Increased Antitrust Hype Overlooks Value of Tech for Small Businesses

By at 24 February, 2021, 11:16 pm

by Raymond J. Keating-

A big question for many entrepreneurs and small businesses is: How do I reach potential customers, especially in a cost-effective way? And regarding new and existing customers: How do I stay in contact with people who purchased my products?

These aren’t some hypothetical or academic questions. Far too many small businesses that offer wonderful goods or services have struggled or failed because they failed to connect with their niche market or target audience. Or, they may have failed because the fell short in maintaining communications with customers.

The problems can range from startup entrepreneurs who have the products and the websites, and then simply wait for orders to start rolling in – but they don’t – to the entrepreneurs who understand that marketing is essential, including advertising, but are constrained by the amount of dollars available, not to mention facing the daunting challenge of how best to spend the limited marketing dollars they do have.

Technology to the Rescue

Helping entrepreneurs and small businesses answer these challenges in recent times has been an assortment of technological developments, which are ongoing. Technology businesses of all sizes have worked and are working to create and improve upon tools that bring businesses and consumers together.

Such tech companies include various market leaders, such as Amazon, Apple, Facebook and Google, that have been coming under antitrust attack by politicians. SBE Council has explained many of the problems with antitrust and various specifics of this latest political spasm against “Big Tech.”

Members of Congress who are saber-rattling for expanded antitrust regulation not only fail to emphasize that companies that have gained significant market share can only do so by serving consumers well, but also how these technology firms have helped to empower entrepreneurs and small businesses.

Facebook, for example, plays a critical role in aiding small businesses to reach potential customers in a cost-effective way, as well as helping entrepreneurs to better communicate and stay in contact with existing and potential customers.

Consider key findings from a September 2019 SBE Council survey on the importance of online advertising:

• “[F]or startups and new businesses, the availability of online advertising was identified by entrepreneurs as a key factor in launching their enterprises, with 80% agreeing that: ‘The ability to reach customers and potential customers was an important factor in starting my business.’”

• “Of the startups surveyed in our report, 90% agree that ‘Online advertising has provided my business with an affordable option to launch and/or grow my business,’ and 86% agree that the method is ‘important to my business survival and growth.’”

• “Small business owners report that they have also boosted the competitiveness of their businesses from new revenues generated by online advertising, which they say is extremely effective at driving new sales. In fact, 73% of small businesses stated that without online advertising ‘it would impact my ability to effectively market my products and services and to grow my business.”

• “While most of the small businesses in the survey use a mix of online and traditional advertising like newspaper ads, mailings, radio, television and other methods (29% use online advertising exclusively and 71% use a mix), survey respondents pointed to key benefits of online advertising compared to traditional advertising such as: finding new customers leading to new sales (89%), the ability to target their intended customer base more effectively (88%), identifying new customers and prospects (87%), saving time on labor with regard to research, targeting, and other aspects of selecting appropriate methods for advertising my products/services (84%), they can more effectively compete with other businesses including larger businesses (82%), and increased value and higher return on investment on ad dollars spent (81%).”

• “Technology, obviously, has become an entrepreneur’s best friend. New innovations continue to produce cutting-edge tools for entrepreneurs to launch and grow their businesses. Thanks to the internet and cost-effective methods that help entrepreneurs target and reach potential customers, small business owners are experiencing very positive returns through online advertising, according to the results of our survey.”

Other surveys have expanded on these findings, and brought in even more recent happenings during the COVID-19 pandemic.

For example, a Facebook report titled “Digital Tools in Crisis and Recovery: US Report” released in December 2020, based on survey and research from Deloitte, reported the following:

• “The findings illustrate how SMBs [i.e., small and mid-sized businesses] have leveraged digital tools to overcome the challenges of the current crisis and have continued to reach consumers whose lives have been disrupted. The report illustrates how paid advertising, including targeted advertising on social media, has enabled SMBs to reach existing and new customers, both locally and farther afield. The report also looks at how direct online communications through social media and online messaging have allowed a personal and seamless customer experience, further nurturing digital-born discovery and converting it into digital sales.”

• “84% of SMBs reported that they had started using, or increased their usage of, digital tools throughout their businesses since the outbreak of COVID-19. That was particularly the case for social media and online messaging, which 62% of SMBs had started using, or increased their usage of, during the pandemic. Notably, usage of social media increased more than any other digital tool, including video calling (54%), which seeks to replicate face-to-face interaction.”

• “44% of SMBs surveyed said they started using, or increased their usage of, targeted advertisements on social media, more than for search engine advertising (37%) and display advertising (36%). Further analysis shows that SMBs that used targeted advertising on social media were nearly twice as likely to report that they increased their revenue compared to last year.”

Also, in February 2021, the Small Business Roundtable and Facebook released the “U.S. State of Small Business: 2020 – A Challenging Year for SMBs.” Among the findings were:

• “34% of businesses have increased their use of online or digital tools since the pandemic began, consistent with other research (Deloitte 2020).”

• “In addition, more businesses started selling online for the first time. The proportion making no sales through digital channels in the past 30 days fell from 35% before COVID-19 to 13% in the 30 days prior to the December survey, and the proportion making 100% of their sales online rose from 13% to 20%.”

• “Many businesses have also used digital channels to advertise. 57% of businesses reported that they use social media to advertise, second only to the number using word of mouth (59%).”

For good measure, on February 22, 2021, The Manifest, which is a how-to guide for small businesses, reported a big increase in online ad spending by small businesses in 2020, including:

• 38 percent of small businesses increased their ad spending in 2020.

• 55 percent of small businesses advertise on social media, and 45 percent plan to increase such spending in 2021.

• “While nearly one-third of small businesses (32%) already advertise on digital video platforms, 35% plan to increase their investment in the new year.”

Zeroing on Facebook and small business, according to, Facebook had 10 million advertisers globally in the third quarter 2020. That was up from seven million a year earlier. That’s approximately a 43 percent increase in one year, and during the pandemic.

Also, in September 2020, CNBC reported, “‘180 million businesses use our family of apps every month,’ said Rich Rao, Facebook’s vice president of small business, adding that nine million of those businesses advertise with the company every month. ‘Our vision is to have a single place for those people to manage their business.’”

And in July 2020, noted that “the biggest chunk of Facebook’s $70 billion ad business comes from small businesses, which account for nearly 75% of its annual ad revenue, according to Deutsche Bank.”

The numbers and trends are clear: Social media matters a great deal to small businesses, and a market leader like Facebook has proven to be valuable to small businesses for reaching and staying in contact with customers, just as small business ad revenues have proven to be of great value to Facebook.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.



News and Media Releases