Many small business owners ask themselves: Is Online Advertising Worth It?
Some businesses see great results, while others find it to be an endless money pit with not much to show for it.
It is easy to burn through your entire budget very quickly if you don’t know what you are doing. But then again, the same goes for almost any other business expense.
As with everything in life, there are pros and cons attached to it.
For some people it makes more financial sense than others
Before you start spending money on ads, a few key points:
Online advertising comes in various forms. You have PPC, or pay-per click ads, you have CPM ads (“cost per mille”, or cost per thousand impressions), Popunder ads, interstitial ads, push notifications, web push ads notifications that appear when you visit specific websites, display ads (mostly banners), newsletter ads, and native ads (ads that look like part of the website’s content.
Some options work better than others, depending on your industry, your target market, and your location.
You have many options to show your business to people on the internet – but most businesses prefer to use pay per click ads on platforms like Google, Bing, Facebook and Instagram.
Online ads can also be targeted in various ways, giving you more options to reach your ideal customer.
You have – to name but a few – search ads on Google and Bing, which you can target according to the search terms that users type, social media ads on Facebook, Instagram, X and Pinterest which you can target by demographics and interests, and display ads on websites (Google publisher network) with content relevant to your advertisement.
In these cases, you usually have a choice of pay-per click ads (you literally only pay when someone clicks on them, making them more efficient in most cases), or CPM pricing.
Facebook also has a pay-per-conversion pricing model (you only pay when someone actually buys or perform a specific action like filling out a form), and pay-per-lead ads, which allow you to capture leads directly on Facebook.
Some small business owners also choose to negotiate with owners of websites – and social media influencer accounts – directly.
The Pros of Online Advertising:
1. You can target your exact potential customer.
For instance, on Google and Bing you can target them according to keyword searches. With the availability of AI searches, many people have become very specific with their search terms, phrasing them as questions rather than just a few random words. Aside from the regular Google ads that come up, it seems that Google sometimes also cites the websites of paid advertisers as sources (if the content on the site is good and relevant, of course). This allows you to target questions that your potential customers usually ask, and filter out people who are not ready to buy, or display a specific intent.
On Facebook, Instagram and other social networks, you can target prospects by age, location, interests, and more.
2. The results are fast:
The moment your ad is approved, which usually happens within a few hours, the ad is shown. Yes, you may still need to spend some time tweaking the ads for optimal performance, but the traffic is faster than anything else.
This is very useful indeed for businesses that – for instance – need a steady flow of leads in order to cover running costs.
3. You control the budget:
You can state how much you want to spend per day, and/or the entire campaign. Fair enough, both Google and Facebook may apply your daily budget somewhat unevenly depending on traffic availability, they usually ensure that the average daily expenditure is as you set it.
You can run ads from just a few dollars per day, and pause or stop at any time you choose to.
As you gather more data, you can improve targeting and/or eliminate under-performing ads to improve profitability. Once you have done that, you can scale it as big as you like, depending on traffic availability for your targeting criteria.
On platforms like Google or Facebook, you also control how much you are willing to pay per click. Fair enough, if your bid is too low, you may not get any visitors, because your ads will not be seen much. But you can start low, and slowly increase it to where you get enough traffic at the lowest possible cost.
4. The results are easy to measure:
By applying tracking links, and/or installing tracking pixels on your site, it is easy to see what works and what doesn’t. Combine the information about cost, specific ads, your advertiser analytics and your results to see what works and what doesn’t, and adjust accordingly.
You can track ad impressions, clicks, visits to your website – even specific pages visited, conversions, leads and of course your cost per result.
5. Local businesses can compete with bigger businesses:
You can hyper-target your advertising to – for instance – only target people in a small radius around your business.
This, for instance, enables a local plumber to only advertise in the area he serves, or a local florist to only advertise in the area from which her customers usually originate. If she notes that most of her customers come from within say, 5 miles of where her shop is situated, she can target that exact range, or even target specific parts of town.
This enables you to not advertise to people who are unlikely to buy from you – which is something that bigger brands often have to live with.
6. The results can be predictable:
Once you have optimized your campaigns, and you know what the profit margins are, you will have an idea of what to expect in terms of ROI. This allows you to not only plan and/ or scale your ad spend, but it also provides business stability.
The Cons of Online Advertising
1. Costs can add up quickly:
If campaigns are poorly planned or poorly managed, advertising costs can easily get out of hand.
Common problems include people clicking without buying, usually due to poor keyword choices and/or poor targeting.
If you are not reaching the right people, or your ad is poorly worded and fails to filter out people with no intent of buying, you can end up spending money with zero results.
2. It can be technically confusing:
Many advertising platforms have complex dashboards, especially Google.
New users may also struggle with things like picking the right keywords, picking their targeting options, coming up with a bid strategy, and tracking conversions.
For people who are not comfortable with technology, this can feel overwhelming.
3. Ads stop working when you stop paying:
Marketing methods like SEO or content marketing take longer to work, but they still keep on working for a while when you stop spending money. Paid ads don’t.
If you stop spending money, the traffic stops. There is no long term visibility.
When you do SEO or content marketing, you own your audience, however small it might be. With paid advertising, you “rent” the audience.
4. Competition can increase costs:
Popular industries, and industries involving higher customer values, usually have high advertising costs. When many businesses bid on the same keywords or target the same audience, the price increases.
For instance, things like legal- and financial services, insurance, real estate, home improvement and anything to do with health or medical services carry high costs per click.
5. Not all clicks turn into customers:
Even well-targeted ads are not guaranteed to convert visitors into sales or leads.
Sometimes visitors are just doing research, sometimes your website doesn’t convince them to buy, or a competitor presents a better offer.
When does online advertising make sense?
a. When you need to generate leads or sales quickly.
b. You offer a clear product/product line or service.
c. Your website is optimized to convert visitors into buyers or leads.
d. You are able to track your results, and adjust accordingly.
Industries for which paid ads often work well:
a. Services for your home – like home renovation, maintenance services, etc.
b. Emergency services, like plumbing, pest control, etc.
c. Local retail promotions and special offers.
d. Events – especially when advertising on social media.
When should you avoid or delay paid online advertising?
a. If your website is outdated, or if the user experience is less than optimal, or if your offer seems weak.
b. If your business mostly relies on word of mouth advertising to generate referrals.
c. If your profit margins per transaction is very small, with no recurring payments to make up for the expense.
d. You don’t have the time to monitor ad campaigns.
In cases like these, strategies like SEO, local SEO and content marketing are likely to deliver better long-term value. They may take longer to get up to speed, but all in all you are likely to be better off financially.
A few practical tips for those new to online advertising:
a. Start with a small budget, test, and improve your ads and targeting as you acquire data.
b. Focus on local targeting for the area/s you serve, or from which you attract customers.
c. Track everything, and use the data to improve the profitability of your campaigns.
Don’t just jump in with a large budget and open the floodgates. Test to see what works first, and then scale the ads that work best. You can always test additional ads or targeting configurations later on.
In conclusion:
While online advertising can be powerful, its success is not guaranteed. It is a tool, not a magical solution, and it doesn’t work for everyone.
Smart small business owners combine strategies, for instance:
a. Paid online advertising.
b. Local SEO.
c. A strong website.
d. Good customer service.
When you start combining these, marketing tends to become much more effective.