The Myth Of Pay Per Click

The Myth Of Pay Per Click

“Pay Per Click works for everyone!” “You’ve got to be doing “AdWords!” “Every media campaign should include Pay Per Click!”

These are some of the most prevalent myths circulating.  These myths are costing local businesses a lot of money in misdirected advertising.  The truth is Pay Per Click isn’t for everyone, especially small businesses and here are some reasons why.

Reason #1 – Is what you are paying for clicks higher than the revenue per visitor?
As this Forbes article states, “Of course you know that with Google AdWords you’re paying for clicks. This wasn’t a problem a long time ago when rates were more reasonable, you know, pennies instead of dollars.  The problem nowadays is… a business is dropping $5 or more per click to get people to visit their site.  Sure, that may increase visitors because you’re appearing at the top of the Google search page, but it’s not guaranteeing customers. Some clicks can be as high as around the $60 range per clicks.”

So you think, “But I’m only paying if the person clicks and if they click they are interested so it’s worth it, right?”  Maybe, maybe not.  The Forbes article goes on to point out, “What that boils down to is that whenever someone clicks on your ad, you still have to pay Google, regardless if a sale was made or not. And, that becomes an issue whenever you have visitors who are just browsing the web with no intention in ever investing in your product or service.  In other words, AdWords potentially isn’t worth the investment because the bids that you are paying for are higher than the revenue that you’re receiving from each visitor.”

Reason #2 – You can’t compete with the “Big Dogs”
Most small businesses are unable to compete with larger companies.  Robert Kenney wrote an article called “Google AdWords – Destroyer of Small Business.”  He points out that in the beginning and up until about five years ago, AdWords was effective for small businesses.  The article points out, “Anyone could launch a campaign and drive in high-quality traffic at a fair price.  However, AdWords got pricey… There’s no way that they (small businesses) can compete with established and well-known brands.”

Large brands in your category can afford to spend hundreds of thousands of dollars per month on an AdWords campaign.  They have the resources and time to do that.  What this means for small businesses is that all of their relevant keywords have been taken, which in turn, raises the price.

As this article put it, “If your company operates in an obscure industry, the cost to get to the top of PPC may not be very high.  But for most companies, there are many other competitors also bidding for space for the same keywords.  Instead of paying pennies for each click, you might find yourself spending tens if not hundreds of dollars just to get a click.  The biggest secret of PPC advertising is that the more successful you are with it, the more expensive it gets.  If you’re in an industry that can find customers and convert them using PPC, the chances are that your competitors can do this too.  As each company starts using PPC, the cost to get to the top increases.  Each company basically bids up the cost of PPC until you get to the point where it’s so expensive, that you really can’t make any money acquiring new customers using this channel.”

Reason #3 – Pay Per Click isn’t as targeted as you may think
With Pay Per Click you don’t know WHO is clicking your ad.  Yes, they are interested in that keyword, but are they a good prospect?  Do they fit your ideal customer profile?  In this recent article the author points out, “A user enters a search term, we guess what they have in mind, and we bid to have our ad shown to them.  But are they actually a good prospect for us based on who they are?  We have no idea. What we do NOT know about these searchers is voluminous: age, sex, industry, job title, income, family status, hobbies, interests, and the list goes on.”

When does it make sense for a local business to use Pay Per Click ads? Searchers are more likely to click on paid search results ads are when they are actively looking to buy something right now (could be a product or service). These are called “high intent” searches and it means the person is ready to be sold to (i.e., “I need a plumber right now) and is at the bottom of the sales funnel and ready to make an immediate decision.

But for most local businesses a better use of your advertising dollars is to do targeted display ads based on keywords and the demographics of the type of customer you are trying to reach. These types of digital advertising are more economical and more effective in driving brand awareness and direct response.

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