AI to reduce SMB advertising costs by 31% in 2026: Kapil Sharma of Amazon Ads

Rising customer acquisition costs, crowded marketplaces, seasonal spikes in CPCs/CPMs, and shrinking marketing bandwidth inside lean teams have put India’s small and medium businesses in a tough advertising reset for the last few years. While many SMBs have continued to grow, most have had to do more with less — fewer people, fewer resources, and higher expectations on campaign performance and creative output. In that backdrop, the arrival of AI in advertising has not been just a technology shift, but a survival lever.

Against this reality, it’s becoming clear that SMBs are viewing AI not as a replacement for marketers, but as a growth multiplier. And this shift is reflected in Amazon Ads’ new research, which finds that SMBs in India expect a 31% reduction in advertising costs over the next year thanks to AI-enabled efficiencies, particularly through reduced time spent on data analysis (49%), better predicted campaign performance (34%), improved reporting and optimisation (32%), and automated media planning (37%).

“SMEs operate with tighter resources and lean teams. While they are an important part of the global economy, solutions have to be customised so they can leverage their current resources and still achieve the best possible outcomes,” Kapil Sharma, Director, Amazon Ads India, told e4m. “AI is helping advertisers move from spending hours on execution to spending that time on building their business. It’s not taking control away from marketers, it’s giving them more control, because the routine workload is taken care of.” 

Sharma pointed to the accelerating adoption of AI-powered creative tools among SMBs, such as Image Generator, Video Generator and Creative Studio, which according to him help brands produce compelling ad creatives using just text prompts and a single product image, at no additional cost. This shift, he said, has lowered the creative and financial barriers that once restricted high-quality advertising to large brands with bigger budgets, agencies and production teams. Sellers can now generate multiple, seasonal variations of an ad within minutes, dramatically reducing both campaign setup time and creative expenses. “This democratises video and display advertising and is going to be a game-changer for brands of all sizes,” Sharma said.

He added that the research was conducted across multiple geographies to understand how SMBs globally, including in India, are embracing AI in advertising. “The objective was to understand the mindset of SMEs toward AI, what excites them, what they are experimenting with, and what is holding them back,” he explained. 

The findings, Sharma said, were both encouraging and revealing. Indian SMBs are not treating AI as a trend of the future, they are already using it as a growth accelerator. According to the study, 89% of SME marketing leaders believe AI will unlock new business growth opportunities, particularly by freeing up time to focus on strategic priorities such as new product launches, sales expansion and tapping new marketplaces. SMBs also expect to save nearly 30 working days annually (5.2 hours per week) by applying AI tools across campaign creation, optimisation and reporting.

When asked whether the expected 31% reduction in advertising costs is visible in practice, Sharma referred to trends in the US, where these tools were launched earlier. “Between Q2 and Q3 2025, there was almost a fourfold increase in campaigns submitted using Video Generator, with tens of thousands of campaigns submitted year-to-date. Interestingly, over 60% of the products promoted using Video Generator had not been advertised previously on Sponsored Brand Video, demonstrating the scalability these tools enable. We expect a similar adoption pattern in India as SMBs increasingly leverage AI for cost-efficient, high-impact advertising,” Sharma told e4m.

The research also shows that 71% of SMB marketing leaders are already using or testing AI tools, but 60% feel overwhelmed and 55% aren’t sure where to start. Early benefits include automated visual creation (23%), performance forecasting (14%), and ad copy generation (14%), while future gains are expected in audience reach (52%), accelerated content creation (49%), and automation of repetitive tasks (35%). Despite these efficiencies, SMBs still want human oversight in key decisions like creative approval (43%), budget allocation (42%), and cultural or emotional context (46%).

Sharma also highlighted that to bridge the gap between interest and adoption, especially for first-time or non-technical users Amazon Ads has adopted a three-pronged approach. First, simplifying AI tools so that advertisers can generate compelling ad copy reflecting their brand ethos and product features with just a few prompts and clicks. Second, educating marketers through free video resources, the Learning Console with certification courses, webinars, live Q&A sessions, and offline workshops, helping them understand and deploy AI in everyday marketing. Third, enabling SMBs to measure the real impact of AI through tools like the ad console and Amazon Marketing Cloud, which allow advertisers to review insights and optimize campaigns through a feedback loop.

Sharma believes this signals a fundamental transformation in how smaller brands approach advertising. Rather than replacing human insight or creativity, AI is helping SMBs redirect their effort to high-value priorities while automating repetitive workloads. “Time is one of the biggest constraints for small and medium businesses, and every hour saved can go toward building stronger customer connections or developing new products,” he noted. A key driver behind this shift is the rise of AI-powered creative tools, which allow brands to produce compelling ad assets from just a few words, without additional production costs. “A seller can take one product image and, with a few prompts, create multiple contextualised ad variations. That level of creative agility simply wasn’t possible earlier,” Sharma added.

Despite growing adoption of AI tools, many SMBs still face challenges. The research shows that 60% of marketing leaders feel overwhelmed by the variety of tools, 55% are eager to use AI but unsure where to start, and 35% admit to feeling like they’re faking it when using AI, underscoring the need for intuitive, easy-to-adopt solutions that don’t require extensive technical expertise.