Feature: SME’s Big Digital Footprint

Naskar, Anjana

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ABSTRACT (ENGLISH)
The result is an unflinching empowerment, allowing SMEs to share a platform with big legacy brands. Because in
Digital, size, does not matter. [...]a pertinent question that comes to mind – are SMEs the new growth engine for
Digital? WHY SMEs ARE SPENDING ON DIGITAL? ” “Organic cosmetics or foods have seen exponential growth on
Digital platforms, with brands like Iyal, Vilva, and Avaram using their strong presence on Digital platforms to sell
products with a rocksolid brand ethics. “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. [...]with that as a hypothesis, I don’t think there have been reduced spends on Digital.

FULL TEXT
After contributing around 30% to the GDP in the last few years, SMEs are now leaving an imprint on Digital AdEx
with as much as 40% share

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.

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?

WHY SMEs ARE SPENDING ON 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. Highlighting the multiple reasons behind SMEs investing on Digital, Rammohan Sundaram, Country Head
&Managing Partner –Integrated Media, DDB Mudra Group shares, “First, the government has enabled a big waiver
to SMEs on GST. Earlier SMEs were subjected to mandatory registration and requisite GST, which now does not

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exist for selling online and any interstate sales. This is a big booster, which naturally means more money for
marketing. Platforms such as Google and Meta help in discovery, while Amazon and Flipkart help in ensuring Digital
distribution in a big way, reducing a whole lot of costs for SMEs. Therefore, it is a lot more profitable. Then there is
Indiamart, which is an end-to-end destination for SME brands to thrive on. We also have ONDC levelling the playing
field. So, these are massive boosters for growth of SMEs in India.”

“The most important reason why SMEs are spending on Digital is the pressure of short-term performance. SME
brands want to scale up faster, but in a cautious manner. The revenue earned is reallocated for marketing. Most of
them don’t have any runway beyond a few months. Digital facilitates performance and measurability. While OTT and
traditional are good for brands having a clear long-term view, most SME brands have not evolved to that life stage
yet,” opines Abhik Santara, Director &CEO, atom &Founding Partner, by The Network.

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.”

Shetal Shah, Co-Founder, TheBagTales talks about how brands harnessed the power of digital during pandemic
lockdowns when other mediums were restricted. “When offline events and pop-ups were not taking place during
lockdowns, we moved to influencer marketing and used Instagram as a platform to connect with our audience and to
reach out to a larger set of people.”

“Organic cosmetics or foods have seen exponential growth on Digital platforms, with brands like Iyal, Vilva, and
Avaram using their strong presence on Digital platforms to sell products with a rocksolid brand ethics. The demand
for healthy snacking that popped up during the pandemic led to brands like Snackible, and The Whole Truth Foods
increasing their presence online, and on e-commerce sites as well. Brands like Fully Filmy, The Souled Store, and
Bewakoof use a mix of Digital media (such as, user-generated content, reels and contests), along with optimised
keywords on search engines, to sell their products, which are mostly based on film and television merchandise,”
shares Himanshu Arora, Co-Founder, Social Panga.

IMPACT ON DIGITAL ADVERTISING

According to the Pitch Madison Advertising Report 2023, AdEX in India is expected to grow by 16 percent 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.

“Google or Meta defines any advertiser spending $1.5mn annually as an SME advertiser. By that token, 55% of
digital ad revenues are contributed by SME advertisers &45% by big traditional advertisers,” observes Vishal
Chinchankar, CEO, Madison Digital &Madison Media Alpha while adding that in a couple of years SME spends will
go up by 8-10 basis points.

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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.”

“Digital has become a huge space to drive sales because of marketplaces,” says Shradha Agarwal, CEO, Grapes.
“If I had a 100-crore marketing spend, I was previously doing only 20% on Digital i.e., 20cr, and 80cr or 80 percent
was going offline. This has literally gone up to 40% for Digital and 40% on TV, and the remaining 20% on trade and
BTL. Print &Radio has reduced a lot more. And out of the 40% that is being spent on Digital, around 10% to 15%
goes straight to e-commerce marketplaces to drive sales. After that, they’re spending a lot more on their social
content as content has become the hero now,” she explains.

Quoting a recent advertising report, Aejaz Khan, Chief Executive Officer, Makani Creatives explains how Digital has
eliminated geographical barriers, “GroupM’s ‘This Year Next Year 2022’ report had projected Digital ad spend to
touch Rs 48,603cr in 2022, with nearly 50% share in the total AdEx (which has well exceeded it). What is given is
that now a local manufacturer in Patiala, Nasik, or Mirpur can find a national audience via Amazon/Flipkart to sell, a
voice with Google/YouTube ads, a presence across relevant social handles, over and above a website or even a
Meta page which has become hygiene. The typical Return on Ad Spend (ROAS) on Google is 2:1. As SMEs in
manufacturing see opportunities to cut middle men and become D2Cs, they will look to Digital marketing as their
mainstay. There’s no looking back from here.”

“At least, for start-ups and SMEs, the advertising is Digital-first, and then comes everything else unless you’re really
well funded. Sometimes, for small start-ups, 100% of their spending goes towards Digital media, which keeps
reducing as their funding increases and they move towards ATL and media. I’ll say 70% - 80% of small start-ups and
SMEs are focused on Digital marketing,” shares Divyesh Panchal, Founder &CEO, D2P Consultancy.

