In the modern age, small businesses face the challenge of successful digital marketing. Digitization is ubiquitous and provides the agility and flexibility these companies need to optimize operations and respond to customer demands. In addition, digitalization enables rapid adaptation to market changes and gaining a competitive advantage. In modern marketing, technology is used to analyze the results of marketing activities and help shape future strategies and decision-making. Research in the field of digital marketing has already shown a positive impact on the success of small businesses, which points to the importance of properly implementing digital marketing and delivering value to the customer better than the competition. Digital marketing provides small businesses with resources that are easily accessible and cost-effective, and enables them to reach their target audience in a more efficient way compared to traditional marketing approaches. Considering the lack of research in the field of digital marketing application in small businesses in Croatia and Bosnia and Herzegovina, this thesis aimed to investigate this topic. The theoretical background is based on previous research on digital marketing, while the aim of the research was to investigate the role and application of digital marketing in the business of small service and manufacturing companies in the Republic of Croatia and in Bosnia and Herzegovina. The paper showed that digital marketing is increasingly important in small businesses in both countries, in terms of the level of application, but there is room for further development opportunities and increased investment in that segment. Also, the results indicated that there are certain differences in the way digital marketing is used between Croatian and Bosnian small businesses.