Are Google Ads Right For Small Businesses in 2022?

Google has given small businesses the impression that they can succeed by using the Google Ads platform. Find out why this may no longer be true.

WebJIVE, along with many other agencies is seeing a decrease in the effectiveness of Google Ads for clients who spend less than $3,000 per calendar month.

That’s a lot of money for small businesses trying to stay afloat. This can sometimes be the difference between advertising vs bringing another FTE onboard to help with your customer experience and customer journey.

Just a year ago, we saw businesses with new small accounts (under $3,000/monthly) averaging a return of advertising spend (ROAS) of 3:1 after the first month of advertising across all verticals.

Small accounts have an average ROAS of 1.5 to 1 (ouch). This means that they barely break even after six months. This is only one agency’s experience and matches what we’re seeing in the industry as a whole.

We reached out to other owners of agencies I know and posted some questions on Facebook and Twitter asking for their views. While some people are still getting adequate returns, others are seeing the exact same thing as I am.

Google Ads do not seem to work for businesses that spend less than $3,000 per calendar month, especially for most services-based companies.

Why aren’t Google ads working for my small businesses?

Google has slowly changed the game over the past few years, and these changes were made under the guise of enhancing privacy. Others have joined the fray to make the platform more palatable for less-sophisticated marketers.

Google has made these changes to increase its revenue, not so much for the business’s benefit. Although it would be nice to believe I am just being cynical. It’s difficult to disagree with overall assumptions about the ROIs we’re seeing.

We don’t live in an age of straight ad auctions anymore.

It is difficult to determine the price of clicks or the factors that led to the click’s pricing but we do know that Google’s moving its customers into automated bidding structures has taken away advertisers’ control.

Their algorithm determines the cost per click if the advertiser isn’t in control.

Local advertisers are now competing with national brands, even if they don’t appear to be relevant. This is because Google’s Ads algorithm believes that a click could result from the placement.

Are Google algorithms smarter than humans?

Google has made it more difficult to optimize paid search spend for those who are not directly involved in paid search. Google is increasingly requiring advertisers to rely upon Google to optimize their accounts. The days of advertisers being presented with data and allowed to make their own decisions are gone.

In typical Google fashion, a robot is marketing to consumers. It looks for patterns among many data points and believes that its robots can be more appealing to humans in paid search than real humans.

Google’s insatiable appetite for Ad $$

• Google’s robots need a lot of content to make decisions.
• The Google Ads algorithms cannot make decisions without consuming data.
• Google must be able to identify the correct people in order to deliver ads to them at the right moment.

Work with a local SEO agency to get a list of all the organic keywords you have in GA, along with their performance metrics, and stay on top of your campaigns. Not performing this kind of due diligence can be costly with budget overruns and low ROI. Unfortunately, in most cases,  this happens after advertisers have spent more than $3,000 per month.

A small advertiser will eventually see the benefits of Google Ads’ learning algorithm if they stay on top of their budgets and campaigns.

For ads, just like with shoppers, the reality is that user behavior changes over time, budget shifts, and Google’s own changes make it more difficult for small advertisers to see the same results as big guys.

Small businesses often don’t have the resources or funds to spend $3,000 per month for six months or more to see results.

How much spend is enough to be effective?

It can be difficult to figure out how much you should spend on Google Ads. Navah Hopkins, VP of Strategic Marketing at AdZooma, and one of the world’s most recognized and decorated paid search experts shared her advice on the matter.

Here’s what she shared:

“Google Ads can be a powerful tool or a frustrating waste of money. It all comes down to how much you can invest in acquiring leads and understanding what objective you’re giving your campaign.

 

As a general rule, you want to make sure your budget has enough by the numbers to fit enough clicks in the day to get at least one lead/customer. Depending on your industry/market that might mean 10 or 100.

 

While the average CPC is around $3 per click, many industries have clicks upwards of $25.

If you have a 10% conversion rate:

• U.S. Average CPC: $30 per day or $912 per month.
• $25 Average CPC: $250 per day or $7,600 per month.
• $150 Average CPC (low for legal): $1,500 per day or $45,600.

If you have a 1% conversion rate:

• U.S. Average CPC: $300 per day or $912 per month.
• $25 Average CPC: $250 per day or $7,600 per month.
• $150 Average CPC (low for legal): $1,500 per day or $45,600.

 

When setting a budget, it’s crucial to factor the customer value, location, and vertical into the discussion. While it’s not impossible to achieve value with a smaller budget, any budget lower than $5,000 will struggle to fuel the algorithm (ultimately costing you more because you’re in the learning period longer), as well as not being able to support the objectives it’s responsible for.”

It takes money to make money as we all know. However, most small businesses can’t afford to spend $3,000 to $5,000 per month to find out if a particular marketing channel works for them. Google asks small businesses to do exactly that – without any ideas of what ROI might look like.

Our Take On Googles Ad Coupons

It seems that these ad coupons may have an even lower value than anticipated. Google has created the impression that small businesses can succeed by using the Google Ads platform with these coupons.

Google sells the shovels to millions of small businesses who hear the message of advertising success.

Google Ads can be a great option if you have the budget and know how to properly keyword, and negative keywords.

If you can’t spend the money with larger monthly budgets, then you’re better off getting on another ride. Take the long-game approach and work on your local SEO agency on a strategy – with a company you trust!