DIGITAL MARKETING IN SMALL BUSINESS: ITS ECONOMIC ROLE AND THE IMPERATIVE FOR DIGITAL TRANSFORMATION
Abstract
This study examines the role of digital marketing in small and medium-sized enterprises (SMEs) and the necessity of digital transformation for their economic competitiveness in the contemporary digital economy. Despite SMEs constituting more than 90 percent of all business entities globally and contributing approximately 50-60 percent to gross domestic product (GDP) in most economies, the adoption of digital marketing tools and strategies among small businesses remains uneven, with significant variation across regions, sectors, and firm characteristics. Drawing on a mixed-methods approach combining systematic literature review of 65 peer-reviewed sources published between 2018 and 2025 and empirical analysis of 187 SMEs operating in the Bukhara region of Uzbekistan, this paper investigates the determinants, mechanisms, and outcomes of digital marketing adoption. The findings reveal that digital marketing significantly enhances market reach (an average increase of 34.7 percent in customer base), reduces customer acquisition costs by 28.3 percent compared to traditional marketing channels, and improves customer retention by 21.5 percent. However, financial constraints, inadequate digital literacy, limited access to qualified digital marketing specialists, and underdeveloped digital infrastructure constitute the principal barriers to comprehensive adoption.
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