Pay Per Click Advertising – Sustainable for Small Business?

Great advertising strategies – those that produce measurable and profitable results – are hard to find, and they only last for a limited time. Like a perfect wave, when you find one, you want to ride it as high and as long as you can.

For many businesses – especially small businesses, Search Engine Marketing and Pay Per Click advertising in particular, is the closest thing to a perfect advertising wave.  Yet very few small business owners are using it and few of those that do are “all-in.”  Some business owners don’t even know what Pay Per Click is.  At a seminar not more than a year ago, someone in the audience asked, “what is paper clip advertising (instead of Pay Per Click)?”  This was 2 hours into a 4 hour presentation.  As Homer Simpson would say – “DOH!”

We have good news and bad news.

The good news is that many businesses that could be using Search Engine Marketing are not using PPC advertising. Those that are using PPC frequently allocate too little budget to their campaigns and do not leverage technologies that could help them derive greater performance.  Savvy advertisers and business owners have a HUGE opportunity on their hands to strike while the iron is hot.  But the feast may be coming to an end…

The bad news is that as new advertisers discover PPC advertising – especially bigger companies, the price is going to go up – dramatically.  We have a client who can afford to pay $100 for each new customer.  Google AdWords generates new customers for our client at less than $40 each.  Every month our client asks us for “more, more, more!”  But many of this client’s closest competitors are still not using AdWords.  As more of them take their heads out of the sand, we think that our client’s days for $40 CPA’s are going to become fewer and farther between.

Of course, there are some things to keep costs in check – like Google’s Quality Score ad discounter.  But at the end of the day, some businesses are willing to pay far more for a new customer than others.  Unfortunately, it is not always for the reasons suggested by this article.

Certainly, some businesses are run more efficiently than others or their websites convert a higher percentage of visitors – so they can afford to bid more for their clicks (as suggested in the article).  Maybe their clients never cancel so they base their bids on 5 years of profit instead of some lesser number?  But, the article above suggests a relatively level playing field for those willing to work the system – bid smart, optimize your ads, landing page and website and you too can afford to bid higher!

Sounds great, but the reality looks different from our seat.

First, you have the companies that – at first glance – appear to be in the same business, but are actually in very different businesses.  I’m sure you can think of dozens of examples – Think about the implications on cost per click and what each business might be willing to pay to acquire a new customer.

Then you have business owners used to getting ripped off with traditional advertising – suddenly switching to a new medium where there don’t seem to be enough clicks to spend their entire budget.  We’ve seen instances of this where the company instead expands their keyword list to include words that may generate a click, but will never generate a conversion.  Suppose you sell bottled water delivery service and you bid on “cheap coolers.”  You may never convert someone searching for “cheap coolers” into a water delivery customer, but you will be branding your company for a term related to water.  In our world, this type of thinking makes very little sense, but isn’t this type of thinking what drives the sale of certain other forms of advertising??

Think about the impact this would have on a company who is in business only to sell cheap coolers.

The takeaway:

If you own or operate a small business, do some searches on Google for keywords you think someone might use to find your product or service online.  If you see “sponsored results” (read: ads), you should strongly consider getting started with Pay Per Click advertising.  You’re missing out on a lovely ride…