How small businesses can succeed with digital marketing

Published Friday 17 October 2025

Table of contents

• What is digital marketing?
• Why digital marketing matters for small business
• Creating your digital marketing strategy
• Website essentials for digital marketing
• Types of digital marketing
• How to do digital marketing for free
• Paid digital marketing for small business
• How to do paid digital marketing
• How much does digital marketing cost?
• DIY or use a pro?
• Getting started with your digital marketing plan
• FAQs on digital marketing for small business

Key takeaways

• Start with free digital marketing methods like SEO and content creation to build your foundation before investing in paid advertising, as these approaches generate sustainable long-term traffic without ongoing costs.

• Test multiple digital marketing approaches simultaneously during your first three months, then analyse performance data to focus your budget on the channels that deliver the best return on investment for your specific business.

• Optimise your website as your digital storefront by ensuring it's mobile-friendly, easy to navigate, and includes clear calls to action, since 70% of small business websites lack this crucial element on their homepage.

• Allocate 5-10% of your revenue to digital marketing and begin with small daily budgets of $4-8 across platforms during testing phases, scaling up investment only on proven successful campaigns.

What is digital marketing?

Digital marketing is the use of online channels and strategies to promote your business and generate sales. It includes everything from social media posts and email campaigns to search engine ads and website optimisation. Digital marketing helps you reach more customers, track results precisely, and compete with larger companies.

Digital marketing results vary dramatically for small businesses. Some see immediate returns that justify increased spending, while others waste thousands without a single sale.

The key to success: Test multiple approaches in a controlled way to discover what works for your specific business. This strategic approach helps you avoid costly mistakes while identifying your most profitable marketing channels.

Why digital marketing matters for small business

Digital marketing helps you reach a wider audience and compete with larger companies. It helps you connect with customers where they spend their time – online.

By using digital tools, you can understand what your customers want, build relationships, and make decisions based on real data.

Creating your digital marketing strategy

A good plan is the key to success. Before you start, think about what you want to achieve. Your strategy doesn’t need to be complicated. Just focus on these simple steps:

• Define your goals: Do you want more website traffic, more sales, or more followers? Be clear about what success looks like.
• : Who are your ideal customers? Understanding their needs and habits helps you choose the right channels to reach them.
• Set a budget: Decide how much you can comfortably spend. You can start small and increase your budget as you see what works.

Website essentials for digital marketing

Think of your website as your digital storefront. It’s often the first impression a customer has of your business, so it’s important to get it right. A great website is:

• Easy to navigate: Visitors should be able to find what they’re looking for without any fuss.
• Mobile-friendly: Many customers will find you on their phones—with more than 5.8 billion people subscribing to mobile services globally—so your site needs to look good and work well on any screen size.
• Clear and focused: Tell visitors who you are, what you do, and what you want them to do next (a call to action), whether that’s making a purchase or contacting you. This is a common oversight, as research shows 70% of small business websites are missing a call to action on their homepage.

Types of digital marketing

Digital marketing falls into two main categories: free methods and paid advertising.

Free digital marketing includes search engine optimisation (SEO), social media posts, content creation, and email marketing. Paid digital marketing covers search ads, social media advertising, and display campaigns. Most small businesses start with free methods to build their foundation, then add paid advertising to accelerate growth.

Ben Charlton

Most people get on the ad platforms and start spending straight away but you don’t have to. There’s lots of free value out there. Take care of that stuff first.

Ben Charlton is the owner of Air8 Digital marketing agency, and he also runs an online shop, so he gets to road test his digital marketing tricks every day. He says the good news is that free stuff works.

How to do digital marketing for free

Free digital marketing can generate sales without advertising spend. Ben Charlton proves this with his online shop, using two primary strategies:

• SEO (search engine optimisation): Helps your business appear in search results when customers look for your products or services
• Content marketing: Creates valuable information that attracts and engages potential customers

These approaches take more time than paid advertising but build long-term, sustainable traffic to your business.

SEO marketing

SEO marketing helps your business appear in search results when potential customers look for your products or services online.

Essential SEO steps for small businesses:

• Claim your Google My Business account: Ensures you appear in local search results and Google Maps. This is crucial, as customers are 70% more likely to visit a business with an optimized Google Business Profile.
• Connect to product carousels: Link your online shop to Google and Facebook so product images appear at the top of search results
• Optimise your website content: Include relevant keywords that customers use when searching for businesses like yours

Even basic SEO can significantly increase your online visibility without advertising costs.

Shareable content

Olivia Park

I don’t spend money on advertising. I create content aimed at helping my target customer and share it on Instagram or via podcasts. It attracts enough new clients to keep me busy.

When you publish helpful advice or cool stories on social media, other people are likely to share it. That positive exposure can be all the marketing your business needs. Just ask Olivia Park of Olivia Park Coaching.

