Impact of Social Media Advertising on Business Performance: Evidence from Micro, Small, and Medium Enterprises in Dumai City, Indonesia

Abstract

This study examines the impact of social media advertising on business performance among micro, small, and medium enterprises locally referred to ““Usaha Mikro, Kecil, dan Menengah” (UMKM) in Dumai City, Indonesia. It focuses on Facebook and Instagram as the primary platforms. The research examines the impact of advertising exposure, perceived usefulness, and customer engagement on sales and business growth. Data were collected through a structured online questionnaire completed by 187 UMKM entrepreneurs. The data were analyzed using descriptive and inferential statistics in SPSS Version 26. The findings illustrate the influence of these digital platforms on UMKM outcomes. The findings indicate that 91% of respondents use Facebook Ads and 74% use Instagram Ads. A majority of participants (68.3%) agree that social media advertising increases business visibility, while 55.4% report an improvement in customer engagement. Moreover, the analysis demonstrates a positive correlation between advertising investment and sales performance, suggesting that consistent and strategic digital promotions contribute to measurable business growth. The study finds that female entrepreneurs and businesses in the food and beverage sector benefit most, suggesting that gender and business type affect advertising effectiveness. Social media advertising supports small business growth in regional Indonesia. Its success depends not only on financial investment but also on high-quality content, analytics, and active customer engagement.