In today’s fast-paced, technology-driven era, Micro, Small, and Medium Enterprises (MSMEs) can no longer rely solely on conventional strategies. They require new approaches that are data-driven, efficient, and creative to remain competitive and sustainable.
The presence of technologies such as Artificial Intelligence (AI) and creative advertising plays a crucial role in driving the digital transformation of the MSME sector. However, despite the rapid pace of digital transformation, MSMEs continue to face structural and operational challenges that hinder their competitiveness and long-term sustainability.
According to Dr. Andri Prima Nugroho, a lecturer at the Faculty of Agricultural Technology, Universitas Gadjah Mada (FTP UGM), MSMEs currently face three main challenges. The first is limited production efficiency, particularly in supply chain management, quality control, and product innovation.
The second involves constraints in digital marketing, including limited skills in producing creative advertisements, reaching target markets effectively, and optimizing promotional budgets. The third is increasing pressure from global competition, especially from large enterprises and e-commerce platforms that have adopted digital technologies more extensively and systematically.
“Artificial intelligence and creative advertising are potential solutions to address these challenges. AI offers opportunities to improve efficiency, accuracy, and speed across production, distribution, and marketing processes. Meanwhile, creative advertising can build a strong brand image, capture consumer attention, and enhance customer loyalty through more personal and emotional approaches,” he explained at the UGM Directorate of Community Service building, Wednesday (Aug. 13), while speaking at the UMKM Class Series #27 themed The Role of AI and Creative Ads for MSMEs.
Dr. Nugroho highlighted that the use of AI can boost workforce productivity by up to 40 percent and accelerate time-to-market by as much as five times compared to competitors.
Within the MSME context, AI can be applied to various functions, including segmenting consumers by interests or demographics, targeting advertisements based on internet search history, predicting market trends, optimizing supply chains, developing more efficient sales strategies, and analyzing marketing campaign effectiveness in real time.
Despite its great potential, Andri noted that AI adoption among MSMEs remains relatively low. This is due to several factors, including limited understanding of how to use AI wisely, effectively, and ethically.
“Other barriers include constraints in human resources and digital infrastructure, as well as concerns about negative impacts such as content plagiarism, data privacy violations, and unmanaged dependency on technology,” he added.
Bryan Erfanda Putra, a digital marketing practitioner, emphasized that creative advertising also has a significant impact on the growth of small businesses. Its scope covers the production of engaging visual content, compelling marketing narratives, brand storytelling, and personalized digital campaigns.
A 2023 Meta Business report stated that implementing creative advertising can increase engagement rates by up to 60 percent and drive MSME sales growth by 20–30 percent in less than a year.
“Successful MSME ecosystems adopting this strategy generally involve collaboration with content creators, active use of social media, engagement with e-commerce platforms, and strengthening brand identity,” he explained.
As with AI adoption, Bryan Putra noted that the uptake of creative advertising among MSMEs also faces several challenges, including low digital literacy, limited access to infrastructure and training, and concerns about ethical and social risks in technology use.
“It is important to understand that the success of digital transformation depends not only on technology availability but also on the readiness of human resources to manage it. Education and skills are key factors for effective implementation of AI, particularly for MSMEs,” he added.
Dr. Djarot Heru Santosa, Secretary of the UGM Directorate of Community Service, expressed confidence that through enhanced technological literacy, expanded training opportunities, and supportive policies, Indonesian MSMEs will be able to compete optimally. With competent human resources, they are expected to leverage AI to strengthen customer engagement.
Author: Agung Nugroho