Digital marketing for small business: how to start

Published Monday 13 April 2026

Table of contents

• What is digital marketing?
• Why digital marketing matters for small business
• Creating your digital marketing strategy
• Website essentials for digital marketing
• How much does digital marketing cost?
• Types of digital marketing
• How to do digital marketing for free
• Paid digital marketing for small business
• How to do paid digital marketing
• How to measure digital marketing success
• 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, social media content, and email marketing to build your foundation before investing in paid advertising, as these organic channels create sustainable long-term traffic without ongoing costs.
• Allocate 5-10% of your revenue to digital marketing and begin testing with small budgets of $4-8 per day across multiple platforms to discover what works for your specific business before scaling up successful campaigns.
• Focus on creating a mobile-friendly website with clear navigation and strong calls to action, as your website serves as your digital storefront and often provides the first impression customers have of your business.
• Track key metrics like website traffic, conversion rates, and return on ad spend to measure success and make data-driven decisions about where to invest your marketing budget for the best results.

What is digital marketing?

Digital marketing involves using online channels to promote your business and generate sales. It includes social media posts, email campaigns, search engine ads, and website optimisation.

For small businesses, digital marketing offers three key advantages:

• Broader reach: Connect with customers beyond your local area
• Precise tracking: Measure exactly what works and what doesn't
• Competitive edge: Compete with larger companies on a smaller budget

Results vary between businesses. Some see immediate returns, while others need more time to find what works. Testing multiple approaches in a controlled way helps you discover what works for your specific situation.

Why digital marketing matters for small business

Digital marketing matters because it lets small businesses reach customers where they spend their time online, without the high costs of traditional advertising.

Here's why it works for small businesses:

• Lower barrier to entry: Start with free tools like social media and email before investing in paid ads
• Targeted reach: Show your message only to people likely to buy from you
• Real-time insights: See what's working and adjust quickly based on actual data
• Level playing field: Compete with bigger businesses without matching their budgets

Creating your digital marketing strategy

A digital marketing strategy is a plan that outlines how you'll use online channels to reach your business goals. Keep it simple. Focus on these three steps:

Olivia Park, a business coach, shares her approach:

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.

1. Define your goals: Do you want more website traffic, more sales, or more followers? Be clear about what success looks like.
2. Know your audience: Who are your ideal customers? Understanding their needs and habits helps you choose the right channels to reach them.
3. 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

Your website is your digital storefront and often the first impression customers have of your business. A website that supports digital marketing needs three things:

• Easy to navigate: Make sure visitors can find what they're looking for without any fuss.
• Mobile-friendly: Ensure your site looks good and works well on any screen size, as many customers will find you on their phones.
• 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.

How much does digital marketing cost?

Digital marketing costs vary widely, but you can start small and scale based on results. Most small businesses allocate 5–10% of revenue to marketing, though beginners can start with much less during the testing phase.

You can also advertise your small business for free or for a low cost using organic channels before committing to paid spend.

Starting budget examples:

• Testing phase: $4–8 per day across multiple platforms
• Growth phase: Increase spend on campaigns that show positive returns
• Scaling phase: Gradually raise budget for proven tactics

Long-term budget benchmarks:

• New businesses: Allocate up to 40% of total budget toward marketing
• Established businesses: Allocate 5–10% of revenue toward digital marketing
• Cost comparison: Expect costs typically lower than traditional retail signage and merchandising

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

Types of digital marketing

Digital marketing falls into two main categories:

• Free methods: Search engine optimisation (SEO), social media posts, content creation, and email marketing
• Paid advertising: 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, owner of Air8 Digital marketing agency, recommends starting with free methods:

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 organic marketing works.

How to do digital marketing for free

Free digital marketing generates sales without advertising spend by using organic channels that build visibility over time. The two primary strategies are:

• 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. Ben Charlton of Air8 Digital proves this works with his own online shop.

SEO marketing

SEO (search engine optimisation) helps your business appear in search results when potential customers look for your products or services. Here are the essential steps for small businesses:

1. Claim your Google Business Profile: This ensures you appear in local search results and Google Maps
2. Connect to product carousels: Submit product data to platforms such as Google Merchant Center and social catalogues to improve product visibility across eligible shopping surfaces (if you run ecommerce)
3. Optimise your website content: Include relevant keywords that customers use when searching for businesses like yours

Even basic SEO improvements can help increase online visibility without paid media spend.

