76% SMBs find online ads more effective than traditional methods: Report

New Delhi: India’s online advertising market, driven by increased internet access, smartphone usage, and shifting consumer behaviour, has become vital for MSMEs and startups (collectively Small and Medium Businesses (SMBs)). 

Complementing traditional media, it is projected to grow at a CAGR of 23.49%, with digital ad spending set to reach Rs 62,045 crore by 2025. In light of this, Primus Partners, in collaboration with India SME Forum and Broadband India Forum, have unveiled their empirical report titled, “Leveraging Online Ads for India: Unpacking the Impact of Online Ads on MSMEs and Startups." 

The report was released by Jitin Prasada, Union Minister of State for Ministry of Electronics and Information Technology and the Ministry of Commerce and Industry, and Anurag Singh Thakur, Member of Parliament. 

It revealed that 8 out of 10 SMBs find the use of online ads more effective than traditional means. 

The report highlights emerging trends in how SMB brands engage with their audiences, with 74% of respondents believing in the effectiveness of personalised ads in achieving their business goals. Additionally, 7 out of 10 SMBs now utilise more than two online advertising platforms to ensure a broader reach and consistent brand presence, catering to diverse user preferences. With the rise of regional language ads and platforms like ShareChat and YouTube, SMBs are tapping into untapped markets in Tier 2 and 3 cities. Meanwhile, the adoption of AI-driven targeting, big data, and short-form video content on platforms like Instagram and OTT services further optimises ad campaigns, driving higher engagement, ROI, and lead generation.

While embracing these strategies, SMBs also look at various factors while choosing the online ad platforms. The report by Primus Partners highlights that 49% of SMBs consider opting for platforms offering a return on investment (RoI), which was followed closely by geographical reach with 47%. SMBs in India prefer moderate ad frequency to balance cost-efficiency and engagement, focusing on seasonal or ad-hoc campaigns during high ROI periods like festivals or sales. High-frequency campaigns are common in sectors like e-commerce, where ongoing customer interaction is crucial.

Key highlights from the survey:

• Amongst the SMBs surveyed, 80% of the respondents had used online ads in their businesses. 
• 42% of the respondents allocated over 40% of their marketing budget towards online advertisements. 
• Further, 72% of SMBs utilise more than 2 online platforms, showing a strategic approach to diversifying their digital presence. 
• 33% run weekly campaigns, while 42% opt for monthly ads, indicating consistent engagement with digital platforms.
• 76% of businesses found online ads more effective than traditional advertising. 
• 70% of respondents believed that online advertising helped them optimise marketing budgets and over 80% agreed that online advertising helped improve their brand visibility and helped in brand building. 
• 69% of respondents expanded to new markets, with 40% growing domestically, 30% internationally, and another 30% across both. 
• 80% stated that their business revenues have more than doubled since implementing online advertising. 
• 94% achieved a Return on Ad Spend (ROAS) of more than 2x, underscoring the effectiveness of targeted campaigns
• 58% of the respondents felt that analytics and measurement tools offered in the market were impactful in meeting their business goals. 
• AI-driven campaigns were cited by 74% of respondents as key to precision targeting and cost efficiency. 
• The top three areas where AI made an impact in their online advertising efforts include
• Ad creation & design, 
• Audience targeting, and
• Budget optimisation & performance analysis.
• 49% reported insufficient knowledge of online advertising techniques. 
• 43% cited budget constraints as a significant challenge, especially for smaller enterprises. 
• 35% cited complying with regulations as another challenge.