Why is advertising important for small businesses? (2024)

Key takeaways

• Advertising significantly increases your brand’s exposure to your target audience
• Online ad campaigns offer advanced targeting capabilities that can boost ROI
• Advertising directly impacts sales and revenue for many small businesses

The numbers are clear: Advertising is a key investment for businesses, regardless of size. Companies around the world spend well over $600 billion per year on ads—and digital advertising specifically is set to reach $876 billion by 2024. But why is advertising important? Discover seven benefits of advertising and why it’s well worth the cost for small businesses.

Why is advertising important? 7 key benefits

Whether you’re launching a new product or service or simply trying to get your brand out into the world, ad campaigns can help you reach more of the right people.

Advertising is a type of paid promotion that brings attention to your key message, and it’s the crucial next step for making your digital marketing strategies work. It increases your brand exposure so you can quickly achieve your business goals, from building your customer base to growing your sales volume. Here are seven key ways an advertising strategy can help your business shine.

1. Build awareness

One of the most direct results of advertising is increased awareness of your brand, product, or service. Your target customers will likely need to come across your business a handful of times before they start to remember you, and ad campaigns help you achieve this.

Marketers often use paid ads to not only increase exposure but also to get in front of the same people several times over. Many online platforms use trackers called “cookies” to determine who has previously seen your ad. Thanks to this data, businesses like yours can retarget the same viewers using digital forms of advertising. With this continuous reach, you can become well-known within your target market.

2. Educate consumers

Advertising helps educate consumers about how your products or services help them and what your brand stands for. You can use ad campaigns to improve your brand building and generate a deeper understanding of your brand—from your company mission to the value of what you sell.

As your target market understands more about your business, they’ll feel a stronger connection to your brand, helping you build customer trust and loyalty and getting you one step closer to making a sale.

You can also use ad campaigns to educate consumers about topics relevant to your business. For example, a plumber marketing campaign might run a social media ad that includes an infographic about a simple hack to fix a toilet clog. By doing so, you can increase your visibility as an industry expert while also driving consumers to learn more about your brand.

3. Boost your reputation

Advertising enables you to enhance your small business reputation. Both offline and online advertising can boost the prominence of your key messages—the takeaways you want your target audience to have—and highlight the best aspects of your company.

When you use ads to evoke certain emotions or tell the story behind your brand, you can shape customer perceptions (also known as your brand image). For instance, if you’ve had any negative exposure, running an ad that highlights a positive parts of your business can redirect potential consumers away from the unwanted attention.

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4. Acquire new customers

Acquiring new customers is a must for business growth. Advertising is important because it can help you reach more people within your target audience with messaging that appeals directly to them.

Online advertising—including social media ads, Yelp Ads, search engine ads, and others—is particularly crucial for customer acquisition. With online ads, you don’t have to appeal to a large audience as you would with traditional advertising mediums like print ads or television. Digital media advertising allows you to specifically reach the people who match your target demographics and key interests.

Reaching your target market specifically means you won’t waste money advertising to people your business doesn’t cater to, increasing your return on investment (ROI). In the case of Yelp Ads, you’ll only pay when a user actually clicks on your ad, whereas impressions are free (when people see your ad but don’t click). This means your advertising dollars go straight toward appealing to your target audience.

Because of this, advertising can be one of the most cost-effective ways to gain leads and convert new customers to your brand. For example, if you own an auto repair business for luxury vehicles, you could use digital advertising to specifically target high-income residents in your area rather than advertising on a billboard or in a magazine to a more general audience who might not be interested in your services.

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5. Retain existing customers

Customer retention is the foundation of business growth. You need loyal, returning clients—the people who love your brand, send you referrals via word of mouth, and likely spend more money on your product or service when fully engaged.

Effective advertising drives repeat business by keeping your customers’ attention on you. As such, you can use ad campaigns to retarget members of your target audience, including those already in your customer base. Regularly reminding customers of your brand—perhaps by offering new products or discount pricing for loyal members—encourages them to feel connected to you and buy from your business instead of competitors.

The more brand loyalty you achieve, the less you need to invest in marketing to make a sale. Since engaged customers are 23% more likely to spend than non-loyal customers, selling to existing customers can be far easier and cheaper than investing significant time building relationships with leads who might not turn into customers at all.

6. Stay ahead of the competition

No matter what type of business you run, you have competitors. There will always be brands vying for the attention of the same consumers. Even if you don’t know who those competitors are, there’s a good chance they’re among the many brands contributing to the billion-dollar advertising industry.

In this sense, the importance of advertising comes from the fact that everyone is doing it. If you don’t use ads to put your brand at the forefront of people’s minds, your competitors will gladly take the spotlight. And if you stay in the shadows too long, you’ll lose relevance in consumers’ minds.

Staying ahead of the competition—especially in saturated industries—is all about continuous exposure. Ads can help you achieve that beyond the reach you gain organically (without cost) or through word of mouth. As an example, Yelp Ads allows your business to appear above search results for relevant keywords and on competitors’ pages. You also have the power to adjust your budget at will, ensuring you maximize exposure but never overspend.

7. Make sales

When answering the question “why is advertising important?,” it’s essential to mention its effects on sales. Ads are powerful tools for helping small businesses earn the money they need to survive and thrive.

Ad campaigns can directly increase sales by driving more consumers straight to your physical store, website, and even specific product pages if you run an ecommerce brand. Digital search ads alone help businesses gain about $11 per dollar spent on average.

Any type of advertising, whether traditional or digital, can also help you increase the value of customer purchases via cross-selling, or recommending related products and services. For example, a hair salon could promote their blow dry, styling, and coloring services in addition to providing haircuts. The more customers are aware of your goods and services—and how they can benefit from them—the higher the chance they will buy supplementary goods and services with their original purchase.

Meet your business goals

Advertising is important because it can drive business growth. Advertising works to amplify your small business marketing efforts and helps you reach the right audience with positive, targeted messaging that converts potential customers into paying customers. It also helps you retarget your audience, whether you’re aiming to build brand awareness or drive returning business from loyal customers.

Fortunately, you don’t need to pay pricey advertising agencies to make it happen. Add or claim your Yelp Business Page to get started with digital advertising, then discover eight budget-friendly advertising ideas to help your small business thrive.