Shareable content

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 lets you send updates, offers, and helpful content directly to your customers' inboxes. For many small businesses, it's the channel that brings the highest return on investment (ROI).

To get started:

1. Collect email addresses on your website
2. Send valuable information that keeps your audience engaged
3. Build relationships that turn subscribers into repeat customers

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 and you only pay when someone clicks, making it cost-effective for driving traffic
• Social advertising: Targeted ads appear in social media feeds based on user interests, helping you reach specific audiences
• Display advertising: Banner ads appear on websites and are often used for retargeting people who've already visited your site

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

Pay-per-click

Pay-per-click (PPC) advertising places your business at the top of search results when people look for products or services like yours. You only pay when someone clicks on your ad.

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 explains how retargeting works:

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 requires testing multiple approaches because what works for one business may fail for another. Follow a test-and-optimise approach to find your most profitable channels.

Phase 1: Test widely (first three months)

• Try multiple platforms and ad types
• Stay open to tactics that might surprise you
• 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

Major advertising platforms generally provide campaign analytics such as impressions, clicks, and conversions.

How to measure digital marketing success

Measuring success means tracking whether your marketing spend generates enough business to justify the cost. Measurement helps you make informed decisions.

Focus on these key metrics:

• Website traffic: How many people visit your site and where they come from
• Conversion rate: The percentage of visitors who take action, such as buying something or filling out a contact form
• Cost per acquisition: How much you spend to gain each new customer
• Return on ad spend: The revenue generated for every dollar spent on advertising

Most advertising platforms provide built-in analytics. Google Analytics is free and shows how visitors find and use your website.

Start simple. Track one or two metrics that connect directly to your business goals, then expand your measurement as you grow. The goal is to identify which channels deliver the best return so you can focus your budget there.

DIY or use a pro?

Choosing between DIY and professional help depends on your budget, time, and comfort with marketing tools.

DIY approach: Many platforms help you create and launch ad campaigns, plus report results afterwards. However, you'll want to balance this with the time needed to run your business.

Hiring help: Agencies typically work with businesses spending $1,000 or more per month. For smaller budgets, freelancers offer a cost-effective alternative.

As Ben Charlton puts it: "If someone charges you $200 and saves two days of your time, then spend the money. Try a LinkedIn post or look on a freelancer marketplace like Fiverr."

For even lower costs, consider overseas experts. Just make sure you help create the ads, as you'll want to ensure the word choice resonates with your local audience.

Getting started with your digital marketing plan

Getting started is simpler than it looks. Begin with free methods like SEO and content creation, test what works, and measure your results before scaling up paid advertising.

As you grow, track your marketing spend alongside your other business finances. Connecting marketing costs to revenue helps you see what's actually driving growth and make confident decisions about where to invest next.

Xero's accounting software makes it easy to monitor your marketing spend and its impact on your bottom line. Get one month 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. Digital marketing helps small businesses reach more customers and compete effectively, often with a smaller budget than traditional advertising. It also provides data on customer behaviour that guides smarter business decisions.

How much should a small business spend on digital marketing?

Allocate 5–10% of your revenue to marketing. You can start smaller during testing, then adjust spending based on the return you get from each channel.

Where should I start with digital marketing?

Start with these three steps:

1. Create a simple, mobile-friendly website
2. Set up a Google Business Profile so customers can find you in local searches
3. Choose one or two channels to test first, such as social media or email marketing

Build from there based on what works for your business.

What is the 70/20/10 rule in digital marketing?

The 70/20/10 rule is a content planning framework. Spend 70% of your effort on proven content that builds your brand, 20% on sharing relevant content from other sources, and 10% on experimental or promotional content. This balance keeps your audience engaged while maintaining their interest.

How long does it take to see results from digital marketing?

Paid advertising can generate traffic within days, while SEO and content marketing typically take three to six months to show meaningful results. Email marketing falls in between, with results often visible within weeks once you've built a subscriber list. Expect to test and refine your approach for at least three months before drawing conclusions.