7 Things to Consider Before You Buy Ads for a Small Business
We often get a lot of questions that revolve around if and where small businesses should buy digital advertising. Unfortunately, there’s no hard-and-fast rule or indicators that say you should, or you shouldn’t buy it. And there’s certainly no marketing playbook that will tell you exactly where to buy your ads.
Like everything else, much depends on your unique situation – your business type, the stage at which your company is developing, your budget, your risk tolerance, your goals and goal horizon (short-term, medium-term, or long-term), and many other considerations and factors. That said, to try to help you figure this out, we’ll dive into each of these considerations in depth and cover some other things you have to know before buying ads.
Consideration No. 1: What Type of Business Are You?
We often say the type of marketing you do depends heavily on the type of business you run. And that’s true for the ads you buy as well. If you’re a retail business that sells both online and/or, say, in a brick-and-mortar store, you might have one approach. If you’re a B2B business, you might have another. Without getting into advertising goals yet, in general, a broad range of ads can work for those types of businesses which might have a shorter buyer journey (say, impulse-type retail purchases), including: social media, Google search ads, display and native ads, and video ads.
If you are a B2B business focused on lead generation and your goals are on a shorter-term horizon, display advertising may not be the greatest choice. In that case, you might consider weighting certain platforms more heavily such as Google search ads, while using display and social for retargeting. Why the difference? Because the longer the buyer journey, the harder it is to convince people with a display ad to convert upfront or talk to a salesperson. The more appropriate ad might be in areas where people are already looking for a solution, such as search. That’s not true in 100 percent of the cases and much depends on your strategy, which we’ll discuss below, but certainly the data bears that out and is one reason why smaller B2B companies tend not to do a ton of brand and display ads. (The bigger B2B businesses certainly do.)
Consideration No. 2: At What Stage of Development Is Your Company
We’ve talked to a number of companies over the years. And if one thing is consistent, it’s this: When many small companies start out, the bulk of their business comes from those already in their network. In other words, those individuals who already known to you, or their contacts and friends. To save money early on, it makes sense to exhaust your network of contacts first, as a.) You can take advantage of the word-of-mouth aspect of a referral and; b.) It saves on marketing expenses as leads generated from friends or friends of friends often cost very little.
But at that stage when you’ve hit up all the people you know and need to grow beyond your “network,” many begin to think about advertising. That’s not to say digital ads can’t be used when you’re just starting out – and indeed for many retail businesses they need to think about advertising right away – but we would encourage small businesses actually to try to do as much word-of-mouth marketing as they can first to keep costs low. It’s at this second stage we describe above where you might want to think about extending your reach through ads. Hopefully, that is also the time when you have business already coming in and can afford both the media cost and any agency services.
Consideration No. 3: What Is Your Risk Tolerance?
Ads carry inherent risk, especially those that are focused on branding and awareness, which takes time to develop. Ad performance can rise or fall on any number of factors including the placement type, the platform (when and where the ad is showing), the targeting, the ad copy and/or any images, the call to action, your goals, and any ad optimizations you might employ. That’s a lot of risk for a single creative or placement, especially if there are costs involved. If you are completely risk averse as a business owner, you might think twice about investing in advertising because there are no guarantees that you’ll fulfill your goals. But, like the old saying goes, you also can’t make money unless you spend money. That’s true with any risk taking and it’s certainly true when you think about advertising. (One reason to go with an experienced agency like Marketing Nice Guys or another established agency that they will have a track record of helping you craft ads that perform better and get a decent ROI.) Indeed, if you can change your mindset to think about marketing more as an investment in your future, it might help you better see the value for the long run, as any form of advertising will help raise awareness of what you do.
Consideration No. 4: What Are Your Goals and Goal Horizon?
Every small business we know wants more revenue. And the sooner, the better. But those shouldn’t be your only goals when it comes to advertising. One thing many small businesses perhaps don’t realize about some forms of advertising is that certain placements are better than others at driving direct revenue (money that can actually be attributed to the placement). For example, if we were to suggest a company buy display advertising on a site in the Google ad network, the goal for that ad may not necessarily correspond to direct revenue. That’s because, no matter how good the ad and targeting are, click-through rates on display advertising just aren’t that great. In fact, click-through rates on display ads range from .2 percent to .35 percent. If your ad shows to 50,000 people you might get 100 clicks to your website on average. So, why would you advertise? To build your brand awareness and keep you top-of-mind in front of the right audiences. To many small businesses, that may seem unconvincing. But if you look at a company such as Coca-Cola, which has banner advertising everywhere and limited means for direct conversion, they haven’t done so badly. Its entire business, after all, is built on top-of-mind awareness.
