The paper assesses the ways in which digital transformation in Montenegro influences the use of digital marketing in business, determining the impact of this concept on promotion and brand positioning, i.e. electronic business development through electronic services. This facilitates the integrated analysis of the context of electronic business, thus providing innovative and value-creating insights for Montenegro – a transition country. This research was conducted using a survey on a stratified random sample and the data was subsequently analyzed using the Structural Equation Model (SEM), Analysis of Variance (ANOVA) test, and eta-coefficient. Multivariate analysis was applied to data obtained from 172 companies. The results showed that a number of factors determine the ways in which companies apply digital marketing and use differing levels of influence, amongst which the period of implementation, the abilities of people in charge for its usage, perception of digital marketing cost-effectiveness, measurability of its effects and sufficiency of traditional marketing have a key role. The period in which digital marketing is used was especially significant and notably affects the choice of digital marketing instruments, the way its performances are measured and the managers’ perception of its cost-effectiveness. Social networks were the most commonly used form of digital marketing in the market under analysis, and Google analytics was the most common way to measure the effects of digital marketing. Furthermore, the results showed that the more a company relies on the use of digital marketing in its business, the more significant its impact on promotion and brand positioning. •Multivariate analysis was applied to data obtained from 172 companies in transition country Montenegro.•a survey on a stratified random sample and the data was subsequently analyzed using the Structural Equation Model (SEM), Analysis of Variance (ANOVA) test, and eta-coefficient.•The use of digital marketing has a slightly bigger impact on the formation of respondents' attitudes regarding its influence on the development of e-business (η2 = 0.563), followed by its impact on brand promotion and positioning (η2 = 0.509). Based on the results obtained, we accept hypotheses H2 and H3.•Research has shown that social networks are the form of digital marketing that companies use most often. This is especially evident in companies that use digital marketing for more than 5 or more than 10 years. The most common ways to measure the effects of digital marketing are Google Analytics, followed by the Social Network User Engagement Rate and the Degree of Interaction.