Should Small Businesses Invest in Paid Search?

Small business owners often ask if paid search, such as Google AdWords, is the best use of their marketing dollars. As with any marketing tactics, there are several things to consider in order to answer the question, “should small businesses invest in paid search?”

There are several benefits of paid search for small businesses

For a small business owner who is looking to increase visitors to their website, pay-per-click (PPC) advertising is an inexpensive way to grow their online businesses fast, and in a controlled and profitable manner. Unlike many other forms of marketing, PPC is a very measurable, controllable form of marketing, and can be very dynamic and reactive in nature if needed. AdWords also allows you to position your brand in front of a very targeted audience, while allowing you to control the spend as needed. It’s one of the more customizable forms of marketing out there for small businesses. In addition, studies show that paid search can help a website’s organic search performance. Most importantly, as previously mentioned, it’s a very measurable form of marketing. The analytics and insights provided in paid search campaigns can prove valuable to leverage in other forms of marketing such as content marketing.  For instance, if you have a high performing keyword phrase in PPC that is also quite expensive, it may make sense to leverage that topic and keyword phrase in some form of content such as an onsite blog post.

Paid search can be expensive if not managed correctly

Where most small businesses struggle with paid search is the potential for costs to ramp up quickly. Typically, this happens when small business owners start a PPC campaign without doing any research first. It’s difficult to understand how to bid certain keyword phrases if you don’t first understand:

• What your average cost per acquisition (CPA) of clients across all marketing channels is
• What your lifetime value of a client is
• What your goal is for a conversion

Ideally, a small business has a marketing strategy in place that has already identified these. If your average cost per acquisition across all marketing channels is $45, and your average PPC CPA is $30, you’re smart to keep doing PPC. However, if your PPC cost is well over that say, $60, it may be difficult to justify the spend. Same goes for lifetime value of a client. If the lifetime value of a client is $5000, and you spend $100 to acquire them, with an average lifespan of 5 years, you’re in good shape. If you spend $100 for a client’s whose lifetime value is $100, there’s little value there. Regarding conversions, what the goal of the PPC campaign is can make all the difference.  Are you directing them directly to a purchase opportunity, or encouraging them to download a free guide or sign up for a free trial? It’s all about the ROI, and starting a paid search campaign without understanding this can make the effort extremely expensive and ineffective.

Like anything else, PPC is effective only if you do it correctly

PPC can be a tough nut to crack for small businesses, but devoting just a little more time to managing a paid search campaign can be enough to put you ahead of the vast majority of advertisers. Many companies fail to truly customize and monitor their PPC campaign and then are disappointed at the results. Make sure consider the following to help make your PPC campaign successful:

• Know your CPA and lifetime value of a client BEFORE you start a campaign
• Do keyword research to understand what phrases will attract quality traffic and which ones won’t
• Create a targeted landing page for the keyword phrases you’re bidding on
• Start with a small campaign, give it time to collect data, and measure results
• Be an active participant in the PPC campaign, not set it and forget it

Paid search can be an effective marketing tactic for small businesses.  However, it takes research and preparation before embarking and requires ongoing management and measurement. If you have the resources for this, then try a small campaign. If you can’t commit to these efforts, it’s better to leverage other tactics instead or hire a small business marketing professional
to oversee these efforts for you.