The problem of course is that not every company has a business model such as Coke. On the flip side, many small businesses want to use any advertising they do to generate revenue now. As mentioned above, that’s where the time horizon matters. How quickly do you need to see a return on your advertising investment? Brand building takes time and if you have the money and the right strategy, display and other forms of advertising can do a great job of getting your name and products and services out there. However, if that’s not the case, then you might want to think about other forms – paid search, for example, which often is much better and provides a more immediate return on your business. Here’s a quick way to think about your goals and potential channels:
- Goal: Leads and Phone Call (Bottom of marketing funnel)
- Ad Type: Google Search Ads, Facebook Ads (especially lead ads)
- Goal: Awareness and Brand Building (Top of marketing funnel)
- Ad Channels: Facebook, Instagram, Google Display, YouTube, Linkedin (For B2B)
- Goals: Engagement and Re-Engagement (Middle of funnel)
- Channels: Retargeting on Google Display, YouTube, Facebook and Linkedin
Consideration No. 5: What’s Your Budget?
Perhaps the most direct conversations we have with small business clients revolve around media cost and spend. After all, if you have hired an agency (or are paying an in-house staffer) to help you, there’s an upfront media cost, then there’s also the cost of the resource you’re using to place the ad for you. Much depends on the goals you have, but let’s take search advertising as an example. Say you want to drive some immediate-term ROI. For that, we’d generally recommend a spending baseline threshold of $1,000 per month on media. (Note: The agency fee to manage will often equal or exceed that — depending on who you hire – and a full-time staffer would cost quite a bit more than an agency.) That’s not to say you can’t spend less than that in Google search ads and still be effective. You can and we’ve certainly helped small businesses with smaller budgets. But there are reasons for that kind of media spend threshold, including:
- You can’t really drive great conversions if you don’t reach more people. If you think about it, it’s like any funnel (X number of people will see your ad; X-Y people will engage with your ad and click to your website; X-Y-Z people will actually convert. So, if you don’t reach that many people (X), you won’t get a ton of conversions.
- Depending on the keywords you buy and the competition, you may not have enough budget, which can limit ad impressions (the number of times your ad is shown to users).
- Your ad rank may suffer due to budget (in other words, in the display of results, you might get beat out due to competition.
- Unless you spend a bit of money, you may not be able to optimize your ads and test the way that best practice dictates.
For other, non-search related ad opportunities, you could certainly get away with spending less per month. For example, we know small businesses that dabble in advertising spending only $200 per month on, say, Facebook. These companies simply boost their own social posts or create their own ads to use in display campaigns, but the same issues that we describe in search above can also apply. Plus, we’ve seen many small business owners become disillusioned between the mismatch in expectations for what they want the ad to do versus what the placement actually delivers. Over time, if you aren’t setting the right goals for the right placements, you can easily waste money and time, especially if you are inexperienced in the various platforms (see more below).
Consideration No. 6: ‘Where to Spend’ (Based on the Goals You Have, Type of Company, Time Horizon, Budget)
There are no hard and fast rules for where to spend your money or even which platform is best for what type of business you have. It’s a mix of many of the considerations we’ve discussed above, including the goals you have, the type of company, your time horizon, and your budget. There are so many options for you as a small business:
1. Social media. Typical ad opportunities can be found on platforms such as:
- Snapchat (though this remains much more the realm of larger advertisers)
Each platform has different ad types and options, depending on your goals. And it’s certainly worth investigating what you can do based on the factors we mention above (goals, type of company you are, etc.) A few things to keep in mind about social advertising:
- It can be a great lower-funnel conversion mechanism if the purchase is retail or is impulse-based, or part of a retargeting campaign. Otherwise, social advertising generally is better for top-of-the-funnel awareness.
- Platforms vary wildly in terms of ad engagement and lower-funnel effectiveness. For example, Pinterest is perhaps the best of all the platforms in terms of e-commerce conversion and performance – just note ts audience is heavily female – while LinkedIn and Facebook probably dominate B2B for lead generation.
