Constant Contact, a leading provider of digital marketing tools for small businesses and nonprofits, released on Wednesday findings from its Q1 2026 Small Business Now report.
The report includes a survey of over 1,500 small business owners across the United States, Canada, United Kingdom, Australia and New Zealand.
The company said the data indicates that small business owners are meeting economic uncertainty with aggression rather than retraction. While inflation and rising costs remain the top business concern for 41% of owners, the vast majority are planning to invest significantly more resources into their marketing efforts to grow their business.
“Small business owners are entering 2026 with a clear directive: do more, but do it smarter,” said Smita Wadhawan, Chief Marketing Officer at Constant Contact. “Our latest data shows a fascinating tension—inflation is the number one worry, yet businesses are choosing to increase their marketing budgets rather than cut them.
“This signals that entrepreneurs view marketing not as a discretionary expense, but as the essential lever for survival and growth. By leaning into efficiency and AI tools, they are finding ways to maintain this increased pace without burning out.”
With 74% of small business owners expecting to spend more time on marketing and 68% expecting to increase their marketing budgets, the focus for 2026 has shifted to maximizing the impact of every dollar and hour spent, said Constant Contact.
Key findings from the Q1 2026 Small Business Now report include:
● Investment Increases Despite Economic Worry: Small businesses are refusing to let economic pressure dictate their visibility. While 41%t of SMB owners cite inflation as their top concern—outpacing weak customer spending (19%)—74% expect to spend more time on marketing, and 68% plan to increase marketing budgets. Only 14% expect their budgets to decrease.
● The Search for Engagement and Efficiency: As businesses ramp up spending, they face a significant hurdle: connecting with their audience. The top anticipated barrier to marketing in 2026 is customer engagement (44%). In an effort to solve for this, 50% of SMB owners are prioritizing efficiency strategies, while 33% are testing new tools and technology.
● AI: The Analyst and The Author: Artificial Intelligence (AI) is becoming the tool of choice for bridging the gap between high effort and high efficiency. More than half (54%) of SMB owners are already using AI marketing tools, and usage is becoming more sophisticated: 45% use AI to analyze trend data, and 44% use it to compose content.
● Social and Email Lead the Channel Mix: When asked which channels will drive the most business in 2026, SMB owners are betting on digital over traditional. Social media (68%) and email marketing (41%) lead the pack, while traditional advertising (26%) and in-person events (29%) ranked significantly lower.
Canadian Small Business Findings:
• Canadian SMBs cite tariffs and import costs as their #1 business concern, ranking higher than inflation and higher than in any other country surveyed;
• Many Canadian owners say they’re doubling down on marketing despite economic pressure, reflecting a focus on maintaining customer demand in a shifting economy;
• In-person events are viewed as the most effective marketing channel for 2026 — signaling a strong return to face-to-face engagement;
• Text/SMS ranks lowest for expected effectiveness among Canadian SMBs compared to other marketing tactics;
• Canadian businesses continue balancing cost pressures with growth plans, adjusting channel mix and investment priorities as consumer behavior evolves;
• The Canada sample includes nearly 800 small business owners, offering one of the most robust country snapshots in the study
“Our latest data shows a fascinating tension: inflation and rising costs are the number one concern for 41% of small business owners, yet 68% plan to increase their marketing budgets in 2026.What sparked this change is the realization that ‘retraction’ is not a viable strategy in a hyper-competitive market. Small businesses are choosing aggression over hesitation because they know they are in an attention war. If they pull back now, they lose ground that is incredibly expensive to regain later. They are doubling down on investment to secure growth, but they are doing it with a new directive: do more, but do it smarter. They aren’t just throwing money at ads; they are investing in efficiency to ensure every dollar works harder,” said Wadhawan.
“Our data shows 88% of consumers are likely to become repeat buyers after a positive holiday experience. Apps now allow SMBs to automate hyper-personalized follow-ups based on that specific purchase history, turning a standard email into a high-conversion touchpoint. Similarly, on social media, agility is now non-negotiable. In the U.S. specifically, one in three owners plans to launch entirely new social campaigns this year rather than extending old ones. Technology allows them to test, iterate, and pivot creative assets instantly based on real-time performance data, something that was previously impossible for a small team.
“Marketing has never been more competitive, and the attention war is shifting. While social media remains the fast lane for discovery (favored by 58% of SMBs), our findings indicate that the inbox is where attention is truly earned. As some consumers spend less intentional time on social feeds and grow skeptical of SMS, the inbox remains one of the few spaces where customers actively choose to engage. In 2026, the most successful small businesses will be those that use AI to deliver hyper-personalized value here, turning one-time buyers into their most predictable growth engine.”
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