Smaller units to step up online advertising, says report

Online advertising among Indian small and medium enterprises is expected to grow in the next one year, thanks to improved technology and SME investments in e-commerce.

According to AMI-Partners, a research firm specialising in information technology (IT), less than 6 per cent of PC-owning SMEs currently advertise online, which indicates a significantly high growth potential. A majority of Indian SMEs use traditional media and AMI expects them to shift their advertising-spend to more targetable and measurable media soon.

The growth in Indian SME’s online advertising expenditures is expected to be fuelled by two key factors.

First, SMEs have positive growth expectations regarding e-commerce revenues. Currently, a typical SME engaged in e-commerce derives over 4 per cent of its annual revenues from online sales, which are expected to grow by an additional 6 per cent over the next 12 months, pointed out Swati Sasmal, senior manager — Research at AMI-Partners, India.

Moreover, about a third of SMEs are planning to prioritise the adding or improving of e-commerce capabilities next year. This growth will be supported by matching investments in online advertising.

Second, a huge number of these SMEs are yet to adopt online media. As Indian SMEs become more aware of the effectiveness, measurability and predictability of using online advertising to reach the target audience, there is likely to be a large influx of first-time buyers being influenced by this medium.

A huge opportunity exists for Indian SMEs to reach their desired financial goals by optimising their web presence and capabilities. This still remains a somewhat unexploited market, points out AMI Partners.

Since the majority of Indian SMEs, especially the small enterprises, generate a large proportion of their revenue from the local market, they still rely on traditional media like telephone directories and newspapers to reach their customer base.

However, electronic media can increase their revenues significantly by actively reaching out to Indian SMEs, says Sasmal. Indian SMEs can then leverage this unique opportunity to showcase their products beyond any geography.