Small shop illuminated by a computer screen during the pandemic, symbolizing the role of online advertising.

Can Online Advertising Save Small Businesses? The Surprising Role of Tech During COVID-19

Kai Mendoza in Business & Economy December 2025 • 4 min read.

"New research reveals how advertising technology helped small and midsize businesses survive the pandemic, offering valuable lessons for future crises."

The COVID-19 pandemic brought unprecedented challenges to businesses worldwide, with small and midsize businesses (SMBs) facing particularly dire consequences. Demand plummeted, revenues declined, and many were forced to close their doors. However, amidst the chaos, a crucial question emerged: could advertising technology have played a role in mitigating these adverse effects?

While studies have explored the broad economic impacts of the pandemic, the specific role of online advertising in shaping business survival has remained largely unexamined. The sudden and rapid onset of COVID-19 made it difficult to gather timely data on both business outcomes and advertising strategies, leaving a significant gap in our understanding.

Now, new research sheds light on this critical area, analyzing data from over 60,000 businesses across 49 countries. The findings reveal the surprising ways in which advertising technology helped SMBs navigate lockdowns and demand shocks, offering valuable lessons for businesses and policymakers alike.

Lockdowns and Closures: Understanding the Initial Impact

Small shop illuminated by a computer screen during the pandemic, symbolizing the role of online advertising.

The study confirms the widely held understanding that government-imposed lockdowns led to a significant increase in business closures. On average, an increase in lockdown stringency in the first month of the pandemic was associated with an 8.3 percentage point decrease in business survival probability. This finding underscores the immediate and severe impact of restrictions on SMBs.

However, the researchers also found that the impact of lockdowns varied depending on several factors, like baseline stringency, geography, and duration. Lockdowns had the most significant effect when started from very low stringency, and after the first initial month, additional controls had marginal effects.

Country Matters: Businesses in Asia and Africa were the most vulnerable to these lockdown effects.
What Worked?: However, European nations tended to fare better.
North American Average: Canada, the United States, and Mexico hovered close to the median impact.

These results highlight the complex interplay of factors shaping business outcomes during the pandemic, suggesting that a one-size-fits-all approach to policy interventions may not be effective.

Advertising as a Lifeline: Lessons for Resilience

This study offers compelling evidence that online advertising played a vital role in supporting SMBs through unprecedented economic challenges. By illuminating how advertising technology can mitigate the adverse effects of demand shocks and government restrictions, this research provides invaluable insights for businesses and policymakers alike. As we navigate an increasingly uncertain future, understanding the strategic importance of online advertising may be key to fostering a more resilient and sustainable small business ecosystem.

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This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2307.09035,

Title: Covid-19 Demand Shocks Revisited: Did Advertising Technology Help Mitigate Adverse Consequences For Small And Midsize Businesses?

Subject: econ.gn q-fin.ec

Authors: Shun-Yang Lee, Julian Runge, Daniel Yoo, Yakov Bart, Anett Gyurak, J. W. Schneider

Published: 18-07-2023

Everything You Need To Know

How did online advertising specifically help Small and Midsize Businesses (SMBs) during the COVID-19 pandemic?

Online advertising served as a crucial lifeline for SMBs during the COVID-19 lockdowns. It helped mitigate the adverse effects of demand shocks and government restrictions. The study indicates that advertising technology played a vital role in supporting SMBs through unprecedented economic challenges. This strategic importance may be key to fostering a more resilient and sustainable small business ecosystem.

What was the immediate impact of government-imposed lockdowns on Small and Midsize Businesses (SMBs) at the start of the COVID-19 pandemic?

The study confirms that government-imposed lockdowns led to a significant increase in business closures. An increase in lockdown stringency in the first month of the pandemic was associated with an 8.3 percentage point decrease in business survival probability, underscoring the immediate and severe impact of restrictions on SMBs.

Were the effects of lockdowns consistent across all regions, and if not, what were the key differences?

No, the impact of lockdowns varied significantly based on factors like baseline stringency, geography, and duration. Businesses in Asia and Africa were the most vulnerable to lockdown effects, while European nations tended to fare better. Canada, the United States, and Mexico showed impacts close to the median.

What are some of the factors that the study mentions as playing a role in business outcomes during the COVID-19 pandemic?

The study highlights several factors shaping business outcomes. These include baseline stringency of lockdowns, geographical location, and the duration of restrictions. The research suggests that a one-size-fits-all approach to policy interventions may not be effective because of these varying factors.

Why is understanding the role of advertising technology important for the future of Small and Midsize Businesses (SMBs)?

Understanding the strategic importance of online advertising is key to fostering a more resilient and sustainable small business ecosystem. The research offers compelling evidence that online advertising played a vital role in supporting SMBs through unprecedented economic challenges. By illuminating how advertising technology can mitigate the adverse effects of demand shocks and government restrictions, this research provides invaluable insights for businesses and policymakers alike as we navigate an increasingly uncertain future.