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From Meta recently pushing out new tools for small advertisers to Google’s ever-expanding reach to various small businesses, Big Tech has become an older brother for the little guys in a big, bad advertising world. A more accurate term would probably be a Big Brother, but that’s an entirely different article.
We’ve already observed that SMBs are showering their attention and ad dollars on digital advertising, but what is notable is that big tech companies have shifted their focus towards small businesses, unveiling a new paradigm in advertising strategies. This transformation is marked by the introduction of novel tools, enticing pricing models, and exclusive deals aimed at democratizing digital ad spaces for small advertisers.
According to the EY-FICCI M&E Report 2024, SME advertisers spent Rs 208 billion on digital media in 2023, “predominantly on search, social and classifieds – on platforms like Google, Facebook, Flipkart, Amazon, Just Dial, etc. Large ad platforms claim that there are now between 800,000 and one million small and medium enterprises who advertise on them, to generate business in India and abroad, with spends as low as INR 20,000 per year.”
Arnab Bhattacharya, Entrepreneur in Residence, Adbuffs, says the emergence of this trend underscores a pivotal change in the digital ecosystem, presenting a mosaic of opportunities for stakeholders across the board.
“By rolling out user-friendly tools and attractive financial incentives, these corporations are not just expanding their user base but are also empowering small businesses to carve a niche in the digital realm. This inclusivity fosters a dynamic advertising environment where small entities can leverage sophisticated marketing tools, once the preserve of their larger counterparts,” he says, saying the implications for ad revenues are significant, as this diversification can lead to a broader, more resilient revenue stream for platforms, mitigating risks associated with overreliance on big spenders.
SMEs, which have been consistently contributing around 30% to India’s GDP, now constitute a substantial portion of the digital adex, accounting for up to 40%.
Priyanka Randhawa, Associate VP - Strategy, Lodestar UM, says, “Tech giants Google and Facebook derive over 30% of their ad revenues from SMEs. Amazon, with 2.5 million SMBs, and Flipkart also benefit significantly from SME ad revenues. This symbiotic relationship underscores how tech giants provide accessible platforms for SMBs to engage with consumers cost-effectively. SMBs leverage tech platforms due to their low entry costs, precise targeting capabilities, and higher returns on investment.”
Bhattacharya notes that this shift in focus towards small businesses is, in part, a strategic response to the deceleration in ad spending by traditionally large advertisers.
This recalibration reflects a broader industry trend where companies are seeking to diversify their advertising portfolios beyond digital mediums.
“As growth in digital ad spends by major players shows signs of plateauing, Big Tech's outreach to smaller businesses can be seen as a forward-looking strategy to sustain growth. This approach not only compensates for the slowdown from big spenders but also anticipates future shifts in advertising dynamics,” he says.
Looking ahead, while traditional brands continue to embrace digital marketing for brand building and performance, SMEs are expected to intensify their focus on digital platforms for bottom-funnel initiatives. Projections indicate robust growth in digital adex, with SME spending expected to grow over 20%, outpacing overall digital adex growth of 13-14% annually, according to Magna estimates.
“Unlike legacy brands that prioritize ROI across all mediums, SMBs actively harness digital channels to expand their reach and enhance brand awareness. Major tech players like Meta and Google facilitate brand discovery, while e-commerce platforms such as Amazon and Flipkart facilitate sales for SMBs. Government initiatives, such as exempting small businesses from compulsory registration on online marketplaces, further incentivize SMBs to allocate more funds towards digital marketing,” says Randhawa.
Dhaval Gupta, MD of CMRSL, the parent company of CMGalaxy (an AI-driven Saas product), also believes that the big tech companies of today are significantly different from those of yesteryears. The shift has occurred from merely being technology providers to actively becoming ecosystem builders. This transition also implies the need for effective strategies to weather downturns.
“In the face of the challenging global macroeconomic environment, Big Tech has intensified its focus on acquiring new clients. The onboarding of new clients is directly correlated with the rollout of new product offerings. Such situations offer tangible opportunities for small businesses to experiment and grow. Small and medium-sized businesses (SMBs) often represent the largest growth opportunities for Big Tech. Therefore, it becomes crucial to actively engage with small businesses, creating a win-win scenario for all stakeholders.”
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