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November 08, 2013

Study Shows Small Businesses Waste 25% of Their Pay-Per-Click Budget

At a glance, Google’s AdWords is an appealing way to market your business. This pay-per-click (PPC) advertising model allows users the flexibility to set budgets, target specific audiences and quickly drive traffic to their sites. Without AdWords, a business might have to wait months before their organic web traffic turns into a steady stream of conversions.

Due to the apparent ease of use, some small businesses fall into the trap of believing that they can monitor their own AdWords accounts just as efficiently as the pros. According to a new study by Wordstream, Inc., small businesses are unnecessarily wasting 25% of their PPC budget, largely due to strategic and managerial errors.

After studying 500 small and medium-sized companies, WordStream found that many businesses failed to adhere to basic PPC best practices like improving ad relevancy and regularly managing their accounts. Failing to follow best practices can result in hundreds of lost leads and increased costs for small businesses. This 25% inefficiency is illustrated through actual examples of the client industries sampled: 367 lost bed and breakfast inquiries; 569 lost product sales for retailers; 126 lost insurance quotes; 157 lost B2B supplier leads.

So how can a small business better manage their AdWords campaigns? Here are some suggestions from Graphically Speaking to help you get started.

What is your end goal?

The relative ease of setting up an AdWords account can cause some business owners to act before they’ve strategized. Start by considering your ads’ objectives. Are you trying to find leads? Sell a particular product online? Or drive traffic to your site? Clarifying your goals allows you to create more effective and targeted ads.

Take the time to research

In order to make the best use of your advertising budget, you will need to conduct some keyword research. Use Google’s Keyword Planner and explore which search terms will bring the most relevant traffic to your site. Generic keywords can come with pricier bids, so consider using more specific or long tail keywords and exact match or phrase match options.

Limit your keywords…at least at first

It can be tempting to bid on every keyword that might be relevant to your site, but remember that the quality of your keywords affects your costs. The more relevant a keyword is to your site, the less you pay per click. Aim to create a few focused ads with highly important and specific keywords. Once you’ve let your campaigns run for a few days, analyze the collected AdWords data. It should give you a good idea of which campaigns, ads and keywords are resulting in conversions and which will require edits.

Track your conversions

Wordstream found that less than half of the small businesses they surveyed used any conversion tracking on their landing pages. If you don’t know which ads are converting and how much each conversion costs, then you’re shooting in the dark. Unless you’re operating an e-commerce website, determining the value of a conversion can take some research. First determine how many leads it takes to produce a sale. The value of that sale then determines what you are willing to pay for those leads. Now your goal is to get as many leads as possible for less than your target cost per lead.

Be ready to invest your time

Just because AdWords is up and running doesn’t mean that you can “set it, and forget it.” AdWords requires planning and consistent weekly management so that it operates smoothly and efficiently. Be prepared to spend an hour a week going through your campaigns and pausing inefficient keywords, testing advertisements, and adding negative keywords.

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