A lot is changing in the marketing world, and when we look across our client base alongside the broader market data coming out of Q1 2026, the real story isn't what most people think it is.
Spending isn't down. Across the country, more than two-thirds of small businesses are increasing marketing budgets this year. Fewer than one in five are decreasing them. The collective response to a noisy economy has not been retreat, it has been "spend more and hope harder."
The problem is the second half of that sentence. Fewer than one in five small business owners say they feel confident their marketing is actually working. So we have a market full of business owners pouring more money and more hours into marketing at the exact moment when every dollar carries the most risk, and most of them have no system for knowing if any of it is paying off.
That gap between spend and confidence is the real tax on small business right now. Not recession. Not consumer pullback. Uncertainty about what's working.
We wanted to step back this week and share what we're seeing on the ground across our accounts, who's actually winning right now and why, and what we're telling clients to focus on through the next 90 days.
Here is the honest picture from inside our book of business, paired with what the broader Q1 2026 data is showing.
1. Consumer spending in the B2B service space looks stable, but it varies meaningfully by geography and niche. What's happening in roofing in Tulsa is not what's happening in HVAC in Tampa. Don't take a national headline and apply it to your zip code.
2. Small business spending is still growing, but the rate of growth is decelerating. Owners are spending more, but they're getting more cautious about hiring and operational expansion. The U.S. Chamber's Small Business Index dropped from a recent high of 72.0 to 67.0 in Q1, and the share of owners planning to increase investment fell from 44% to 37% quarter over quarter. Spend is up. Confidence in where to spend is down.
3. Dominant players in their markets are spending consistently to protect their space, and many are doubling or tripling down. When the market gets noisy, the biggest players tend to get louder, not quieter. They've seen this movie before.
4. Smaller companies are letting the noise play on their nerves. That hesitation is costing them position gains they had just started to build, and it's allowing bigger players to hold ground they've held for years. The market doesn't wait for you to feel ready.
5. Demand collection is still working really well for service businesses with a clear ICP and a real funnel. If you know exactly who you serve and where they live online, this is a great moment. Opportunity is shrinking for anyone who hasn't built any demand creation underneath the demand collection. If all you have is a name and a phone number, you're running out of runway.
6. Funnel strategy is as strong as ever. A well-built funnel lets digital companies target sub-niches very carefully, and that precision is where the margin lives right now.
7. Meta and Google "lead form" products are a trap for most service businesses. They fill your CRM with cheap leads and give you a flattering cost per lead, but the real customer acquisition cost at the end of the line is brutal. The benchmark crowd has finally caught up to what we've been saying for years: ignore CPL, look at Cost Per Qualified Lead and CAC. A $50 lead that closes is infinitely cheaper than a $5 lead that ghosts.
8. Broad Meta targeting with broad creative is the move of smaller, less experienced agencies. It has been proven, time and time again, that this does not produce real customers. Nothing truly competes with quality psychographic data and tight audiences. Anyone telling you otherwise is either new or selling you on what's easy for them.
9. Legislation changes are creating a real land rush in certain verticals. Energy, oil and gas, and construction are all seeing it, particularly anything tied to LNG, data center power, and domestic energy production after the One Big Beautiful Bill Act. When the rules shift, the companies that move first get rewarded, and the ones that wait get left explaining why they waited.
10. Retargeting on connected TV (Netflix, Disney+, Hulu, and the rest) is producing significant results for smaller brands. Entry budgets start in the $500 to $5,000 a month range, and the targeting is genuinely good now. This is one of the better demand generation plays available right now if you know what you're doing.
11. AI is increasing production speed dramatically, but the revenue and profit impact is uneven. Enterprise teams are seeing real returns. Small business returns are real but smaller, and they tend to come from the operators who use AI to free up time for more human contact, not less. Early adopters are making some poor decisions as they learn. Over-conservative adopters are going to be behind if they wait too long. The right move is to adopt with intent, not to sprint or stall.
This is the part most market updates skip. There are real groups of small businesses that are growing right now in this exact environment. Some patterns we're seeing across our book and across the industry:
Service businesses with a clear ICP and a real follow-up process. The ones who know exactly who they serve, can describe their dream customer in a sentence, and respond to leads in minutes (not hours) are eating. Lead quality is becoming a much bigger differentiator than lead volume, and the operators who already had their house in order are pulling away.
Companies positioned in or adjacent to the energy build-out. Anyone serving energy, O&G, construction, electrical, industrial services, or anything tied to the data center and LNG infrastructure boom is in a moment that doesn't come around often. If that's you, this is not a year to be conservative.
Local service businesses that have committed to local SEO and reputation as a system. Word of mouth is back at the top of the most-trusted channels, and Google's Business Profile remains one of the highest-leverage assets a local service business owns. The businesses treating reviews, citations, and GBP optimization as a real ongoing program are compounding while their competitors are coasting.
Operators using AI to free up their time for actual human contact. The small businesses winning with AI right now are not the ones replacing their team with bots. They're the ones using AI to handle the admin, the drafts, and the data crunching, then spending the saved hours on personal follow-up, real customer conversations, and being unusually responsive when something goes wrong. AI as a force multiplier on the human stuff, not a replacement for it.
Businesses with stable operations and a steady stream of new positive customer stories. Marketing is downstream of operations. Companies that have invested in delivering a consistently great experience are now sitting on a renewable resource: testimonials, case studies, referrals, and repeat business. Marketing for these companies is significantly cheaper because the product is doing half the work.
If you see yourself in any of those buckets, the last thing you should do this season is pull back. The market is creating openings, and the businesses that hold their nerve are going to look back in twelve months and realize they picked up real ground.
Here's the part worth tattooing somewhere. Regardless of recession, consumer mood, or what your competitors are doing, your growth depends on four things:
That's it. That's the whole list. Yes, some businesses are facing harder times than others, and some are growing faster than ever. But no matter the circumstance, those four things don't change.
Knowing what you have to do regardless of the environment is what puts you ahead. It's also what lets you grow market share specifically in hard seasons, because most of your competition will be busy being scared.
If you're reading this and wondering where to actually point your attention in the next 30 to 90 days, here's what we'd tell you.
1. Review your site and core marketing assets. Do they clearly state what you do? Can a new visitor assess your market fit with an undeniable offer in a matter of seconds? If not, no amount of traffic will save you. Traffic is a magnifier, and it will magnify a confusing message just as quickly as a clear one.
2. Audit your marketing channels for lead quality, not just lead cost. If a channel isn't producing a quality CPL, figure out where that channel actually fits in the funnel. Some channels are closers, some channels are openers, and some are dead weight. Then honestly ask yourself if your company can afford to float that channel based on its real performance, not its promise.
3. Establish clearer reporting and figure out your real numbers. Cost Per Lead, Cost Per Qualified Lead, Cost Per Conversion, Customer Acquisition Cost. Find those numbers by channel, not just as a blended average. If you do this one exercise well, you'll be ahead of 75%+ of your industry. Most of your competitors are flying blind and hoping for the best, which is exactly why they're spending more and feeling less confident.
As always, we hope this helps you on the journey. If any of this sounded too hard or like gibberish, call us. We'd love to help you work through it.
In the meantime, let's all contribute to a more positive attitude in the market. There is real good happening, real openings being created, and real opportunities for businesses across our ecosystem to take advantage of. The businesses that keep their head up and keep executing through this season are the ones that are going to look back in twelve months and realize they picked up real ground.
Onward.
