How to do digital marketing for small businesses

Published Monday 15 September 2025

Table of contents

• What is digital marketing?
• Why digital marketing matters for small businesses
• Types of digital marketing
• How to do digital marketing for free
• How much does digital marketing cost?
• Paid digital marketing for small business
• How to do paid digital marketing
• Should you do your own digital marketing or use a pro?
• Track your digital-marketing success and grow with confidence using Xero
• FAQs on digital marketing for small businesses

Key takeaways

• Start with free digital marketing strategies like setting up your Google Business Profile and basic SEO before investing in paid advertising to build a solid foundation without upfront costs.
• Test multiple paid advertising platforms with small daily budgets of $4-8 to identify which channels deliver the best return on investment for your specific business.
• Track key metrics including views, click-through rates, and conversions for every campaign to make data-driven decisions about where to allocate your marketing budget.
• Apply the systematic testing approach by casting a wide net initially, then focusing your resources on the campaigns that generate measurable returns while continuously adapting your strategy.

What is digital marketing?

Digital marketing is any online activity designed to attract customers and generate sales for your business, representing a massive and growing industry—paid search spending alone is projected to reach $124.59 billion in 2024. It includes everything from social media posts to search engine ads, email campaigns, and website optimization.

Digital marketing can help your small business grow in several ways. Here are some key benefits:

• Get a high return on investment when you optimize your campaigns
• Scale your marketing as your business grows
• Test different approaches to find what works for your business

"Some startups spend their entire marketing budget quickly because the return on investment is strong," says online business consultant Marc McKeown of FortBrave. "They often earn back more than they spend."

However, Shaheman Farid of Boobooks Accountants notes, "It's important to track your results. Businesses that monitor their campaigns closely are more likely to see positive returns."

Why digital marketing matters for small businesses

For a small business, marketing is all about connecting with the right customers and growing your revenue. Digital marketing helps you do just that by putting your business in front of a wider audience than most traditional methods.

It allows you to build trust, showcase what makes your business unique, and get a clear view of your return on investment. By understanding which strategies bring in customers, you can make smarter decisions and spend your marketing budget with confidence.

Types of digital marketing

Digital marketing strategies fall into two main categories, each with distinct advantages for small businesses:

• Free digital marketing: Builds long-term visibility through SEO, content creation, and organic social media
• Paid digital marketing: Delivers faster results through targeted advertising on search engines and social platforms

How to do digital marketing for free

Free digital marketing focuses on organic methods that build long-term visibility without ongoing ad spend. The two most effective free strategies are SEO and content marketing.

Ben Charlton of Air8 Digital says, "I'm focused on free opportunities and haven't had to spend anything yet to get sales." His online shop earns revenue through organic marketing.

1. Set up your Google Business Profile

Your Google Business Profile is one of the most important free tools for local businesses. It helps customers find you when they search for businesses like yours in your area.

Make sure your profile includes your business hours, contact information, and photos of your products or services. Encourage satisfied customers to leave reviews, as these help build trust. In fact, research shows that customers are 2.7x more likely to view a business as reputable if it has a complete Google Business Profile, which also improves your visibility in local search results.

2. Conduct SEO marketing

SEO (Search Engine Optimization) helps your business appear in search results when potential customers look for products or services like yours. It works by making your website and business information easily discoverable by search engines.

Essential SEO steps for small businesses include:

• Claim your Google Business Profile so local customers can find your business location and contact information
• Connect your product catalog to Google and Facebook shopping features so product images appear in search results
• Optimize your website content by using keywords your customers search for in your website copy and page titles

While search engine optimization (SEO) generates free traffic, you can invest in professional SEO services to get faster results and use advanced techniques.

3. Build a Social media marketing strategy

When you share helpful advice or interesting stories on social media, people are likely to share your content. That positive exposure can help your business grow.

4. Craft an email marketing strategy

Email marketing helps you stay in touch with customers and prospects. For many small businesses, it is the most common way to find and keep customers. Start by collecting email addresses from your website visitors and customers. Then send regular updates, special offers, or helpful tips.

How much does digital marketing cost?

Digital marketing costs can start as low as $4-8 per day for testing, making it accessible for most small businesses. Your budget strategy should balance experimentation with sustainable growth.

Budget guidelines:

• Testing phase: Start with $4-8 daily across multiple platforms to identify what works
• Growth phase: Successful startups typically allocate 40% of their initial budget to marketing
• Long-term strategy: Marketing spend percentage decreases as you identify effective channels

"You don't have to break the bank to test ideas," says Charlton. "I have clients spending $4–8 per day to run ads on multiple platforms. They check results and focus on what worked."

