vcita has released a new report that signals a double-edged sword for marketing agencies that work with SMBs. Known as vcita’s 2025 SMB Marketing Report, it demonstrates how SMBs show healthy levels of outsourced spending on marketing. However, they’re also showing high churn rates.
The survey – fielded to 500 U.S. SMBs – finds that 52 percent work with SMB agencies and spend up to $3,000 monthly. However, 40 percent of those SMBs discontinue or switch their marketing agency. Perhaps more alarming, 56 percent of those do so within 6 to 12 months of signing a new agency.
This represents a challenge for SMB-focused agencies in that they often have a very short runway to demonstrate clear value. In a broader sense, these results indicate that SMBs are more discerning and ROI minded than they’ve ever been. They need to see proven results, and they need to see them quickly.
“Our survey revealed what many in the industry have sensed for a while: local businesses are raising the bar when it comes to what they expect from marketing partners,” vcita CEO Itzik Levy told Localogy. “They’re not just looking for flashy campaigns: they want real, measurable business outcomes.”
Willing to Pay
Going one level deeper, 60 percent of SMBs pointed to a lack of ROI and tangible results as the biggest reasons for churning. The survey identifies social media management, email marketing, and paid search as the most commonly outsourced marketing services for SMBs… but also those at the most risk.
Within these categories, SMBs define tangible business results as converting leads into paying customers (19.2 percent), generating new leads (16 percent), and building brand awareness (11.6 percent). These are the performance indicators that SMB-focused agencies need to work on.
The good news is that SMBs aren’t reducing their market spend… they’re willing to pay for the right results. But in search of those results, they’re not afraid to go through several marketing agencies until they get the ROI that they’re looking for. This puts SMB-focused agencies on warning.
Of course, no SMB survey these days is complete without AI. How does that factor into SMB sentiments? 69 percent work with agencies that offer AI-powered marketing tools. But for the remainder of SMBs whose agencies don’t offer AI-supported tools and services, a majority said that they want it.
Bridge the Gap
As for the AI-assisted functions that SMBs want, they named automated content creation as a top category. Also on that list is using AI to respond to customer inquiries and generate custom estimates. That last one is important for high-value verticals like professional services and home services.
“Agencies are facing rising churn and increasing pressure to prove their value,” said Levy. “With client expectations evolving faster than ever, AI is emerging as a powerful tool for agencies to bridge the gap between services offered and results delivered.”
In addition to quenching clients’ thirst for AI tools, AI can help agencies internally and operationally. In other words, utilizing AI for automation and more effective task completion can help agencies fulfill marketing work on behalf of clients – whether or not those AI deployments are evident to the client.
“When AI is introduced as an instrument for achieving tangible business results, it opens the door for greater ROI for SMBs,” said Levy, “and it enables more enduring relationships between agencies and their clients. We see this as a turning point. Agencies that evolve their offering with AI at the core will not only meet the moment, they’ll reshape the way small businesses grow.”
