Artificial Intelligence Adoption in Digital Marketing: Its Impact on Customer Engagement and Business Performance of Small and Medium-Sized Enterprises (SMEs)

Abstract

Digital marketing has been revolutionized by Artificial Intelligence (AI) as it empowers small and medium-sized businesses (SMEs) to automate their marketing processes, interpret customer data, personalize interactions, and fine-tune advertising campaigns. This study investigates the incorporation of AI in digital marketing and its association with customer engagement and business performance of SMEs. A quantitative, cross-sectional research design was adopted, with a structured questionnaire given to the SME owners, managers, and workers who undertake digital marketing activities. The instrument used to measure the usage of AI in the following application areas was a questionnaire: Content creation, Customer data analytics, Personalized marketing, Customer communication, and Predictive analytics and AI-supported advertising. Customer engagement was measured in cognitive, emotional and behavioural terms; and business performance was measured in terms of sales and financial performance, customer and market performance and overall business performance. Descriptive statistics, reliability analysis, Pearson correlation and regression analysis were carried out for the data analysis. The results show that there is a positive correlation (and statistically significant) between AI use and Customer Engagement. Likewise, there was a positive and significant relationship between the use of AI and business performance. Additionally, customer engagement was shown to have positive relationships with business performance, which implies that increased customer engagement can help to enhance the business performance. The research underlines the strategic importance of adopting AI tools for digital marketing for SMEs and offers empirical evidence on how to leverage AI in customer-focused marketing and business performance.

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