Can Google Adwords (Now Google Ads) work for Small Businesses?
Google has just announced that they are re-branding Google Adwords (their paid search platform) as Google Ads. And as part of that re-brand, they are changing their Adwords Express platform to “Smart Campaigns.” Smart in the name, but not in the execution.
I’ve never been a fan of Adwords Express. It was Google’s solution for a quick and easy way for Small Businesses to advertise on Google without having to build out a campaign or manage the performance. Sounds easy, and it was. Push a button and I’m live. But it’s missing the key ingredient – ROI.
I’ve seen many Adwords Express campaigns over the last decade and I have yet to see one work. I’ve seen interior decorators spend money on terms like “decorating the interior of my car.” I’ve seen painters spend hundreds per month with no leads. I’ve even seen some businesses advertise without a website. But I’ve never seen a positive ROI or strong cost per lead/sale.
That is why I have always been a proponent of a full Adwords campaign, even for the small business. So even if the new “Smart Campaign” sounds great, it’s still not the right way to do paid search. If you want a positive return on paid search, even for the smallest of the small campaigns, then you have to do it right. Here’s how…
When Paid Search Works for SMBs and Small Accounts
Small Geo-Location – with a $500 budget, you’ll be hard-pressed to target the US, or even Pennsylvania. Heck even a major metro like Philadelphia. But if you are a driving school looking for students within a 10 mile radius in Bucks County (Philly Suburb), you can do well with $10 per day.
In this case, a conversion is anyone who signs up through the online form on his website. And he does get calls as well, so the ROI is a little better when you factor in the phone leads. For a guy who can only handle so many students, this is a solid campaign with an accommodating budget for his area and his capacity…
Capacity – Some SMBs (or Micro B’s if you will) can only handle so much business at a time. I’ve had situations where clients will pause campaigns until they can catch up on orders and/or quotes. We have a mobile paper shredding SMB. They have only one truck and want to generate enough recurring clients to make a second truck profitable…
As you can see, on a $500 adspend, they did fairly well. Could they spend more? Yes. The CPCs in this case aren’t that low, so they don’t get a lot of traffic, but because the campaign is focused on specific terms it fits their situation. And that is a nice segue to…
Niche Terms – As many PPC’ers know, broad terms can have a place, but can also be a major killer. However, if you have a limited budget, it’s a deal-breaker. You have to be as specific as possible in order to maximize conversions. With a small budget, traffic is usually not an issue, but conversion is everything. And without a huge budget for CRO or major web dev/des, a lot of that falls on the PPC strategy and most notably the keyword strategy (apologies to the ads). So keyword selection is…well, key.
For example, I didn’t know there was much difference between an Interior Decorator and Interior Designer. But after my first Interior Decorator client educated me, we made a choice to avoid interior designer terms since people who searched interior decorator keywords were a better fit for her services. Interior designer gets a lot more search volume…
But with a limited budget, volume was not the goal; conversions business was. So while this isn’t the most-niche industry I’ve worked in, it illustrates that small budgets can work with very specific terms – lice removal, solar powered pool heaters, and medical malpractice insurance to name a few.
Small CPCs – Some industries have low CPC’s, which is nice from a PPC-manager-perspective, because you can do a lot more with a smaller budget. For example, we have a bakery that wants to increase its custom cake business. In this particular campaign, we have a $350 per month budget and as you can see, we are not “limited by budget.” The goal of this campaign is to target people to place online custom cake orders. Shower cakes, wedding cakes, logo cakes, etc…
While this falls under the niche-term scenario as well (and small geo), the cost per click is below $1, so for their $337.86 adspend, we have almost 400 visitors. And for that low spend and “decent” volume we are generating a positive ROI with 15 online orders (not including phone orders as well).
So when you have low CPCs, the volume, even on a small budget, can give you some nice data to sink your teeth into (like a cake) and help optimize an SMB campaign even faster.
High Profit Margin – When running a small budget campaign, you’ll have more chance of success if the end product has a high profit margin. Let’s use a painter as an example. I’ve seen the average job size range anywhere from $3,000 to $12,000 (depending on interior, exterior, commercial, etc). So if the average job size is $4,000 for a particular painting business, then on a $500 per spend per month, it only takes one job to cover a month or two of adspend. Once you factor out costs/margins, anything over is profitable.
