Marivie S. Piollo, Eric M. Villamar, Cris Saranza
Digital marketing is widely promoted as an equalizer for small retailers in emerging markets, yet evidence on whether its returns are evenly distributed - across firms and across marketing channels - remains limited. Drawing on the technology-organization-environment framework and the resource-based view, this study examined the adoption of five digital marketing channels (email, social media, search engine, digital display, and mobile marketing) and their relationship to four sales performance indicators (revenue, sales volume, customer acquisition, and customer retention) among 100 retail businesses in Surigao City, Philippines. Data from a validated survey were analyzed using weighted means, one-way ANOVA, and Pearson correlation. Three findings stand out. First, adoption was shallow and uneven: retailers concentrated on free, low-skill applications of social media (M = 2.82) while the channel most strongly associated with performance - search engine marketing (r = .74-.92 across indicators) - was the least practiced (M = 1.73), revealing a substantial adoption-effectiveness gap. Second, returns to digital marketing were channel-contingent rather than uniform: social media, search engine, and mobile marketing correlated positively with all performance indicators, email marketing showed no significant association, and digital display advertising correlated negatively with all four indicators (r = -.33 to -.61), suggesting that poorly targeted investment can be counterproductive. Third, both adoption and performance differed significantly by capitalization, technological infrastructure, organizational form, retailer type, and operational tenure - a within-market digital divide in which better-resourced firms adopt more and benefit more. The findings caution against treating digital marketing as a monolithic, capacity-neutral intervention and support resource- and channel-differentiated approaches to SME digitalization policy in emerging markets.