Digital transformation reshapes business models and processes through technology, and our research examines how companies’ investments in digital advertising can lead to technological innovation, especially in small and medium-sized enterprises. Our aim is to examine whether investments in paid internet advertising are associated with higher adoption of AI in marketing and sales. Specifically, the study seeks to determine if SMEs that allocate more resources to digital advertising also show increased levels of AI integration, while exploring the potential moderating effects of firm size and time. Using Eurostat data from 21 countries for 2023 and 2024, we analyzed the percentage of firms using paid internet advertising and those using AI in marketing and sales. Our approach combined descriptive statistics, correlation and multiple regression analysis with diagnostic checks. Results reveal a significant positive association: each percentage point increase above the mean in paid advertising corresponds to a 0.101 percentage point increase in AI adoption, with the model explaining 55.2% of the variance. These findings provide empirical evidence that strategic investments in paid digital advertising drive AI adoption in marketing and sales, thereby accelerating digital transformation in SMEs.