Think of it this way. You spend $500, generate 10 leads, which is a $50 CPL. If your conversion rate is 10% from lead to sale, and your job size is $4000, then you most likely win. You can move these numbers around to make a case for or against this example, and I know every case is different. But it is at least a starting point to measure the success of an SMB campaign or a discussion to have with the client.
As a quick aside, you’d be amazed how the above example leads to a question of “why is my conversion rate from lead to sale X%”. Then it leads to improving customer service, sales techniques, quote process, etc. So this data has even more value to the client. I’ll talk more about the value of data later.
Lead Gen vs Ecommerce – I will say this: In my experience, SMB campaigns work better in the Lead-gen world vs Ecommerce. The ROI seems to be higher, and the revenue on the service vs a product is typically higher, as well. Not that a small budget can’t work for a PLA or ecommerce search campaign. Again, it goes back to profit-margin, but I’ve had more success with sub-$500 budgets on the lead-gen side.
That said if the product is niche and you can’t get it from a major online retailer or large brick and mortar chain, your chances are stronger, but it will still be a challenge, especially with PLA campaigns which are no easy feat even for PPC veterans.
Seasonality – In some cases, a $500/month PPC budget can even be too much for an off-season month. I have a fence client who spends 10% of his normal budget in December. Between the holidays and the cold weather, not many are in the market for a new vinyl fence. So while you may get an inquiry or two, the spend will be small. Which is fine, as long as the cost per acquisition is within your target.
New Businesses – “We’re a scrappy little startup.” “We just spent all of our marketing funds on the new website.” “We’re starting a side business.” Yup, I’ve heard variations of all three of these and more. In these cases, they rarely have over $500 to spend on PPC, so they have to start somewhere. And if you and the client are willing to be patient and test, then I’d actually recommend a small budget until you learn some things. The pressure is typically higher in this scenario, so it’s not the ideal situation.
I was almost hesitant to include it, but if you have nothing to work with, you don’t want to see the SMB go blow the bank with a large spend and learn the hard way. I’d rather learn on the cheap and try to find something that works. Again, there is value in the data and in some cases like this, a small PPC budget might be the better way to go (I use might very loosely).
The PPC Manager – Some of the arguments about the value of an SMB PPC campaign related to the manager and more specifically the time. Time has value, which equates to money. So whether the person is in-house and his time is better spent on other parts of the business or the agency who charges for that time, the actual manager will have an impact on whether a small budget will work.
Managing a small business campaign will take time – more time than you think. On top of the work itself, it’s the management of the client – their lack of familiarity with search engines, their expectations, sometimes impatience, and overall education. So as the manager of the campaign, you have to have patience or it won’t work. You may be saying the same thing over and over until people understand the strategy and logic. You may have to answer emails and calls, many emails and calls. Did I say many 🙂 So if that is not a strong suit of the PPC manager, then it could be doomed from the get-go.
To that end, the PPC manager is going to have to over-deliver in the beginning. Not just on immediate results, but on time. So I can see why some agencies avoid small campaigns, as the fee will not justify the time. I’ve made a decision to accept that, but that strategy is not for every agency or manager. And if you don’t have a manager with that acceptance, it may not work.
To that point, setup and structure will be key. Not just for the success of the campaign, but for the efficiency of the manager’s time. I’d rather take the extra time to develop a sound structure, which will make it easier for me to manage the campaign in the long run and…save me time. A strong setup will:
- Generate faster success
- Keep the client long-term with early results
- Save me time in the long run.
Experience is a big factor as well. Experience will save time. An experienced manager will already have processes in place they use for clients. They have a good feel where to prioritize time to have more impact, what not to do, where to play defense (eg- negative keywords). Those factors make you more time-efficient. So an unskilled or rookie (for lack of a better term) PPC manager may not be the right fit to have success with a small PPC campaign, until they have more experience.
When It Doesn’t
So while there are some situations where a very small PPC budget can perform well, there are definitely situations where you don’t have a chance to perform well…
High Competition – If you are in a major metro (New York), a high CPC industry (Injury Law), or a highly competitive industry (insurance), you may have a real struggle or lack of results with only $500.
Low Revenues and Profit Margins – If profit margins are razor thin or if your product or service is low revenue, the cost per acquisition may be rough, and you’ll blow through $500 before you can get to a strong ROI. I’m not saying it could never work, but more (most) often than not, you won’t get there.
