With India’s burgeoning online advertising market becoming incrementally vital for all including MSMEs and startups, collectively Small and Medium Businesses (SMBs), driven by increased internet access, smartphone usage, and shifting consumer behaviour, it is projected that online advertising will grow at a CAGR of 23.49% to complement traditional mediums and reach Rs 62,045 crore by 2025.
As a result, Primus Partners in collaboration with India SME Forum and Broadband India Forum, has now unveiled a report titled- ‘Leveraging Online Ads for India- Unpacking the Impact of Online Ads on MSMEs and Startups’ in the presence of Jitin Prasada, Union Minister of State for Ministry of Electronics and Information Technology and Ministry of Commerce and Industry as well as Anurag Singh Thakur, Member of Parliament.
In the same, it was revealed that 8 out of 10 SMBs find use of online ads more effective than traditional means and having said that 7 out of 10 SMBs now utilize more than two online advertising platforms to ensure a broader reach and consistent brand presence, catering to diverse user preferences.
This comes in the aftermath of online advertising evolving rapidly and businesses embracing innovative strategies to stay competitive in a dynamic market, leading to the rise of regional language ads and platforms like ShareChat and YouTube, to tap into untapped markets in Tier 2 and 3 cities.
The report also highlights emerging trends in how SMB brands engage with their audiences, with 74% of respondents believing in the effectiveness of personalized ads in achieving their business goals.
Meanwhile, the adoption of AI-driven targeting, big data, and short-form video content on platforms like Instagram and OTT services further optimizes 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- 49% SMBs consider to opt platforms offering Return on Investment (RoI), which was followed closely by geographical reach with 47%.
Moreover, 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 as high-frequency campaigns are more common in sectors like e-commerce, where ongoing customer interaction is crucial.
The primary research for this study gathered insights from a diverse group of SMBs across various sectors such as manufacturing, retail, technology, healthcare, and services. Additionally, in-depth Key Informant Interviews (KIIs) were also conducted with SMB founders, legal experts, academia, industry specialists, and advertising executives.
Key highlights from Primus Partner’s survey include:
- Amongst the SMBs surveyed, 80% of the respondents had used online ads in their business.
- 42% of the respondents allocated over 40% of their marketing budget towards online advertisements.
- Further, 72% of SMBs utilize 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 optimize 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 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 and design,
- Audience targeting, and
- Budget optimization & 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 challenges
Commenting on the launch of the new report, Ramakrishnan M, Managing Director, Primus Partners, said, “MSMEs and startups, contributing 30% to India’s GDP, play a vital role in the nation’s economic growth. To boost their performance, these businesses can leverage the power of digital advertising, including AI and AI-related tools, which 69% of our surveyed SMBs found effective in achieving their business goals. Our research highlights that harnessing the full potential of online advertising requires policy reforms and industry strategies that address their unique challenges, foster innovation, and reduce barriers, ensuring sustained digital competitiveness.”
To this, he added, “To enhance SMB access to online advertising, affordable tools and platforms could also be provided through government-industry collaborations, offering subsidized or tiered pricing. Additionally, we feel a multi-stakeholder approach to regulatory frameworks is needed to ensure transparency, consumer protection, and inclusivity, while avoiding burdensome regulations.”
