Commentary
Small Businesses To PPC Search: Drop Dead
- by Steve Baldwin , December 22, 2008
Microsoft's motive for releasing this survey is obvious: the company is launching a new product called adCenter QuickLaunch -- which includes free consultation with a "search expert" -- targeted at small-business owners spending more than $500 a month on PPC search. I'm not about to bash Microsoft for offering this kind of free hand-holding for novices: what I do object to is the idea -- widely circulated on blogs reacting to the survey results -- that small-business owners are either too timid or too dumb to embrace the obvious benefits of PPC. In my view, many of these people have a damned good reason to stay clear of PPC, for reasons that include the following.
advertisement
advertisement
1. There's no faster, easier way to lose money. If you're a small-business owner with a limited marketing budget, the last thing you want to do is to start buying keywords without a mature plan for how you to make your PPC efforts sustainable. Microsoft's survey would have been much more valuable if it had broken out the kinds of goods and services its respondents were selling, because there are many classes of goods and services whose margins are too low to justify any PPC spend at all.
Additionally, as everyone knows, just because a small business happens to have a Web site doesn't mean that it's capable of delivering an acceptable conversion rate. A lot of these sites seem to be cobbled together by 13-year-old nephews of the owner. And yes, while it might be an awful thing to run the numbers and say to a small-business person, "I'm sorry: there's no way you can make a profit using PPC search," it's the only honest answer for many businesses who'd have better luck pursuing a different set of tactics that might not be as sexy but would deliver better ROI.
2. Dabbling in search is dangerous. Spending $500 a month on search might seem like a lot of money to a small business, but it comes down to a mere 16 bucks a day. The last time I looked, there weren't a lot of 10-cent keywords out there, so we might be talking about 16 to 32 clicks per day. Even though it will likely take you many weeks to accumulate enough data to provide a statistically valid sample against which to test significant campaign variables (keyword copy, landing page offers, etc.), many novice search marketers are too "quick on the trigger," and start making changes before they have enough data to justify them. It's sad to say, but the reason that big search spenders have such an advantage in the market is that their investment in data allows them to make meaningful, not random changes. Even here, it can take months and many thousands of dollars to completely optimize a PPC strategy that's truly competitive. Like it or not, PPC is a pay-to-play marketing channel, and if you only pay a little, you'll only get a little back.
3. There's very little low-hanging fruit left. Call me a cynic, but I really believe that the whole "let's make PPC search seem easy" message pushed by the search engines, the conference industry, and pundits who should know better creates chaos and heartache across the land. Sure, if you're in some completely non-competitive category (maybe you're the only authorized vendor of purple marsupial Beanie Babies in Rhode Island), you might have been able to buy a few cheap long-tail keyword combinations, but if you don't have organic visibility for this kind of business, you're doing something wrong and money might be much better spent making your site more usable and search-engine-friendly. Once you step into a competitive category, however, you're going to be up against the big guys, who've spent tons of money on data (see point 2 above), and use agencies with multimillion dollar bid management automation systems and teams of analysts poring over results each day to squeeze out the waste from the keyword buying process. Small businesses might have had a chance of competing in this environment in 2004, but they'd be road kill today. Why even try when you know --- in advance -- that you're going to get crushed?
I don't think that most small-business owners are scared, weak, or ignorant. In fact, I think that many know something that too many of us search insiders gloss over: PPC search is difficult, daunting, complex, and expensive, and this issue can't be done away with a few sessions of hand-holding by Microsoft or anyone else.
Although it grates against the optimistic, "can-do" spirit of the SEM industry, there may in fact be no answer to the small-business malaise when it comes to search. Unless we as industry can be honest about presenting the hazards, as well as the rewards, we shouldn't be surprised when small-business owners, after trying PPC search for a while, tell us "yeah, I tried it, it was a complete waste of money, and I found that my money went a lot further using some other channel."
16-32 clicks a day for $16 would be huge for a true small business. That's a lot of leads even if only a small percentage convert. And I agree that lumping SMBs together without knowing what business they're in is ridiculous- a service business would welcome one good lead a day while a restaurant might need to add two new regulars weekly.
I think it's equally as scary to have Microsoft (or even Google or Yahoo) set up and manage a campaign. Although they are great at setting up and organizing the initial account, often you get a "specialist" that doesn't have the experience to understand the small business, how to write truly relevant adtext and so on. They usually rely too heavily on keyword insertion instead of the benefits/features of the product being sold -- driving lots of clicks that don't really convert. Additionally, no attention is paid (by these specialists) to the website or landing page. Throwing up some keywords without ensuring the site is optimized for conversions is a recipe for disaster.
Small business owners who take the time to learn and figure this channel out, similar to what they would with any other traditional channel, can succeed and it would probably make sense to work with one of these specialists to help set up the account and get recommendations, but ultimately, they need to do the work themselves and pay close attention to the account. And, I think there are plenty of keywords available for under $1/click -- but will they convert?
Here are a couple of objections I've hit:
#1 - Many SMB's aren't used to committing $500-$3,000/month, even if you tell them you'll get their ROI back within two months.
#2 - PPC and SEO are a bit too competitive for you to show immediate high-yield results, and in their mind, it's all about the position.
#3 - It is a bit technical, and they don't understand the technology.
