertising hits $17.2 billion with video surging 21.9%
• October 2, 2025: Brand marketing research demonstrates up to 6x greater long-term sales impact

Summary

Who: LocaliQ, a digital marketing solutions platform operating as part of Gannett, surveyed over 300 small business owners across diverse industries including home services, healthcare, automotive, professional services, education, travel, entertainment, and retail. The research targets businesses with varying sizes from 10 or fewer employees to operations with 50+ staff members, spanning monthly marketing budgets from under $500 to over $10,000.

What: The second annual Small Business Marketing Trends Report reveals that 54% of small businesses plan to maintain their 2026 marketing budgets despite 66% viewing economic uncertainty as challenging. Social media advertising adoption reached 56%, surpassing search advertising at 45%, while 53% plan to increase video marketing investment. AI adoption held steady at 60%, with content creation usage surging from 52% to 81%. Customer referrals remain the dominant lead source at 83%, while 52% of businesses operate on monthly budgets below $1,000 and 50% have no dedicated marketing staff.

When: LocaliQ released the research on October 27, 2025, based on survey data collected during 2025 examining current marketing strategies and future plans for 2026. The findings reflect year-over-year comparisons with the inaugural 2025 report, tracking shifts in channel adoption, budget allocation, technology usage, and strategic priorities across a 12-month period.

Where: The report encompasses small businesses primarily located in the United States and Canada, with 87% of respondents operating in these North American markets. The research examines marketing activities across digital channels including social media platforms, search engines, email systems, websites, and traditional media, reflecting the multi-channel landscape small businesses navigate regardless of physical location.

Why: The report matters for the marketing community because it quantifies how resource-constrained businesses adapt to rising advertising costs, platform changes, and economic uncertainty while maintaining growth ambitions. The research reveals that social advertising now surpasses search in adoption despite search advertising's proven effectiveness, suggesting platform complexity and cost barriers limit small business access to high-intent channels. Video investment acceleration indicates strategic shifts toward brand-building despite measurement challenges. The findings demonstrate that small businesses increasingly rely on AI and automation to compensate for limited staffing while operating lean marketing operations that must balance immediate lead generation needs against long-term brand development requirements in an increasingly complex digital advertising ecosystem.