Online Ad Bill in Congress Threatens Small Business Revenue and Growth

By at 2 February, 2022, 12:31 pm



by Raymond J. Keating –

Members of Congress just keep coming up with pieces of legislation that are detached from the realities of economics, competition and consumer choice in the market, and small business. Indeed, legislation from U.S. Reps. Anna Eshoo (D-CA) and Jan Schakowsky (D-IL), and Senator Cory Booker (D-NJ) – titled as the “Banning Surveillance Advertising Act” – would undermine a form of advertising that has proven to be affordable, efficacious and enormously beneficial to small businesses.

This proposed legislation would ban the targeting of online advertising using personal data. Indeed, the only targeting that could be used would be on general location, as well as what is called “contextual advertising,” that is, based on the content with which the user is interacting.

Most reporting on this bill notes that companies like Facebook and Google would suffer if this measure were to become law. That most certainly is true. But what is left out is the devastating impact on small businesses.

The Benefits of Online Advertising to Small Businesses and Startups  

Online, targeted advertising has been a business gamechanger for entrepreneurs and small enterprises. Indeed, it has been vital to entrepreneurs’ abilities to startup and grow small businesses, as well as being able to survive during tough times.

A survey of small businesses conducted by TechnoMetrica for the Small Business & Entrepreneurship Council made clear how essential online advertising is to small businesses. It is crucial to take note of the key findings from this survey:

73% of small business owners stated that without online advertising “it would impact my ability to effectively market my products and services and to grow my business.”

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

The ability to reach customers and potential customers through online advertising was an important factor for 80% of the entrepreneurs in starting their business.

Small businesses who advertise online view it as superior to traditional methods on a number of fronts, particularly with regards to customer acquisition: 89% cite finding new customers as a benefit of online advertising over traditional advertising and 88% report that they are able to target their intended customer base more effectively. A wide majority (87%) also consider the ability to identify new customers and prospects as a benefit of online advertising over traditional methods.

82% of online advertisers say that digital advertising has helped their businesses compete more effectively with other businesses, in comparison with traditional advertising.

81% find that online advertising has delivered increased value and higher return on investment over traditional advertising.

Online advertising has delivered increased sales for small businesses. The median increase in new sales attributable to online advertising is 12.24 percent. Close to one-half (48 percent) of online advertisers estimate that digital advertising is responsible for a median sales increase of more than 10 percent for their businesses.

As for estimated savings, SBE Council reported that small businesses saved $162.8 billion annually:

“Savings in time and labor as a result of the efficacy of online advertising is also allowing small businesses to use their resources more productively. Entrepreneurs surveyed said that, on average, they are saving 10.93 hours of employee time each week, and 9.28 hours each week of their own time. More than 8 in 10 (84 percent) of small businesses said saving time on labor was deemed a key advantage of online advertising over traditional advertising… [E]mployee and owner hours saved as reported by business owners in the survey, combine to an estimated $3.1 billion each week, and $162.8 billion annually. Small business owners are investing these savings of time back into the business: 42% have searched for or are investing in new growth opportunities, 31% have invested in new equipment to improve competitiveness, 29% have increased wages or benefits for employees, and 22% increased the size of their staff.”

Rather than being unusual, it’s actually rather typical that when elected officials target large businesses – with today’s fad being targeting so-called “Big Tech” – entrepreneurs and small businesses wind up suffering.

Our economy is a small business economy. It’s also a dynamic, competitive economy where entrepreneurs and businesses ultimately serve consumers. No matter the claims or even the intent of politicians, massive regulatory intrusions, such as this proposed “Banning Surveillance Advertising Act,” mean overruling and undermining entrepreneurs, small businesses and consumers.

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


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