- To learn more about each, you can download our Small Business Guide to Social Media.
2. Paid search. The obvious place to start is Google. But don’t forget about Bing, too. The great thing about search ads is that they can be used in all parts of the buyer journey, though many small companies focus, for obvious reasons, on conversions. It’s especially useful for e-commerce retail, B2B, or other lead-generation type businesses. For small businesses that focus on local, don’t forget about advertising in local search results as well. One caveat – we would strongly recommend small businesses hire a specialist or an agency to help them with paid search (see the “Final Consideration” below).
3. Native advertising. For whatever reason, small companies often don’t take advantage of native ads (which can come in the form of articles, videos, or other content) as much as bigger companies do. Perhaps that’s due to the cost of placements on particular websites, and the need to create compelling content. What’s great about native is that, if you are a company that can produce relevant content, you will probably enjoy high rates of engagement with your ads and enjoy click-through rates that average about 1 to 5 percent.
4. Video advertising. The 800-lb gorilla of video advertising is most certainly YouTube (owned by Google), though individual publishers throughout the Google Ad network also provide video ad opportunities. Video ads are also popular on social media channels. Obviously to take advantage of video advertising you need to produce compelling video clips and that can be a deterrent for some small businesses.
5. Paid display, programmatic, and mobile app ads. More than 85 percent of all the digital display ads you see are programmatic ads, delivered as part of an ad exchange which matches advertisers with target audiences on different sites. Google has its own programmatic network and there are other major players as well. For the reasons we’ve stated above, such opportunities for display and mobile tend to be taken by mid-size to larger companies with larger budgets. For small businesses, one thing we might recommend is using, say, the Google display network to retarget those who already came to your website or perhaps remarketing to those who have searched for an area you provide services in. Beyond that, the upfront budgets and the branding awareness aspect might be a steeper hill than many small businesses can afford to climb.
A Final Consideration: Don’t Do It Yourself Unless You Really Know What You’re Doing
We don’t say this to be self-serving. And we are 100 percent in support of small businesses learning the digital marketing field as they go. But for the average small company, we would recommend they hire an agency like ours (or get someone with a background in paid media advertising in particular who can help.) With digital advertising – and it doesn’t matter if you’re considering a display campaign, a native ad, social media, video, or search – we’ve seen a lot of businesses that waste money and not get results because they just dive into it, without understanding some core marketing principles, or even simply knowing more about the platforms they are spending money on.
There’s a reason paid media specialists and managers develop an expertise in this area alone – it can be “complicated” to make sure you’re targeting the right audiences, focusing on the right stage of the buyer journey, and getting a decent return on ROI. In an ideal world, you should create a plan and an approach for what you’re trying to accomplish (it’s not always a simple purchase for example), have access to professional design and ad copywriters, and A/B test to make sure you’re optimizing performance. That’s just the beginning. Unless you know more about certain techniques – such as ad retargeting, optimizing for a particular action by the end user (clicks, landing page views, or conversions), or, tracking KPIs and goals – you’ll still likely fall behind others who are better ad managing ads and know exactly what they’re doing.
If you know how to do all that, great. But note, we haven’t even gotten into the nuances of paid search (which is its own animal that requires an understanding of many different concepts, including:
- How the Google Search Ads auction works
- Best practices in account creation and campaign setup
- How to develop effective ad groups
- Understanding match types and when to use different ones
- Creating good ad copy and extensions
- Having a thorough understanding about responsive ads
- Understanding bidding strategies and optimization strategies
- Identifying the right keywords
- And so on…
Obviously, this area alone is complex. Throw in other platforms – such as more sophisticated programmatic ad exchanges and there’s even more to absorb to know how to do it well.
Sure, there are some things you can do on your own. Facebook and other social media services have made it relatively easy to boost a post, for example. But unless you know who your target audience is, create the right message to them at the moment they’re looking for it, and have a better sense of what your goal is, you might still find your ROI to be elusive as well. The point here isn’t to discourage you, it’s just to be realistic about what you want to accomplish in the time you have. And if you feel like your time is better spent elsewhere, agency consulting is the way to go.
We hope you have found this helpful as a guide. Our goal at Marketing Nice Guys is to help you excel at digital marketing, whether that’s supporting you through our paid media management services, conducting a paid media audit, or guiding you through do-it-yourself paid media approach with our Marketing Help Desk.