22 Feb Does Google Adwords Work For Small Business?
Type in almost any keyword into Google these days and you see Ads.
Would these guys be doing Adwords if it didn’t work?
I haven’t known too many small business owners over the years that are happy to throw money at advertising without any return on investment.
So I think we can safely say that it works for some businesses.
The More Important Question is Will Adwords work for your small business?
I am a big advocate of Google Adwords. But I know deep down it won’t work for every business and that there are plenty of businesses that will struggle to see a positive return on their investment.
Through managing hundreds of small business Adwords campaigns, I have a fair idea of whether or not an Adwords campaign will work long before getting started.
So, If you want to know whether or not Adwords is going to be a killer addition to your marketing strategy or a complete waste of money, please read on.
Type Of Business
Every business is different and will work far better for some than others.
So what type of businesses typically do well with Adwords?
- Local businesses that service a Specific Area/Radius
These businesses will benefit from Adwords targeting options
- Seasonal businesses
These businesses may not want to invest in marketing programs that cost money all year (eg. SEO), but want to put all of their marketing budget into the most profitable months of the year – Adwords makes this easy.
- Businesses that run regular specials/offers
These businesses will benefit from the ability to quickly change Ads to the latest offer & continually test the performance of different offers against each other.
- Business with high margins and high product/service values
- Businesses with high customer life time value
These businesses can afford to spend more on acquiring customers and will have a higher margin for error when using the Adwords platform.
What types of businesses typically don’t do well will Adwords?
- Online Stores / Ecommerce Businesses
Some standard Ecommerce products may do well with Adwords, but typically people like to see a product before they buy and text Ads do allow potential customers to see the offering before they click. Typically you would expect lower conversion rates and higher costs per click than Ecommerce friendly channels such as Google Shopping.
- New products / Services
If you have a completely new product or service that isn’t yet well known, people probably aren’t searching for it…yet. While product familiarity increases, try Social or Display advertising to get in front of an audience and sell your product benefits.
Quality of your Offer
The quality of your offer is going to big factor in whether or not Google Adwords and many other marketing channels are successful for you business.
Consumers are going to weigh up the following and more before going ahead with a purchase or making an enquiry:
- Return policy
- Guarantees / Warranties
Before Advertising on Google Adwords, look at how your product stacks up relative to all competing offers. If everyone else is offering free shipping and no questions asked returns, your offer needs to at least equal that in perceived value to potential customers to be competitive.
Make sure your offering is equal to, or better than the competition you are far more likely to succeed with Adwords, and in business!
No two websites are created equal and those websites that make it easier for propspects to do business with you have an enormous advantage.
Hopefully you are tracking the types of activities you want people to take on your website (online purchases, phone calls, enquiry form submissions – known as conversions). If you are then you you should be able to calculate your website conversion rate and make an estimation of how many clicks you need to generate a conversion.
This can may a huge difference in what it will cost you to acquire new customers and if you website is doing a poor job of turning interest into enquiry, then you are probably best to invest in your website before considering a Adwords campaign.
For example: If 1 in 100 people (or 1%) of people convert on your website and 3 in 100 (3%) are converting on your competitors website, then you will need to pay 3 times as much as your competitor for the same outcome (eg. enquiry)
How much is a lead, sale or booking worth to you?
The higher that value, the more you can you can afford to spend per conversion and still see profits increase.
If the value of a conversion is low, then you really need to nail everything in Adwords (keyword selection, Ads, landing pages, targeting options etc.) for it to perform well.
For Adwords to work, you need to have a budget that matches your goals for the campaign.
If your goal is to acquire 2 new customers per week, then a budget that only generates 10 clicks a week is most likely going to fail to meet your targets.
Project a budget that allows you to meet business goals after factoring in website conversion rates, cost per click and conversion values.
Also keep in mind that you would expect it to cost more in the beginning to generate a business result, than it will 12 months from now after working on and refining your campaign.
Whoever is responsible for your campaign (you, a staff member or the receptionist) needs to be able to dedicate time to optimising and improving it on at least a weekly basis.
Campaigns that aren’t given love fall behind the competition.
If you want yours to excel, you need someone to be analysing the performance statistics and making smart decisions on where to allocate your budget for optimal results.
Expertise & Experience
Adwords is easy enough to get started, but difficult to master.
Google makes it easy for small businesses to get started, but are not going to give you the necessary support to create a successful, high return campaign.
If you have someone managing your camapigns that doesn’t have the necessary experience or expertise, it would be like sending a rookie salesman out to important sales meetings with potential clients.
They may be able to do the job, but they are going to win far less deals than an experienced salesperson. The same applies to Google Adwords.
If you have someone less experienced and proficient managing your account you need to be comfortable with a certain amount of wasted spend and a lower rate of success.
If you want to maximise every cent that you put into Adwords then you need to be sure that you have a member of your team that is capable, or seek a professional.
Cost Per Click
With Adwords every click on an Ad costs your business money. The amount you will have to pay per click is generally decided by:
- The number of advertisers competing for a particular search term
- How much each advertiser is willing to pay per click
- The value of a particular search (Sometimes cost per click can be high even if there are no other advertisers, if you are bidding on a term associated with high value products/services, eg. insurance)
The adwords system is an auction with ad spots up for grabs. If you can only afford to pay $1 per click and multiple other advertisers are willing to pay $2-3, then your adwords campaign will fail to get off the starting line.
Small businesses competing in high competition and high value industries may have a hard time competing with larger, more established businesses with larger budgets.
To be successful with Google Adwords, you need to be prepared to pay the price of entry, but if it too high, you may decide to stick to other marketing channels.
If no one is searching for your specific product or service, then Google Adwords is not for you.
Adwords is at its best when people are searching for your product or service specifically, rather than
Geographic Market Size
Big Fish in a small pond or a small fish in a big pond?
Adwords allows you to target geographic areas as large and small as you want.
If you are targeting Australia wide you will be competing against some of the larger Australian advertisers as well as international advertisers and the required budget may escalate quickly.
If you want to dominate your local market, it can be very cost effective to do so with Adwords, by showing ads to everyone in that area and not wasting any budget on those outside of your area.
How tough is your Adwords competion?
Do a few searches relevant to your business at different times of the day and days of the week and see who comes up.
You may recognise some of your competitors, but more importantly, do you see the same businesses appearing consistently or is it always changing?
Understand what you are competing with:
- Are they well known brands?
- Do they have large marketing budgets?
- What is there website or landing page like?
- How appealing are their Ads?
Can you compete with the competition on one or more of the above and give yourself an advantage?
It is not only about the budget, if you have a better website, better brand or more appealing message, you may still be able to gain the upper hand.
There are other reasons why small businesses may invest in Adwords which are not based on dollar value ROI, but on the information that you can learn and leverage about your target audience.
Some of these include:
- Testing a new market
- Testing particular offers
- Testing different landing pages
- Creating and refining conversion funnels
- Identifying your highest performing keywords
- Testing different Ad copy
If you got this far, your business has passed the test.
Get going with Adwords – you have my approval.