THE ROLE OF ARTIFICIAL INTELLIGENCE IN REDUCING MARKETING COSTS AND ENHANCING PROFITABILITY: AN EMPIRICAL STUDY ON START-UPS IN DEVELOPING COUNTRIES

This study investigates the empirical relationship between artificial intelligence (AI) adoption in marketing functions and dual outcomes of marketing cost reduction and profitability enhancement among start-ups in developing economies. A cross-national, quantitative survey-based design was employed across five countries—Nigeria, Egypt, Kenya, Vietnam, and Bangladesh—yielding 412 valid responses from founders and C-suite executives. Data were analysed using IBM SPSS Statistics 29, SmartPLS 4.0 (Partial Least Squares Structural Equation Modelling [PLS-SEM]), and R 4.3.2 (lavaan package for confirmatory factor analysis [CFA]). AI adoption in marketing was found to reduce overall marketing expenditure by a mean of 31.4% and increase gross profit margin (GPM) by 18.9 percentage points relative to non-adopting cohorts. Predictive analytics (β = 0.41, p < 0.001) and programmatic advertising (β = 0.38, p < 0.001) exhibited the strongest direct effects on cost reduction, while AI-augmented customer relationship management (CRM) demonstrated the highest impact on customer lifetime value (CLV) (β = 0.45, p < 0.001). Multi-group analysis (MGA) revealed significant moderation by national AI readiness index (NAIRI) (χ² difference = 34.7, df = 10, p = 0.0002), making this one of the first large-scale cross-national empirical studies to simultaneously quantify AI-driven marketing cost savings and profitability gains across five developing-country start-up ecosystems.