McKeown recommends investing enough in marketing to reach your goals. "It's a numbers game. You need to get a lot of people to your site, so we recommend clients put 40% of their startup budget toward marketing."

Paid digital marketing for small business

Paid digital marketing offers three primary approaches, each serving different business goals:

• Pay-per-click (PPC): Appear at the top of search results, paying only when someone clicks your ad
• Social advertising: Target specific audiences on platforms like Facebook, Instagram, and LinkedIn
• Display advertising: Show banner ads across websites, often used for retargeting previous visitors

Pay-per-click

You can pay to appear at the top of search results when people look for products or services like yours. You only pay when someone clicks your ad.

Charlton explains that you can use this technology in smart ways. "I have a client who pays to appear when people search for a builder – but only if that person is within 15 miles, because my client doesn't want jobs that require a lot of travel."

Paid social (ads or sponsored content)

You can pay to have your ads appear in the newsfeed of target customers on social media, a strategy that ranks among the best ROI channels for B2C brands. Most social platforms allow you to create a profile of the particular type of people who you want to see your ads so you can hone in on your ideal customer.

Display ads

You can display your ads in banners on websites and social media. Small businesses often use this for retargeting. Marc McKeown says retargeting can help you close a sale with someone who has already visited your site.

How to do paid digital marketing

Successful paid digital marketing requires systematic testing because results vary significantly between businesses and campaigns. The most effective approach is controlled experimentation.

Testing strategy for the first three months:

1. Cast a wide net: Try multiple platforms and ad types, including tactics you might initially dismiss
2. Monitor key metrics: Track views, click-through rates, and conversions for each campaign
3. Focus on ROI: Identify which campaigns generate the best return on investment
4. Adapt continuously: What works today may not work tomorrow, so keep testing and adjusting

Most advertising platforms provide detailed analytics showing how many people saw your ad, what percentage clicked through, and how many made purchases.

Should you do your own digital marketing or use a pro?

McKeown says there are many resources and tools to help you do your own digital marketing. "Many platforms help you create and launch ad campaigns, and they report results. But time can be a challenge when you are running your business."

Charlton says agencies usually work with businesses spending over $1,000 per month, so that may not be an option at first. He adds that freelancers can be a good 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."

Farid suggests considering overseas experts. "Just search for 'small digital campaign' and a good agency will find you. We've discovered great talent at a quarter of the price in those markets. Make sure you help create the ads, as word choice can be challenging for people who aren't native English speakers."

Track your digital-marketing success and grow with confidence using Xero

Digital marketing success depends on precise targeting, continuous testing, and careful measurement of results. Focus on these core principles:

• Know your audience: Understand exactly who you're targeting and use language that resonates with them
• Match customer mindset: Align your messaging with how customers think when they're ready to buy
• Test systematically: Try multiple approaches but track performance data rigorously
• Invest in winners: Direct your budget toward campaigns that generate measurable returns

As your marketing generates more leads and sales, you'll need reliable systems to track revenue, manage cash flow, and measure return on investment. Xero accounting software helps you monitor which marketing channels drive the most profitable growth, so you can make confident decisions about where to invest your marketing budget.

Ready to take control of your business finances while you grow? Try Xero accounting software for free and see how easy it is to track your marketing success.

FAQs on digital marketing for small businesses

Here are some common questions on digital marketing for your small business.

Is digital marketing worth it for small businesses?

Yes, absolutely. It helps you reach more customers, build trust, and grow your brand in ways that traditional marketing often can't. You get clear data on what's working, so you can invest your budget wisely.

What are the 4 main types of digital marketing?

The four most common types are search engine optimization (SEO), social media marketing, email marketing, and pay-per-click (PPC) advertising. You can use a mix of these strategies to reach your goals.

What is the 70/20/10 rule for marketing budget?

It's a simple guide for allocating your budget:

• spend 70 percent on proven strategies
• spend 20 percent on new but promising ideas
• spend 10 percent on experiments This approach balances reliable results with innovation.

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

It varies. Paid ads can bring traffic right away. Search engine optimization and content marketing can take a few months to build momentum. Track your progress from the start and adjust your strategy as you learn what your audience responds to.

Should I focus on free or paid digital marketing first?

It's often best to start with free strategies like setting up your Google Business Profile and basic search engine optimization. Once you have a solid foundation, you can experiment with a small paid budget to see what gives you the best return.