BIG BRANDS VS. SMEs

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 We
approached Vriddhi and received a lot of support from them to identify the product, packaging, factory setup and
how to make sales as well. We took our showroom online and the digitization of our factory has helped a lot,
especially sales on the eCommerce platforms has pushed us to be more Digital,” says Sharma. Witnessing a 100%
growth through e-commerce even during the pandemic, he has set ambitious sales targets of 100% for 2023-24 and
2024-25. “Looking at the sales growth and projections, my team of designers have identified new products to sell
online through different channels in the domestic market,” he says.

“Shobitam is steadily spending more of its budget on Digital marketing with high ROAS, using platforms across all
channels (Google, FB, Emails and Website). We have built custom solutions to design our sarees with bespoke
blouse solutions where we collect measurements digitally from customers, transmit them to our tailors electronically

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and deliver to our customers globally without the traditional stores and physical meetings. Our custom built ‘Right
Track App’ has been a game changer for us to track inventory across the value chain, starting from weavers and
artisans in the supply chain to quality control, catalogue, and packaging, till it gets delivered to our customers. With
this level of traceability and speed, our digital marketing also emphasises that messaging to customers with global
delivery in 3-7 days,” shares Aparna Thyagarajan, Co-founder &Chief Product Officer, Shobitam.

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.

NEW AVENUES

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.

“We see many SME brands now entering the Digital marketing space and making use of newer formats. About 61%
of SMEs invest in social media marketing currently,” observes Mitesh Kothari, Co-founder and CCO, White Rivers
Media. “Influencer marketing is showing promising ROIs for these brands due to its high engagement potential.
Display and search ads, short videos, and email marketing also work well towards building a brand,” he adds.

“Advertising in the form of content is the new normal for SME brands. There would be more than 500 million online
video subscribers by FY 2023,” states Rupesh Kashyap, Founding Partner &CCO, Hotcult Branded Content while
adding that SME brands would bet their advertising money on short form video platforms followed by OTT along with
social media and e-commerce. Elaborating on this, he says, “The massification of online video viewing has already
made its inroads as an average Indian spends 70 minutes per day or 8.2 hours per week watching content on OTT. I
am sure SME brands would like to take advantage of the same.”

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
hyperpersonalization 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

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see where to go and buy Skippi.” says Ravi Kabra, Co-founder, Skippi Ice Pops .

MOST USED PLATFORMS &TOOLS BY SMEs

* Search

* E-commerce

* Social Media

* End-to-end platforms like Indiamart &Trademart

* E-mail Marketing

* Google Adwords

* Shortform

* Video

Source: Brands &Experts

FACTORS LEADING TO THE GROWTH OF SMEs

* Product uniqueness

* Fast &Innovative thinking

* Specialization

* Flexibility

* Digital transformation

* Presence on e-commerce Platforms

* Creating tech-based Experience

* Convenient payment options like UPI

* Good content

* Initiatives such as ‘Make in India’ or ‘Atmanirbhar Bharat’ has helped in doing business easily, export of services,
PLI schemes, and promoting Start-ups

* Strong customer relationship

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Source: Brands &Experts

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.”

WAY FORWARD

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.

“SMEs are generally considered to be a significant portion of the Digital advertising market. About 29% of the MSEs
surveyed were using Digital sales channels such as online aggregators/marketplaces, social media, and mobile
marketing, before the pandemic struck. That number has shot up to 53% among small enterprises and 47% among
micro enterprises,” highlights Amit Singh, Director - Planning, Carat India.

“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.

“SMEs are expected to be the next significant growth drivers for Digital categories. Given that corporate advertising
is becoming somewhat saturated, SMEs would account for a substantial 40% of growth if we predict 30% of growth
continuing for the next five years. They are about to create a sizeable portion of Digital advertising,” projects
Abhishek Punia, CEO &Co-Founder, #armCommerce.

As consumers, we aren’t complaining. That advertisement we see online can sometimes lead us to a hidden gem.

“We launched Walmart Vriddhi in 2019 with the intention to equip 50,000 Indian MSMEs with the business skills
necessary to succeed as suppliers to Walmart, sellers on Flipkart, and other domestic and international marketplace
platforms. Recently, 20,000 MSMEs completed their training under the program. With consumers and businesses
shifting to digital during the pandemic, building their digital capabilities became a necessity for small businesses.
The program supports MSMEs by providing a comprehensive learning platform that includes growth opportunities,
free-of-cost training, and in-depth expert support to digitize and scale their businesses. Seeing thousands of MSMEs
thrive as a result of this program and embrace the digital route is truly inspiring.”

JASON FREMSTAD, Senior Vice President, Supplier Development, Walmart

Feedback: anjana.naskar@exchange4media.com

DETAILS

Business indexing term: Subject: Digital marketing Economic development Chief executive officers Startups
Small &medium sized enterprises-SME Social networks Online advertising

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 Subject: User generated content; Digital m arketing; Economic development; Chief executive
officers; Cosmetics; Digital broadcasting; Startups; Pandemics; Small &medium sized
enterprises-SME; Social networks; Online advertising

Location: India

Publication title: Impact; Mumbai

Publication year: 2023

Publication date: May 28, 2023

Publisher: Athena Information Solutions Pvt. Ltd.

Place of publication: Mumbai

Country of publication: India, Mumbai

Publication subject: General Interest Periodicals--India

Source type: Magazine

Language of publication: English

Document type: News

ProQuest document ID: 2820109362

Document URL: https://www.proquest.com/magazines/feature-sme-s-big-digital-

footprint/docview/2820109362/se-2?accountid=44931

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Last updated: 2023-08-24

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