New research from Amazon Ads has uncovered the impact of advertising on Australian small businesses as they look to grow both locally and internationally.

The study, conducted among marketing decision-makers from business-to-consumer (B2C) small businesses across Australia, found that advertising plays a crucial role in acquiring new customers and driving business expansion.

Advertising fuels expansion and customer growth

One of the key findings from the study is that 88 per cent of Australian small businesses that invest in advertising report success in acquiring new customers. This confidence in the power of advertising is reflected in the fact that more than a third (33 per cent) of small businesses have increased their advertising spend over the past year. The primary drivers for this increased investment include raising awareness of new products or services (47 per cent) and enhancing overall brand recognition (45 per cent).

The positive impact of advertising is not limited to local markets. The research shows that over seven in 10 (71 per cent) small businesses that invest in advertising have successfully expanded their operations within Australia. Additionally, 54 per cent have achieved international growth, highlighting the global potential that advertising can unlock for small businesses.

Popular advertising channels

When it comes to where small businesses are directing their advertising dollars, social media leads the pack, with 70 per cent of respondents indicating it as their top choice. Online search (63 per cengt) and online display (44 per cent) follow closely behind. These channels are helping businesses reach and engage their target audiences effectively.

Looking ahead, the study revealed an emerging interest in streaming TV advertising, with nearly a quarter (24 per cent) of those surveyed planning to invest in this medium over the next 12 months. This indicates a growing recognition of the power of streaming platforms to connect with consumers in an increasingly digital world.

What’s challenging business?

Despite the successes reported by many, not all small businesses are convinced of the value of advertising. The study found that 32 per cent of Australian small businesses do not currently invest in advertising. The primary reasons cited include the perceived high cost (44 per cent) and a lack of return on investment (38 per cent) from previous campaigns. This highlights the ongoing challenge for small businesses to balance their budgets while seeking effective ways to grow.

Even among those who do invest in advertising, challenges remain. Over three in 10 (32 per cent) respondents identified a lack of budget as their biggest obstacle, while nearly a third (29 per cent) pointed to a shortage of time and resources. Additionally, 28 per cent of small businesses struggle with determining where to focus their advertising efforts to achieve the best results.

How tech is helping

As small businesses navigate these challenges, many are turning to technology to enhance their advertising efforts. The study found that just under half (46 per cent) of Australian small businesses believe that artificial intelligence (AI) will improve the performance of their advertising campaigns. As a result, nearly one in five (19 per cent) are currently training their teams on how to leverage AI for advertising purposes.

Kasey Jamison, Head of Endemic Advertising at Amazon Ads for Australia and New Zealand, emphasised the importance of making advertising accessible and effective for small businesses.

“We see many small and medium businesses testing the impact of advertising as part of their overall growth strategy and deciding if advertising provides the right return on investment to help them meet their business goals,” she said.

“We aim to make advertising as simple as possible for any small business, with easy-to-use tools and resources that offer a low cost of entry, closed-loop measurement, and the ability to introduce their products to customers at scale.”

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