New Businesses and Startups – If your total budget is $500 for a month and you don’t have enough funds to get past that first month, you may be setting yourself up for failure. While small budgets can work, they do take time to optimize and sometimes new business don’t have the patience. Each situation is unique, so this scenario is hard to judge.
The Right Manager – Big or small, you have to respect PPC. I’m biased of course, but I’ve seen a lot of agencies not respecting its value or importance and that’s when it fails. If you are slapping together multiple campaigns with broad terms, with minimal management and charging a fee, your churn rate will be high and you’ll actually have more cost in paying sales people to replace that revenue.
And not only that, but if this is a client who has multiple services through your agency (social, seo, etc), its failure could lead to loss of those revenues as well. A dissatisfied client will leave, and then you lose revenue from other departments. We actually have SEO firms outsourcing their SMB PPC to us because they value client retention and its impact on the bottom line.
So you need to have someone who can handle a PPC account, especially a SMB PPC account. Just because its small doesn’t mean it’s easy. Trust me. And if the manager is not passionate, patient, eager or efficient, it’s not going to work out well. SMB PPC management is not for everyone, but it is for me/us and we enjoy it. And that’s a big part of it.
Other Factors to Consider with a Small PPC Account
You will grow with the campaign – once you prove success, the client will be more willing to spend more. The budget increase will allow you to do more, and you will grow with the client as well, which leads to…
More Testing – With PPC success comes more channels – video, remarketing, paid social, etc. So again, you can grow with the client. The best feeling in the world is when the client says, “what else can you do?”
Small success can be a big win – As I mentioned, one sale could really help the SMB. If their training program is $5,000 for the year, one early sale opens some doors for an SMB. The cash flow alone can be a large boon that allows them to spend more, and covers advertising costs for a few months. If one sale per month is break-even, then everything else is profit.
Immediate Impact – More than any other channel, you’ll have faster results (if you get it to work). SEO takes time, radio and TV need frequency, email has open rate concerns, social media takes more exposure, banner ad CTRs are low; but with paid search, you’ll most likely get some action the first day you launch the campaign.
Quality of Channel – Nothing wrong with email, social, direct mail, etc. But search is where people are looking for you. So if $500 is your only budget, I think the quality of search traffic has a higher chance to convert than a direct mail drop. You can argue SEO vs PPC in this case, but I’ll at least agree that any search would be the better value for your $500.
Data – I don’t want to put too much emphasis on this because to a SMB, $500 is a LOT of money. So the goal of that $500 is typically to directly drive more business. And I agree. But, the data from PPC is sometimes so much more valuable than they realize. For example…
“Wait, 10 people typed in transmission repair in eagleville went to my site and didn’t call or fill out our schedule form? Why not, we’re the only guys in town?”
Then it leads to conversations about their site, their pricing, their content, mobile vs desktop. And once you get into phone tracking, it amazes them that the front desk or call center could be an issue. Or even themselves. I had to tell one owner to let someone else answer the phones. So the data can sometimes open eyes about the business.
And it can help other channels as well. The SEO may want optimize for one term, but you can give him/her actual data that supports a better term. The search query report itself is a goldmine for content. What’s the best call to action for an email campaign? What promotions work best for a newspaper ad, etc. So there is value in the data itself, and maybe have even more of an impact for an SMB.
Red Tape – If you sell red tape or anything with a small SMB account, you most likely don’t have to deal with compliance, politics, approval processes, etc. You typically have more agility and authority to quickly make adjustments without 30 chefs in the kitchen, which allows you to optimize on the fly and hopefully improve results.
Challenge Accepted – I’ll be honest. A big part of getting the $500 budget to work is my ego. I want to prove that I can do it. And it’s one of the most satisfying things about my career. To have someone give me a chance with their hard-earned $500 (which is a lot to a lady working from her house or a mom-and-pop shop that’s been in my neighborhood for years) and see me make it work for their business. And if that doesn’t drive you, then this is a con. But to me it’s a major pro. I just really enjoy being challenged (ergo this post)
So to wrap this all up, “You’d be surprised how often SMBs can get Adwords to work, if they do it right.” So avoid the automated campaigns, the set it and forget it mentality. Build and manage a campaign the right way, with the right manager and generate a positive ROI.