Dynamic Impact of Digital Marketing on MSME Sales in Indonesian Marketplaces: A GMM Approach

Abstract

This study aims to comprehensively analyze the direct and dynamic effects of digital marketing strategies on MSME sales performance, with a specific focus on the persistence of their impact. Employing a quantitative approach based on longitudinal panel data over a 6–12-month period, the study evaluates the temporal dynamics of digital strategies using a Dynamic Panel Regression model based on the Generalized Method of Moments (GMM). Data were collected from marketplace dashboards and digital advertising platforms (Meta Ads, Google Ads), complemented by control variables such as social media interactions and product characteristics. The estimation results indicate that organic social media strategies offer significant advantages in sustainably improving MSME performance, particularly in terms of engagement, click-through rate (CTR), cost efficiency, and long-term return on investment (ROI). Comparative and subgroup analyses confirm that community-based approaches are more effective than paid advertising, which tends to generate rapid but short-lived impacts. Theoretical mapping of the findings to frameworks such as Customer Engagement Theory, the Technology Acceptance Model (TAM), and the Resource-Based View (RBV) strengthens the theoretical contribution of the study and opens avenues for the development of affective and personalization-based models. Reflections on methodological and contextual limitations highlight the need for sectoral analysis, ongoing longitudinal approaches, and the integration of technologies such as AI and natural language processing (NLP) to more deeply capture consumer behavior dynamics. Budget simulations underscore the importance of aligning strategies with the specific profiles of MSMEs. Overall, this study provides a strong empirical foundation for designing adaptive, efficient, and relationship-oriented digital strategies for MSMEs.

Keywords: Digital Strategy for MSMEs, Organic Social Media, Paid Advertising, Generalized Method of Moments (GMM), Sales Performance