What sort of businesses? SEO?
You fail to to recognise that business directories aka the yellow pages in some countries were around long before Google or Adwords existed. That's where small business advertises.
Neither Google nor Adwords is anythng like print, radio or TV. It's like the yellow pages. Except Google has has the lure of being a gateway to noncommercial content. There's reason to use Google even when you have no intent to purchase. There's little reason to use the yellow pages unless you are planning a purchase of some sort.
As such you have millions of people looking at Google search pages who are not looking for anything commercial in nature. And that audience presumably makes Google look like a more attractive place to advertise to a small business than the yellow pages. Whether it is actually more effective for these advertisers in terms of sales is another question.
We come back to that word again: intent.
For an advertiser, targeting a large crowd of people, _some_ of who may have an intent to purchase might seem more appealing than targeting a small group of people who _all_ have intent to purchase.
Whether it's more cost-effective for small business to devote its limited resources toward targetting the crowd or toward targeting the small group is still an open question. For Google, it's not necessary to answer that question. As long as advertisers believe the big crowd, which may include lots of people lacking any intent to purchase, is a better choice, there's no reason to question if it's true.
Maybe public libraries should start selling ad space? Surely some patrons might have an intent to purchase or could be persuaded to make one.
Google has its origins in a web-based library project at Stanford so this comparison is not as bizarre as it might sound. Subtract the non-commercial "library" aspect of Google and what's left? Adwords? SEO? Content farms, on-demand "articles" laced with display ads?