Email marketing for small business

Email marketing is a powerful way to build relationships with your customers, and for many small businesses, it’s the channel that brings the highest return on investment. It allows you to send updates, share special offers, and provide helpful content directly to their inbox. Start by collecting email addresses on your website and be sure to send valuable information that keeps your audience engaged.

Paid digital marketing for small business

Paid digital marketing lets you reach customers quickly by purchasing ad space online. The three main types are:

• Pay-per-click (PPC): Ads appear in search results; you only pay when someone clicks
• Social advertising: Targeted ads appear in social media feeds based on user interests and demographics
• Display advertising: Banner ads appear on websites, often used for retargeting previous visitors

Each approach serves different goals, from immediate sales to building brand awareness.

Pay-per-click

You can pay to show up in the results when people search for products or services like yours. It’s a way to get to the top of search results without world-beating SEO. You only pay a fee for your ad if someone clicks on it. This model can be highly profitable; according to Google, businesses earn an average of $2 in revenue for each $1 they spend on its platform.

Paid social (ads or sponsored content)

You can also pay to have your ads (or stories) appear in the newsfeed of target customers on social media. Most social platforms allow you to create a particular profile of the type of people who you want to see your ads – so you can hone in on your ideal customer.

Display ads

Marc McKeown

Your ads can follow them around the internet for a little while. If they abandoned a cart, you can retarget them with an ad offering a discount or free delivery. If they already bought something, you could retarget them with an ad for a complementary product.

You can also have your ad displayed in banners on various websites, including social media sites. This isn’t often done by small businesses, except as part of a retargeting campaign. Marc McKeown says retargeting can help you close a sale with someone who’s previously been to your site.

How to do paid digital marketing

Successful paid digital marketing follows a test-and-optimise approach because results are unpredictable across different businesses.

Phase 1 - Test widely (first 3 months):

• Try multiple platforms and ad types
• Don’t dismiss tactics that seem unlikely to work
• Cast a wide net to discover what resonates with your audience

Phase 2 - Analyse and optimise:

• Track key metrics: impressions, click-through rates, and conversions
• Focus budget on campaigns with the best return on investment
• Continuously monitor performance as results change over time

Most advertising platforms provide detailed analytics to guide these decisions.

How much does digital marketing cost?

Experimenting, learning, and improving can be rewarding. But it also costs money. So how much will you need to spend?

Is there a way to advertise your small business for free or for a low cost?

Digital marketing budgets can start small and scale based on results.

Starting budget examples:

• Testing phase: $4–8 per day across multiple platforms
• Strategy: Monitor results and increase spend on successful campaigns
• Scaling approach: Gradually increase budget for proven tactics

Long-term budget recommendations:

• Startup allocation: 40% of total budget toward marketing
• Comparison: Much lower than traditional retail signage and merchandising costs
• Adjustment: Reduce percentage once you identify your most effective channels

This approach lets you test affordably while building toward sustainable growth.

DIY or use a pro?

McKeown also says there are plenty of good resources and tools for people who want to do their own digital marketing. "Lots of platforms help you create and launch ad campaigns, plus they’ll report results afterwards. But time may become a limiting factor when you’re also trying to run the business."

Charlton says that agencies tend to work with businesses that are spending a lot – upwards of a thousand per month – so that may not be an option straight off the bat. But he adds that freelancers can be a great way to start.

"If someone charges you $200 and saves two days of your time, then spend the money. You may already know someone who knows how to do digital marketing for a small business. Try a LinkedIn post. Or look on a freelancer marketplace like fiverr."

Meanwhile Farid says not to be afraid of using overseas experts. "Just search for 'small digital campaign' and a good agency will find you! We’ve discovered some great talent at a quarter the price in those markets. But make sure you help create the ads because word choice can be hard for people who aren’t native English speakers."

Getting started with your digital marketing plan

Digital marketing is a journey of learning and adapting. The key is to start simple, test different approaches, and measure your results. Don’t be afraid to experiment to find what resonates with your customers.

As you grow, you can track your marketing spend and see its impact on your bottom line in your accounting software. By connecting your marketing efforts to your finances, you can make confident decisions and focus on what drives growth.

Try Xero for free.

FAQs on digital marketing for small business

Here are answers to common questions about digital marketing for small business.

Is digital marketing worth it for small businesses?

Yes, absolutely. Digital marketing helps you reach more customers, build brand awareness, and compete effectively, often with a smaller budget than traditional advertising. It provides valuable insights into customer behaviour that can help you grow your business.

How much should a small business spend on digital marketing?

A common guideline is to allocate 5 – 10% of your revenue to marketing, which aligns with research showing the average local business puts 5 – 10% of its revenue toward its digital marketing budget. The great thing about digital marketing is that you can start with a small budget, test what works, and adjust your spending based on the return you get.

Where should I start with digital marketing?

A great starting point is to create a simple website and set up a Google Business Profile. This makes your business discoverable online. From there, you can explore one or two channels that feel right for your business, like social media or email marketing, and build from there.