SMEs' Big Digital Footprint
The greatest gift that Digitalisation has given us is perhaps, freedom, and unlike the political or social kind, this one did not cost much. In terms of business, this new-found freedom has reverberated through the corridors of Small and Medium-Sized Enterprises (SMEs) the most. So now they appear as unsolicited ads on our social media, massively broadening our choice of brands. The result is an unflinching empowerment, allowing SMEs to share a platform with big legacy brands. Because in Digital, size, does not matter. WHY SMEs ARE SPENDING ON DIGITAL? IMPACT ON DIGITAL ADVERTISING BIG BRANDS VS. SMEs NEW AVENUES WAY FORWARD HOW ARE SMEs USING DIGITAL? India has more than 800 million active internet users with digital assets’ reach even expanding to the semi-urban and rural audiences. With this massive reach that is ever increasing, SMEs now have the access to connect with a wider audience on all kinds of platforms. So, let’s have a look at how the SMEs are fuelling their growth story via Digital.
In India, MSMEs have been contributing around 30 percent towards the total GDP in the last few years, creating employment for nearly 110 million people in manufacturing, trade and other services in 2021-22, compared to 51.057 million in 2014-15. So, due to the value-addition and high employment generation share, they are rightly considered to be the backbone of the economy, or the ‘catalyst of economic and social development’.
Of late, the small and medium sized businesses have been investing heavily on Digital to increase their reach and create brand awareness. In the recent past, we have witnessed many successful new-age digital-first brands, be it Zepto, Licious, Fresh To Home, My Glamm, Sugar Cosmetics, Mamaearth among others, go the Digital way. Hence, a pertinent question that comes to mind – are SMEs the new growth engine for Digital?
As Digital mediums offer low-cost implementation, versatility, and the freedom to experiment, many small businesses have now taken the Digital route. The medium is being extensively used by MSMEs these days, and for good reason. It effectively takes away the grind of other mediums, and advertising on Digital does not require a lot. To put it plainly, you can promote your brand today on Digital medium without any professional help. Although its effectiveness can be debated sans a professional touch, but nonetheless, you can reach out to a wide number of people.
Santara gets a front-seat view and insight into SME brands, as atom handles brands such as Setu, Nature4Nature, Vector, Hampa, etc. He further adds, “The good part about the work on SMEs is that we are not stuck with formats. We keep experimenting a lot. SME brands are not tight fisted with brand manuals and tonality. But that doesn’t mean we play blind. We have a proprietary strategic tool - ‘Six By Six’, which helps us divide short term, mid-term, and long term campaigns with very clear KPIs. It further classifies the brands on the basis of their life stage – challenger brands, established brands, or new entrants.”
According to the Pitch Madison Advertising Report 2023, AdEX in India is expected to grow by 16 per cent in 2023, more than 5 times higher than the global AdEx which is predicted to grow only by 3%. The report also stated that 58% of total AdEx growth has been contributed by the digital sector that has grown by 35% in 2022, and is expected to further rise to 41% in 2023.
Sharing a similar estimate, Santara states that SMEs spend upwards of 55% of their budget on Digital and contribute to around 38% of the total Digital ad spends.
However, Sundaram pegs it really low, as he says, “My guess is that SMEs could contribute anywhere between 15-20% of the overall Digital advertising in India and I don’t see it growing more than 5% in the coming year unless the struggle to deliver the requisite outcome is met,” notes Sundaram. “Overall, Digital overtook TV in 2022, which only tells us that growth is continuing on Digital and that cannot happen with spends reducing from FMCGs and traditional torch bearers of advertising. Therefore, with that as a hypothesis, I don’t think there have been reduced spends on Digital.”
When the pandemic hit, brands, including big traditional ones and SMEs started investing big on Digital. Surprisingly, post pandemic, when everything opened up, some of those traditional brands returned to their old approach in terms of media mix, but with small variations of course. However, SMEs continued to tread down the Digital path. Now, looking at growing number of SMEs in the country and their continued patronage to Digital, it compels us to think about whether SMEs rather than big brands are driving the growth story for Digital.