Absolutely agreed. The search engines are doing a disservice by pushing "cheap-start" solutions, and would do more good in the long run by helping SMB site owners understand the fundamentals of conversion-oriented site design.
Steve,
You make some great points about the complexity and entropy of the PPC landscape that hinder success among very small AND large businesses. And you're correct about the churn: it's significant, though not widely discussed. However, there are opportunities for the small guys to succeed with PPC:
1. There are some lead-generation companies that do a great job to help very small businesses profit with PPC. By aggregating many small businesses in key verticals, they can achieve scale needed to set-up, track, optimize and instill overall best practices. If small businesses achieve success, it's likely they'll increase their investment and migrate to more meaningful spends with even greater ROI -- a great opportunity for lead-gen companies to grow with their customers. While there are some pockets of success, the next wave of lead-gen companies will only succeed by delivering far greater ROI and transparency. They will introduce more comprehensive reporting, advance customers more toward conversion and profitability analysis, and allocate more customer investment to media, not profit margin. Innovations in automation will make this possible.
2. Also, acknowledging my own bias (I work at Clickable, a PPC management solution), automation tools are making PPC far easier for smaller businesses that want to do it themselves. Tools are introducing simplicity, ease, best practices, time efficiency, confidence and ROI. Tools are also aggregating the PPC metadata of smaller players to achieve the benefits of scale -- enabling them to compete for demand with the big guys. Tools don't completely solve complexity and risk, but they are making "normal people" -- those who aren't PPC Ninjas or quant jocks -- capable of achieving success. To be sure, there's a huge band of advertisers that are too big and savvy for most lead generation companies, but too small for agencies to serve. Tools will help these guys achieve success, migrating them up from lead generation services, and sending many of them up to agency thresholds of spending and service sophistication.
Finally, as you alluded, small business owners are not stupid. They usually are very savvy, and have a very good idea of what's driving their business and not. If you can help build their business and simplify their lives, they'll invest.
Thanks for keeping the edge on!
Regards.
Max
Bravo. As a professional working with new media for over 11 years, working for large and mid-size Internet Marketing Teams, and now for 5 years owning my own firm, I can't agree more with your article.
There are huge rewards with SEM; however, it takes a lot of work, effort, knowledge and talent to squeeze out a marketing ROI, especially for smaller companies with limited to null media budgets.
Merry Christmas...great post!
Jeff
www.SalesDrivenMarketing.com
As you pointed out, Microsoft’s execution was a bit ham-fisted. The survey they administered was obviously conceived as a way to promote the product they were preparing to launch. Notice that all of the questions and concerns center around the logistics of setting up and running a PPC campaign.
The reality is that designing an effective PPC campaign has more to do with the strategic thought required to ensure that the campaign is well aligned with your business goals and marketing objectives. These are not logistical issues, rather they are strategic planning issues.
My experience with Microsoft and other PPC vendors is that they are of very little assistance in planning for measurement and ROI. The problem is that by marketing this way, I think Microsoft is doing a disservice to small business decision makers by saying “Look how easy this is. We will walk you through all the steps.” When in reality, they are ignoring the most important steps in the process.
As you pointed out, Microsoft’s execution was a bit ham-fisted. The survey they administered was obviously conceived as a way to promote the product they were preparing to launch. Notice that all of the questions and concerns center around the logistics of setting up and running a PPC campaign.
The reality is that designing an effective PPC campaign has more to do with the strategic thought required to ensure that the campaign is well aligned with your business goals and marketing objectives. These are not logistical issues, rather they are strategic planning issues.
My experience with Microsoft and other PPC vendors is that they are of very little assistance in planning for measurement and ROI. The problem is that by marketing this way, I think Microsoft is doing a disservice to small business decision makers by saying “Look how easy this is. We will walk you through all the steps.” When in reality, they are ignoring the most important steps in the process.
How do you say Advo for small businesses?
Thanks for the excellent post!
SMBs are not dumb or timid -- they are simply cautious and pragmatic. With regard to PPC they have valid and legitimate reasons to be skeptical:
1. Success depends on strategy + tactics. Buying words without strategy is guaranteed to fail. SMBs get this.
2. Many SMBs do not have sufficient margin to justify PPC spend. The world's greatest PPC campaign will fail miserably in support of the wrong business model. SMBs get this.
3. PPC is like golf. You must play 7 days a week to become any good. Weekend hackers are just that. Dabbling is dangerous. SMBs get this.
4. Not only is PPC like golf -- it's like professional golf. While you might be a decent golfer -- the difference between you and a pro is massive. Step inside of the ropes (with the big boys) and you should be preapred to get crushed.
At the end of the day, most SMBs today still need help with basic online marketing. Rather than suffer the cost and complexities of buying and placing outbound advertising via paid SEM channels -- what most SMBs want is simple tools to promote themselves online so they can engage in conversational marketing and generate inbound leads via natural SEO and referals.
Unlike PPC advertising -- it really is that simple.
With an increase in the cost of traditional media advertising and the diminishing ROI on these mediums for small business, we are seeing a definite shift to online advertising and in particular Google Adwords. In our experience Small Business understand that they have to keep promoting but they are wary of PPC. The smart operators are shifting their campaign management over to respected PPC agencies and in most cases are seeing improved PPC ROI.