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The Truth About AdWords for Small Businesses
This post is part of our Small Business Week series. Check out blog for more valuable posts for small business owners.
I’ve got a friend who does pay per click (PPC) management for a monster of a marketing firm in D.C. She’s one of hundreds of Web marketing analysts at the firm, and she manages huge AdWords accounts for popular hotel chains and restaurants. Alternatively, I work out of the Airpark in Gaithersburg, Maryland, doing SEO and content marketing for local plumbers, HVAC contractors, remodelers, etc.
While she’s texting me to let me know she’s now overseeing PPC for a certain entertainment company familiar to both of us—embarrassingly enough—because of the MTV show The Hills, I’m texting her back to let her know I just posted a fascinating blog about things to consider when replacing your toilet.
Maybe it doesn’t sound as glamorous, but it’s certainly rewarding, nonetheless. Plus—I’m going to make a great husband someday with all of this random plumbing knowledge I’ve acquired.
The point of all of this? Blue Corona specializes in all aspects of online marketing for small to medium sized businesses. From SEO and content marketing—which I consider my stomping grounds—to things I let my teammates dominate like PPC, Web design, call tracking, and more, Blue Corona’s goal is to be a virtual online marketing manager (VOMM—not our greatest acronym so far) for companies that don’t have the time or resources to manage these marketing channels in-house.
So when The New York Times ran a blog post on its small-business blog, “You’re the Boss,” about how AdWords isn’t practical for small businesses, I had to get a word in—or 1,000 words in (let’s just say people don’t compliment me on my brevity and they probably won’t start anytime soon).
Why—According to The Times—AdWords (PPC) Isn’t Practical for Small Businesses
According to one small business owner quoted in the article, her company ultimately chose not to pursue marketing via Google AdWords because “it’s a pretty expensive channel for small companies.”
“Testing to determine which keywords drive traffic simply wasn’t worth the expense, she explained — especially when lower cost options like Facebook and Pinterest were proving effective.”
And the price of Google AdWords was just one complaint by small business owners in the article. Another company received plenty of inquiries from its AdWords campaign, but the prospects weren’t qualified.
“They’re like, ‘I want to do a conference and I have $100,’” she said. “And you can’t set your AdWords for ‘people who really want to spend a ton of money.’”
Don’t Hate the Game, Hate the Player
I picked up this saying from—you guessed it—another MTV show, but I find it to be true in a lot of scenarios. One commenter on The Times article said something similar:
“Often the problem is that people confuse tools with strategy and most of what we see online are tools, adwords, pinterest, facebook, these are all tools of the trade and not strategy. The strategy may be to use a tool, but first you need to work out a strategy.”
For the small business owners quoted in the article, the problem could likely be not AdWords itself, but rather an ineffective AdWords strategy.
Another commenter added, “Many people give up quickly on AdWords because they think it didn’t work. It’s not the product, it’s the execution that has flaws. This sounds like a number of rookie mistakes were made.”
I have concrete evidence that AdWords CAN be effective for small businesses, which I’ll share with you at the end of this post, but first I should let you know that AdWords might NOT be effective for ALL small businesses.
Is Pay Per Click Worth It for Your Small Business?
The answer, like most things in life is, “it depends!” What are you willing to pay for a new customer? How much do you want to grow? How well do your sales reps convert leads into sales? How effective is your website at converting visitors (or clicks) into inquiries (leads)?
If you can’t accurately answer each of the aforementioned questions, it’s impossible to answer the question, “is pay per click advertising worth it?”
You see, one of the beautiful things about pay per click advertising is that it’s far more science than art. Savvy marketers love PPC because they usually “know their numbers.” Once you identify what you’ll pay for a sale, your inquiry-to-sale conversion rate and your visit or click-to-inquiry (lead) conversion rate, deciding what you should pay per click and if PPC is worth the cost is a no-brainer.
In order to determine whether PPC advertising (or any other marketing strategy) is worth it, you have to know your numbers. At a minimum, this means knowing what you’re willing to pay for a new customer, your lead-to-sale conversion rate and your visit-to-lead conversion rate. If you own a plumbing company and you’re willing to pay $200 per sale and your lead-to-sale conversion rate is 50 percent, you should be willing to pay $100 for a lead. If you then find out (through accurate tracking) that your website converts 10 percent of pay per click visits into leads, you’d know that you could afford to pay up to $10 per click.
AdWords CAN Be Effective for Small Businesses
I’m not going to lie. This entire portion of this blog post was provided by the former head of our PPC team, Sean Kelly (Skelly for short). Be thankfully—he knows numbers much better than I do:
Through our experience in the home improvement industry (and related industries), we have already tested and proved lists of keywords that are cost-effective. In six months, we improved the CTR of a campaign for a trash collection company by 4.90 percent, lowered the CPC by $2.18, and improved the ad position by 0.6 points. The company is a small business that operates solely in southern Delaware. We have even been able to steal business from a major competitor by bidding on keywords for waste management.
Spending a ton of money is not necessary to earn tremendous results. One of our clients is in the fire protection industry. With a small budget of $800 per month ($38.10 per day from Monday through Friday), the client generated 84 web leads and 461 phone leads for a CPL of $16.81. The leads range from residential fire extinguisher sales to commercial fire sprinkler and suppression system installations.
Product Listing Ads for Google AdWords are an excellent source of inexpensive clicks. One of our retail clients has an ecommerce website. In one week, we produced 423 visits, a CTR of 12.47 percent, and 17 online transactions. We generated $5,499.95 in revenue for a cost of $109.61. The CPC was $0.33, the average value per transaction was $323.53, and the Return on Ad Spend (ROAS) was 4,917.74 percent.
If you’re interested in seeing what Blue Corona can do for your AdWords campaign, give us a call
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About The Author: Blue Corona is a data-driven online marketing company with offices in Gaithersburg, MD and Charlotte, N.C.
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