Paid Online Advertising Pros and Cons for Small Business

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For many larger businesses, running paid ads online is a given. For many, it is the only way to scale their lead generation to the numbers they require to remain viable.

But, when it comes to small businesses, should you be running paid ads?

Well, it depends. Here are a few things you need to look at before putting your money into it.

7 Pros of paid online advertising:

 

1. The traffic starts flowing immediately.

As soon as your ads are approved, the traffic starts coming in. Fair enough, the numbers will depend on where you advertised, the available traffic and your budget. But once your ad is approved, the traffic starts flowing.

From there you can tweak them to maximize the conversion rate, and generate the best return on your ad spend.

2. It can be highly targeted.

Different advertising platforms offer different targeting options. Some, like Facebook – don’t have that may targeting options, but others, especially when you explore things like push advertising, allow you to target not only interests and locations, but also device types, operating systems and -versions, and even the websites your traffic came from.

If you have proper conversion tracking set up, you can see the website identifying codes, and stop traffic from the ones which do not send traffic that converts.

3. Testing changes or improvements in your ads yields new data quickly.

Fair enough, if you do something like influencer advertising, where you pay a social media influencer to run your ad on their channel, it cannot be changed. Once it is out, it is out.

For everything else, making any change usually only results in a few hours required for approval, and once completed, you can see if any changes you made have improved the results, or not.

4. It can be highly profitable.

Depending on your niche, your profit margins, your positioning and the number of competing advertisers, it can be incredibly lucrative.

Fair enough, it might not be highly profitable from the start, but once you tweaked your ads for the best possible results, it can – depending on your offer – be very profitable indeed.

5. Lots of options.

Many small business owners limit their thinking to placing pay per click ads on Google, Youtube or Facebook, and possibly display- or banner ads. In reality, however, there are many more options available.

You have – on social media – pay-per-engagement ads. Then you have push ads (notifications sent to phones), in-page push ads, pop-under ads, newsletter ads, proximity ads, direct agreements with social media influencers, sponsored content or paid guest posts, in-app advertising, and more.

6. You can do retargeting.

You can set up ads that will “follow” recent visitors to your website, and repeatedly show them a display ad across multiple websites they visit.

The reality is that most people require up to 7 exposures before they make a decision about something new, so if their first contact with you is just because of an ad…

Being able to “follow up” and remind them of your offer can exponentially increase your conversion rates.

7. The results can be measured directly.

Unlike website content generating traffic from search engines, or posting on social media – both of which are judged by complex algorithms and depend on engagement and content popularity (among other things), paid online ads can be tracked, and depending on the software you use, it can reveal a wealth of information.

Adding to that, tracking conversions (sales, form submissions, etc.) and how the prospect came to you can allow you to not only see if that specific ads is profitable, but also whether you can simply eliminate sources which do not convert profitably.

6 Cons of paid online advertising:

1. Instant traffic doesn’t always mean instant profits.

There was a time when you could just throw up an ad, and the money would come rolling in. Sadly, those days have passed.

There are a multitude of factors at play – including knowing your ICP, your targeting, your message, your competitors, your landing page, and even the timing of the ad.

Getting any of these wrong can cause an ad to perform poorly or not at all.

In most cases, some testing is required. In fact, professional media buyers suggest up to three months to test ad campaigns on Facebook or Google.

2. You can waste a lot of money very quickly.

If you don’t know what you are doing, or pay someone who doesn’t know what they are doing, you can burn through a lot of money very quickly indeed.

Sadly, many ad buyers are desperate for work, and will take on your project without advising you about the actual profitability potential.

We have seen businesses throw money down the drain on doomed projects in the past, simply because they trusted the wrong person or “agency”.

Let’s not even talk about “know it all” small business owners who decided to run their own ad campaigns on Facebook…

After all, how difficult can it be?

Let’s just say they found out very quickly. If you want to do it yourself, educate yourself well – before you try.

3. Online ads for some niches are very expensive:

The higher the stakes, the bigger the bets. And since online paid ads on ad networks usually work on a bidding system, the cost for industries like real estate, professional services, and high ticket items can quickly become prohibitive if you don’t have very deep pockets.

Yes, in most of these niches you may be able to find some cheaper advertising options or cheaper keywords to go for (for Google ads), but then the resulting traffic is usually very low in volume.

As a result, you need a lot of those cheaper keywords to generate enough traffic to make it viable.

To add to that, the search intent that accompanies those low volume searches may not always be one that leads to sales, further limiting the actual number of useful clicks you can generate without breaking the bank.

4. It’s not always suitable for low ticket items.

If you have a single product which you sell for say, $10, and it is not in some obscure unoccupied niche, and you don’t offer any up-sells to increase the potential revenue per sale, it may be difficult to run paid ads profitably.

Unless, of course, you run an email marketing list or newsletter, and the $10 product is just the first of a series of products (or services) you offer.

The exception is e-commerce, where – due to delivery costs – very few people buy just one item. While the item you advertise may be cheap, the average order value makes up for it.

5. There is no residual traffic.

On the two opposite ends of the traffic spectrum we have paid ads, and organic search engine traffic. Depending on your niche and the competition, search engine traffic may keep coming for many years.

Even social media posts can be found in search, long after they were made.

On the other hand, once you stop advertising, there is no more traffic.

The only exception to that is if you boosted a high value post, with information that people keep looking for. That may still be visible in search and on search engines for some time.

6. Media buyers don’t come cheap.

Professional media buyers (people who set up, run and improve your ad campaigns) are indeed professionals. The ones who are worth their fee usually don’t come cheap.

The only exception is the ones that don’t yet have a track record, and still need to prove themselves. But then again, if you use one of those in order to get away with a lower fee…

You literally don’t know what you are going to get. You may get lucky and land one that knows what they are doing, or you could end up with someone who simply takes your money and runs your ads, regardless of profitability.