“Well FMCG and other big brands are bigger than the 19-20 levels, and we see them as major contributors to the Digital media AdEx,” notes Chinchankar. “SME media investments on performance marketing have always been on the higher side, and Digital media is extremely strong on the hardworking bottom of the funnel. Digital media to a large extent has become the drip to their business. It is still under-leveraged by SMEs, but in the coming years, spends from SMEs will be much more than large advertisers. Both big traditional brands and SMEs are focused on performance marketing. Search, e-commerce, and social media are some key platforms attracting the dollars from both big traditional brands & SMEs. Having said that, big brands have been consistently investing on branding (video spends).”
Sundaram reveals that SMEs do struggle across Digital marketing, except when they are on e-commerce platforms. “Even though the SME Digital spends might have increased, their ROI isn’t worthy enough for a conducive long-term sustenance,” he says.
With the evolution of Web 3.0 in progress, the world has witnessed various new technologies. As Digital takes the centre stage in marketing, many brands, be it big or small, have been experimenting with different new formats.
Agarwal is of the opinion that this year people will explore YouTube shorts. “The next thing that people are really looking forward to exploring is Google My Business as they want to go the retail way, and then use hyper personalised content. All these apps, whether inDrive, or Ferns N Petals, they’re all using ways of hyper-personalization to create better content and better deals,” she shares.
“We are looking at creating a mobile application wherein people can actually play games with Skippi, and are able to see where to go and buy Skippi.” says Ravi Kabra, Co-founder, Skippi Ice Pops .
Whereas, Sneh Jain, Co-Founder and Managing Director, The Baker’s Dozen says, “We have also installed an AI Ordering Chatbox on WhatsApp that has made it easier to place an order. We also have performance marketing to push our products and campaigns across online platforms. With data science projects for accurate demand forecasting, we make sure that our products are always well stocked.”
While SMEs have shown immense potential and have grown massively on the back of digital, it’ll be interesting to see if they can surpass big corporations in the Digital game.
“During the pandemic, Digital ad spend continued to grow, and is still seeing steady year-on-year growth,” affirms Arora. “For SMEs, the target audience from tier 2 and tier 3 cities is used to television ads. Continuing the same framework into the digital space is the best formula to keep audiences engaged in the long run,” he says.
As consumers, we aren’t complaining. That advertisement we see online can sometimes lead us to a hidden gem.
With the rise of e-commerce and social media platforms, MSMEs have received a further boost to scale their businesses and increase their audience base, especially post-COVID. According to BCG and FICCI report ‘Riding India’s Digital Super-cycle,’ over 60% SMEs expect their online sales to further increase in the future.
In 2019, Walmart Inc. announced the creation of the Walmart Vriddhi Supplier Development Program (Walmart Vriddhi) to train and prepare 50,000 Indian small businesses to ‘Make in India’ for global supply chains. Walmart Vriddhi is actively working with India’s micro-small-and-medium-sized enterprises (MSMEs) to expand domestic capabilities and participate in the global economy.
The greatest gift that Digitalisation has given us is perhaps, freedom, and unlike the political or social kind, this one did not cost much. In terms of business, this new-found freedom has reverberated through the corridors of Small and Medium-Sized Enterprises (SMEs) the most. So now they appear as unsolicited ads on our social media, massively broadening our choice of brands. The result is an unflinching empowerment, allowing SMEs to share a platform with big legacy brands. Because in Digital, size, does not matter.
WHY SMEs ARE SPENDING ON DIGITAL?
IMPACT ON DIGITAL ADVERTISING
BIG BRANDS VS. SMEs
HOW ARE SMEs USING DIGITAL?
India has more than 800 million active internet users with digital assets’ reach even expanding to the semi-urban and rural audiences. With this massive reach that is ever increasing, SMEs now have the access to connect with a wider audience on all kinds of platforms. So, let’s have a look at how the SMEs are fuelling their growth story via Digital.