The Impacts of Digital Marketing Costs on Small Business Growth and Sustainability

Digital marketing platforms have become essential tools for businesses of all sizes. Platforms like Google Ads, Meta Business Suite, TikTok for Business, and many more, offer distinctive opportunities for engagement and growth, with lower costs compared with traditional marketing solutions. However, while these platforms provide small businesses with potential advantages, the financial constraints they face in digital marketing compared to larger enterprises can limit individual small business economic growth and put smaller brands at a disadvantage, spending money on digital advertisements rather than funding core business expenses. This contextual statement will examine the challenges digital marketing platforms pose to small business economic growth, in line with the United Nations' Sustainable Development Goal (SDG) 8, which focuses on promoting decent work and economic growth. It will provide the backdrop for my video essay, highlighting the experiences small businesses face when choosing between spending on digital advertising and essential business investments.

Digital marketing has emerged significantly over the last 15 years, paralleling the rise of the internet and changing consumer behaviours towards online information and commerce platforms. Initially regarded as a secondary strategy (Stafford, 2010), it has become a staple, with a market of 2.71 billion digital buyers worldwide as of 2024 representing over a third of the global population (eMarketer, 2024). However, the costs associated with setting up and maintaining digital marketing platforms can be prohibitive (Ritz, et al., 2019), especially for smaller businesses that typically lack the marketing budgets of larger enterprises (Dorofeeva, 2018). This creates economic disadvantages for smaller firms, as they struggle to match the digital marketing spend of larger brands (Lynn, et al., 1999). The COVID-19 pandemic intensified these disparities, forcing many businesses to shift online, thus increasing competition and altering the digital marketing landscape. Many small businesses find maintaining a digital presence challenging in this rapidly evolving market (Gao, et al., 2023). These challenges align with the aims of SDG 8, which seeks to promote sustainable economic growth and decent work for all (OECD, 2019), highlighting a key concern for policymakers and business strategists regarding the financial constraints small businesses face in digital marketing.

Digital marketing platforms, while cost-effective on the surface, entail various expenses that can accumulate rapidly. Advertising costs on platforms such as Google Ads, Meta Business Suite, social media management tools, websites and the expense of job advertisements on digital platforms like Seek all contribute to a substantial financial burden (D'Angelo, 2023). These financial burdens can be particularly challenging for small businesses, as they struggle to balance marketing budgets with other essential business expenses. Though typically more expensive per campaign, traditional marketing does not require continuous expenditure to maintain a digital presence. For small businesses, these costs are often restrictive (Dwivedi, et al., 2021). Lynn (1999) spotlights that some small businesses struggle to maintain these marketing budgets, leading to compromised sustainability. Lynn also discusses that emergent digital marketing technologies are helping to level the playing field, giving smaller businesses access to the benefits previously only available to larger organisations (Lynn, et al., 1999). High service costs can also limit small businesses from expanding their team, purchasing essential equipment, or maintaining their operations, leading to stunted growth and a lack of sustainability​ (Alyahya, 2021) & (Jung & Shegai, 2023). Marketing & branding forum, BBF, suggests that the gap between small and large businesses is made more significant by smaller brands typically spending less than the recommended 7-8% of their gross revenue on marketing, limiting their ability to build brand awareness and attract new customers​ (BBF Digital, 2023).

Recent innovations regarding Artificial Intelligence, such as large language models like OpenAI's ChatGPT for quick text generation and Midjourney for image development, offer potential cost savings through automation and enhanced customer engagement, their implementation still requires initial investment and ongoing maintenance, which can be daunting for smaller businesses. Alongside this, global cloud-based accounting software Xero found that 80% of small business owners are worried about AI development. Introducing another barrier to entry based on ethical and privacy concerns (Hempfling, 2023). Cloud-based computing offers another potential solution, providing access to advanced computing power without significant upfront costs or needing on-premises equipment. Cloud computing allows many popular web-based apps to operate daily. Canva, for example, is a cloud-based graphic design tool that has been adopted widely by small businesses worldwide to develop their marketing content (Millaningtyas, 2023). Its easy-to-use interface and cloud-based technology, which uses graphics processing on a server rather than the user's computer, have allowed users with low budgets to access high-power graphic design tools without the requirement of a powerful computer (Amazon Web Services, 2019). Although cloud computing can democratise access to advanced technologies, the ongoing costs, initial education, and technical challenges can still pose significant hurdles for small businesses.

