What Is Digital Marketing? What It Does and Main Types

In short: digital marketing is everything you do to make an offer known and sell it through online channels: search engines, social media, email, content and online ads. It is now where most advertising money goes in the US: the IAB/PwC report puts digital ad revenue at $294.6 billion in 2025, up 13.9% in a year.

For a small business, the question is no longer whether to “do digital,” but which channels to use, in what order and with what budget. This guide covers what digital marketing does, the main types, and a method for building a setup that pays without spreading yourself thin.

What is digital marketing, and what does it do?

Digital marketing applies the basics of marketing (understand a need, build an offer, make it known, convert, keep customers) to online channels. You will also see it called online marketing or internet marketing.

It differs from traditional marketing in three ways:

• Measurement. Every click, every form and often every sale can be tied to the action that caused it.
• Targeting. An ad can show only to people searching “emergency plumber Phoenix,” or only to purchasing managers at manufacturing companies.
• Low entry cost. A campaign can start with a few hundred dollars, stop overnight and be adjusted in real time.

It does not replace other forms of marketing. A trade show, a brochure or local word of mouth still work, and the best setups connect them to digital: a QR code on a booth that leads to a dedicated page, a review collected after a job, a Google search made after a friend’s recommendation.

Where does digital marketing stand in the US?

A few recent figures show what the playing field looks like.

Advertising. The IAB/PwC Internet Advertising Revenue Report, published April 16, 2026, breaks down 2025 like this:

Category	2025 revenue	Growth
Social media	$117.7 billion	+32.6%
Search	$114.2 billion	+11%
Display	$81.6 billion	+9.8%
Digital video	$78 billion	+25.4%
Commerce (retail) media	$63.4 billion	+18.0%

The report measures some of these as overlapping cuts, so the rows do not add up to the $294.6 billion total. By our own arithmetic, social and search each account for roughly 39% to 40% of that total, and social has now edged past search. The same release puts creator advertising at $37 billion in 2025, with a projection of $44 billion for 2026.

For a small business, the consequence is direct: the competition for attention plays out first on Google and on social platforms, where the budgets are. Being visible there takes either money (ads), time (SEO and content), and usually a bit of both.

Audiences. Pew Research Center’s 2025 survey of 5,022 US adults found that 84% use YouTube, 71% Facebook, 50% Instagram, 37% TikTok and 26% Reddit. Buying. The Census Bureau estimates that e-commerce reached $340.2 billion in the second quarter of 2026, 17.1% of total retail sales and 12.2% more than a year earlier.

The practical takeaway: your customers are online, they research before they buy, and a share of your competitors are absent or barely present.

What are the main types of digital marketing?

Channel	How it works	Time to results	Best fit
SEO	Rank for free in Google on the searches your customers make	Several months	Almost every business, especially local and B2B
Paid search	Paid ads on search results	Immediate	Urgent needs, high-value offers
Social media	Posts and ads on LinkedIn, Instagram, Facebook, TikTok	A few weeks	Visual products, consumer brands, hiring, B2B on LinkedIn
Content marketing	Articles, guides and videos that answer questions	Several months	Complex offers, long sales cycles
Email marketing	Newsletters and automated sequences	Fast on an existing list	Businesses with existing customers and contacts
Influencer marketing	Creators present your offer to their audience	A few weeks	Consumer brands, niches with recognized experts
Affiliate marketing	Partners paid per sale	Varies	E-commerce

Search engine optimization

Often the most profitable channel over time, because a good ranking keeps bringing visits without paying for each click. For a local business it starts with a complete Google Business Profile, reviews, and one page per real service or location.

Paid search

It answers demand that already exists: the person typing “AC repair quote” wants a provider now. Google Ads campaigns can be tuned day by day, but they stop the moment the budget stops.

Social media

Social is the fastest-growing ad category (+32.6% in 2025). Organic posting mostly builds awareness, trust and hiring; paid social lets you target people who are not yet searching for your solution.

Content and inbound marketing

Publish content that answers your customers’ questions, then guide them toward a purchase: that is the principle of inbound marketing. It takes consistency, but it builds an asset you own.

Email marketing

This is the relationship channel: it turns a contact into a customer and a customer into a repeat customer. In the US it must follow the CAN-SPAM Act (clear sender, honest subject line, postal address, working opt-out); UK and EU contacts add consent rules under the GDPR and PECR.

Influencer and affiliate marketing

One borrows a creator’s credibility, the other pays partners on results. Influencer marketing is policed by the FTC in the US: any financial, employment, personal or family connection with the brand, including free products, has to be disclosed clearly in the post itself, and the FTC warns that a platform’s built-in disclosure tool may not be enough on its own.

Inbound, outbound, paid, organic: how do you combine channels?

Channels sort along two lines: paid or organic, and outreach (outbound) or attraction (inbound). Effective setups mix them:

• Paid for now, organic for later. A business launching an offer can buy clicks while its content and SEO build up, then cut ad spend as organic traffic grows.
• Content feeds ads. An ad that leads to a useful guide often costs less per lead than one that pushes straight for a quote.
• Email recycles your audience. Every contact gained through ads or search can be reached again for free, if they agreed to it.

All these entry points should lead to pages built to convert. One landing page per offer is still the simplest way to turn traffic into leads.

How do you build a digital marketing plan in 5 steps?

1. Set a dated, numeric goal: “20 qualified quote requests a month within six months,” not “grow our visibility.”
2. Describe the audience precisely: who decides, where they look for information, what they ask before buying.
3. Audit what you have: website, Google Business Profile, social accounts, reviews, position against competitors. Fix technical problems and weak pages before sending paid traffic to them.
4. Choose one or two main channels that fit your timeline and budget, rather than launching five halfway.
5. Plan and measure: a three-month calendar, metrics checked monthly, a review every quarter.

Each step is covered in detail in our guide to building a digital marketing strategy.

How much should a small business budget?

No percentage of revenue works for every company. The soundest approach starts from the goal and works back to the budget:

• how many new customers do you want each month?
• how many leads does it take to sign one, based on your history?
• what does a lead cost on the channel you chose?

A fictional example: an HVAC installer wants 5 new jobs a month. It signs one quote in four, so it needs 20 leads. If its first campaigns show a cost of $40 per lead, the ad budget comes to about $800 a month, before management time. Its acquisition cost per customer is therefore $160 (4 leads × $40). If the margin on a job is well above that, the spend is justified.

How do you measure digital marketing results?

Measurement is digital’s big promise, but you have to set it up. The minimum for a small business:

• an analytics tool with forms, calls and purchases set as conversions;
• Google Search Console to follow your visibility in search results;
• a CRM, or even a spreadsheet, that records where each lead and customer came from;
• a monthly check that links spend, leads and revenue.

The metrics to track for content are detailed in our article on content marketing KPIs.

Which digital marketing mistakes are most common?

• Starting with tools instead of goals: opening a TikTok account because “everyone is there.”
• Spreading too thin across five social networks posted to irregularly, instead of one done well.
• Sending traffic to a site that does not convert: a generic homepage, a hidden form, a page that crawls on mobile.
• Judging too fast a long-term channel, or too late a paid one that is not paying.
• Never tying numbers to revenue: clicks and followers do not pay salaries.
• Neglecting security: an outdated site, shared passwords and no backups put the whole setup at risk.