Your competitors just increased their marketing budgets. Not by a little. By enough to matter. While you’re debating whether to pull back because of economic uncertainty, 68% of Canadian small businesses are doing the opposite.
According to Constant Contact’s Q1 2026 Small Business Now report, the majority of small businesses plan to increase their marketing budgets this year despite ongoing inflation concerns. For Canadian SMBs, that’s both a sign of confidence and a serious warning. If your competitors are leveling up while you stand still, you’re actually falling behind.
The Numbers Don’t Lie
Constant Contact’s research reveals that 68% of small businesses plan to increase marketing spend in 2026, 50% are prioritizing efficiency strategies for better ROI per dollar, and 33% are actively testing new AI marketing tools.
The story isn’t “spend more just because.” Canadian SMBs are moving away from spray-and-pray advertising into targeted, measurable channels. Social media, email, and AI-powered automation are replacing traditional channels that can’t prove ROI.
Why Now?
Despite inflation and economic uncertainty, SMBs are investing in marketing for three strategic reasons. First, they’re treating marketing as both defense and offense. Defense keeps existing customers engaged and loyal. Offense captures market share from competitors who cut spending during downturns.
Second, digital channels are finally measurable. AI-powered analytics make it easier to tie marketing directly to revenue through metrics like lifetime value and repeat purchase rate. Third, 79% of Canadians prioritize supporting local businesses and 80% prefer Canadian-made goods even at a premium. When customers actively seek “Buy Canadian,” smart businesses amplify that advantage.
44% Say Engagement Is Their Biggest Challenge
Here’s the critical insight. 44% of small business owners say customer engagement, not budget, is their biggest challenge going into 2026. Money isn’t the main barrier. Relevance is.
Canadian SMBs face content fatigue from audiences who’ve seen “10% off” a thousand times, algorithm fatigue from platforms constantly changing rules, and time fatigue from trying to keep up with posting and reporting. The winners in 2026 won’t just shout louder. They’ll connect better.
Why Social and Email Are Winning
The data is clear. 68% say social media will drive the most business in 2026, and 41% say email will be a top revenue driver. Both are dialogue channels that let you talk with customers, not at them.
Traditional broadcast channels like print and radio don’t build first-party data, are harder to tie to revenue, and can’t personalize messaging. Social and email capture data you own, allow segmentation by geography and behavior, and make testing and optimization simple.
AI Tools Are No Longer Optional
The CFIB’s digital transformation research shows that 54% of small business owners already use AI marketing tools, 45% use AI for trend and performance analysis, and 44% use AI specifically for content creation.
If you’re not using at least one AI tool for content and one for analysis by mid-2026, you’re competing against businesses that can do in two hours what takes you two days. Start with ChatGPT, Claude, or Gemini for content creation, and use AI to summarize ad reports and suggest optimizations.
The Winning Channels
Based on industry research from Martal, here’s where smart money is going. Social media tops priorities for 68% of SMBs with short-form video on TikTok, Instagram Reels, and YouTube Shorts, local discovery through Facebook groups and LinkedIn for B2B, and paid social ads that remain affordable for precise targeting.
Email marketing delivers ROI in the $36 to $42 per dollar spent range, is critical for first-party data growth, and excels at nurturing repeat purchases. Search, content, and SEO still matter through blogs, landing pages, and local optimization, but now you must consider how your brand appears in AI-generated search results, not just traditional links.
Budget Allocation Template
Here’s a sample monthly allocation for a Canadian SMB increasing budget by $2,000 per month in 2026.
40% to Social Media ($800/month): Mix of TikTok, Instagram Reels, and Facebook or LinkedIn ads with AI-assisted content to maintain volume and quality.
30% to Email and First-Party Data ($600/month): Email platform, template design, list-building campaigns, lead magnets, and local offers to grow subscribers.
15% to Owned Content and SEO ($300/month): Blog posts, landing pages, local SEO updates, and content repurposing across channels.
15% to Experimentation and AI Tools ($300/month): Testing AI copy tools, visual tools, new ad networks like Reddit Ads, and small tests on emerging platforms without long commitments.
This mix varies by industry, but the principle holds. Double down on what’s measurable and owned, then carve off a small slice for experiments.
What’s Getting Cut
Traditional advertising including print, radio, and billboards are being reframed as support tools for brand awareness, not core revenue drivers. They face higher costs, harder attribution to real revenue, and limited ability to collect first-party data. Events are becoming more selective with fewer generic trade shows and more curated niche events that map to ideal customers.
79% of Canadians Prioritize Local
Research shows 79% of Canadians prioritize supporting local businesses and 80% prefer Canadian-made goods. This isn’t temporary. It’s a durable preference shift. Canadians are searching for local alternatives before defaulting to global brands, willing to pay premiums for Canadian-made products, and looking for businesses that reflect community values.
How to Market It Authentically
Customers want “real Canada,” not maple leaf clipart. Be specific, not generic. Name your town, region, and local partners. Describe your supply chain in simple, human language. Show your impact by highlighting how many local jobs you support, partnerships with local suppliers, and contributions to local causes.
Integrate this into your content, not just one campaign. Create short video tours of your facility. Share founder stories about why you chose this community. Feature regular “local partner spotlight” posts or emails. In successful examples like Vancouver coffee roasters and Calgary eco-home services, “Canadian” isn’t a checkbox. It’s the core story.
First-Party Data Is the New Baseline
With third-party cookies dying and PIPEDA plus Quebec’s Law 25 raising privacy expectations, consent-driven transparent data is now table stakes. Build your first-party strategy through email lists grown via website, checkout, and social channels with clear value exchange, SMS for high-intent use cases like appointment reminders and limited-time local offers, and surveys to understand what content customers actually want.
Don’t give AI agents access to more data than necessary. Know where your data lives. Be transparent with customers if data is processed outside Canada.
Week 1: Audit Current Spending
List every marketing channel and spending from the last three to six months. Rank by revenue generated, time required, and first-party data generated. Cut or pause clear underperformers. Reinvest those dollars into your top two to three channels.
Week 2: Set Up First-Party Data Collection
Review and update website forms with clear consent, privacy policy with plain language, and email and SMS opt-in flows. Add at least one new list growth mechanism like a local offer, downloadable guide, or contest emphasizing local customers.
Week 3: Test Two AI Tools
Choose one for content like posts, emails, and ad copy, and one for analysis like summarizing reports. Set a clear 30-day test goal such as “Save five hours per month on content.” At month end, decide to keep, upgrade, or cancel based on results.
Week 4: Reallocate Budget and Plan Your Story
Increase allocation to social media, especially short-form video, and email marketing. Map out your Canadian story by identifying what makes your business distinctly local, which partners and suppliers you can highlight, and how to integrate that into social, email, and your website.
From there, your 2026 marketing budget becomes a living system, not a static spreadsheet. The SMBs winning this year align spend with measurable channels, use AI to stretch resources, treat “Buy Canadian” and privacy as advantages, and commit to steady improvements month after month.
Every dollar you spend on unfocused marketing is a dollar your competitor invests in channels that actually drive revenue. The businesses thriving now built strategies on real data, eliminated what doesn’t work, and automated everything possible.
At Latin Launch, we help Vancouver businesses build marketing strategies that align with how customers actually buy in 2026. We audit current spending, identify where you’re losing money, restructure budgets around measurable results, and implement AI tools that multiply effectiveness without adding headcount.
Ready to rework your 2026 marketing budget around what actually drives revenue? At Latin Launch, we provide complimentary marketing budget audits for Canadian SMBs and build practical 30-day action plans that eliminate waste and focus spending on channels that convert.
FIll out the form below and we schedule your call with us