Some small businesses use social media platforms to monetise their marketing efforts, utilising revenue-generating possibilities to fund their marketing efforts, essentially sustaining their operations (The Social Space, 2023). Although this strategy works for some, mainly operating on TikTok and YouTube, which currently have the highest Pay-per-view (Chillingworth, 2024), many small businesses struggle to gain enough traction to financially justify the time and money they're investing (Dekel, 2023). This also puts businesses in a cycle of dependency, where the benefits of these platforms are offset by their costs (Brownstein, 2023).

The United Nations's Sustainable Development Goal 8 - Decent Work and Economic Growth aims to improve working conditions and the local and broader economy through economic aid, education, and policy advocacy. The costs of maintaining a competitive digital presence undermine this SDG, opening up vaulnerabilities for reduced job creation, lower productivity, and hindered economic development (United Nations, 2019). Addressing these challenges is crucial for achieving the goals of SDG 8 and promoting a more inclusive and sustainable economic landscape. The ACCC recommends regulating digital platforms to create a fairer economic landscape, ensuring small businesses can compete on a more level playing field, especially with commerce moving digital (ACCC, 2019).

My video essay, aimed at sole traders and small business owners, explores small business financial and resource constraints due to the costs associated with digital marketing platforms, which most small businesses cannot justify spending. This resource gap often leads to tough choices—like deciding whether to halt business development (hire more staff, purchase new equipment, etc.) to afford digital marketing expenses or risk digital exclusion (Teixeira, et al., 2019). A solemn voice over aims to emphasise the emotion and seriousness of the issue. The impactful music also adds to the weight, aiming to emotionally connect with viewers and enable them to better resonate and understand small business owners' stuggles. The stretegic placement of narriative pauses invites viewers to reflect futher and emphasise. Creative Commons Zero (CC0) stock footage from Pexels, as well as some paid footage from Shutterstock enhances the visual appeal and production value of the video, whilst ensuring the content remains free of copyright infringement.

Recent innovations in Artificial Intelligence (AI) are enabling small businesses to compete with larger enterprises in marketing. AI tools such as ChatGPT, Gemini, and Claude can serve as virtual marketing coordinators, offering marketing plans, copywriting, strategy, and general advice to enhance marketing expertise. Additionally, tools like Midjourney, DALL-E, and Claid.ai are assisting small businesses in generating product photos and stock images, eliminating the need for expensive photographers (Hare, 2023). These advancements are beginning to level the marketing playing field, allowing individuals who may lack formal marketing qualifications to develop compelling content and strategies (Kozinets & Gretzel, 2021). However, there is still plenty of room for improvement; the accessibility of these AI tools is increasingly restricted by paywalls, which require businesses to fund monthly subscriptions (Bruyn et al., 2020). These subscriptions add a significant financial burden when combined with ongoing costs such as website hosting, email services, POS systems, and other communication expenses. Although these disruptive technologies offer substantial potential to transform marketing practices, they often necessitate shifts in business models and additional investments. This can pose considerable challenges for small businesses, which must manage these costs alongside their existing financial pressures (Bower & Christensen, 1995), especially with the cost of goods rising yearly (Macau, 2023). The ATO does offer small business deductions for digital transformations, which may ease the transition (ATO, 2024), but despite the advantages AI technologies bring, the continual expense of maintaining these tools introduces an additional layer of complexity to the economic challenges faced by small businesses.

Social innovations are also crucial for supporting small businesses through economic and development challenges by providing essential resources and networking opportunities. Initiatives like small business workshops, coworking spaces, and innovation hubs offer vital support, enabling employees and small business owners to collaborate, innovate, and access mentorship, training, and financial aid (Pol & Ville, 2009). This ecosystem helps small businesses grow sustainably through relationships and networking, reducing reliance on paid digital marketing and enhancing their competitive capacity in the marketplace (Siqueira, et al., 2014).

In conclusion, while digital marketing platforms offer significant opportunities for small businesses, the financial burdens associated with maintaining a digital presence can impede their growth. These challenges, amplified by the disparities in resources between small and large enterprises, highlight the need for regulatory adjustments and increased accessibility to advanced technologies, free from paywalls. By addressing these issues, the promotion of a more equitable economic environment will exist, better supporting the goals of Sustainable Development Goal 8 and fostering sustained economic growth and decent work for all. This streamlined approach ensures that small businesses can thrive in a congested digital arena.