Pay-per-click advertising, or PPC, is one of most important and reliable options for businesses of all sizes–especially small businesses. SMBs benefit from PPC campaigns in a number of ways, including:
- Near-immediate impact on KPIs
- Quick startup and quick optimization capabilities
- Remarkable conversion tracking and campaign performance
- Effective ROI and conversion rate impact
- Works well alongside existing ad campaigns and digital advertising
The benefits of PPC advertising are many[1], but gaining a true understanding of its value–and optimizing the ROI of your PPC campaigns–can be difficult for any small business. And while the ROI of PPC campaigns is generally favorable to businesses, the costs can also be quite high.
That’s why figuring out what’s working and what isn’t with your PPC campaigns—from clickthrough rate (CTR) to cost per conversion, cost per acquisition (CPA), and other factors—is key to getting the most from a high-efficiency PPC strategy.
To better understand how small businesses are currently tracking, evaluating, and ultimately improving their PPC marketing campaigns, we surveyed 500 small business leaders and digital marketing professionals who help oversee PPC campaigns at their businesses.
We found that nearly 60% of these businesses spend $5,000 or more every month on PPC campaigns. However, less than half of these businesses (46%) reported feeling “very confident” in their ability to track the ROI of these campaigns, and only 48% said that they felt “very confident” in their ability to successfully manage their PPC campaigns.
Despite this lack of confidence, less than 25% of our respondents reported seeking outside agency help to manage their PPC campaigns, even though the top reported benefits of those who did work with an agency were better visibility into ROI and improved PPC conversion rates.
In this report, we’ll dig deeper into these findings to explore the challenges, goals, and strategies of small business PPC teams.
We hope that their insights can help you optimize your own PPC campaigns, reach your target audience, and achieve KPIs to help your business grow.
Challenges of PPC Campaigns
PPC campaigns, while remarkably helpful for small businesses, certainly do come with their challenges as well. Among them are high and ever-rising costs, a lack of expertise among available staff, difficulty testing and optimizing campaigns, and PPC ads that aren’t connected to your overall marketing efforts and message.
Despite these challenges, 4 out of 5 SMBs rate their PPC campaigns as effective, and more than 80% stated that they were confident in their ability to manage campaigns and track the ROI. But even these teams face challenges.
The biggest challenges hounding SMBs include finding the right service provider to help manage campaigns (27%), finding qualified employees who could manage the campaigns, and choosing the right software or tools for the job (25% each).
Interestingly, solving the top challenge on this list by finding an effective service provider can also resolve many of the other top issues, as PPC agencies can help with all aspects of a PPC campaign, from analytics tools to ad creation, keyword selection, and more.
Based on the feedback and responses from our pool of small business owners, it’s clear that many businesses are confident in the strength of PPC advertising and their ability to achieve real ROI from it. However, many businesses are clearly having difficulty finding the right support, internally or externally, to handle the management, analysis, and optimization of their PPC campaigns.
How do you track the ROI of a PPC campaign?
In order to understand, adjust, and improve the performance of your PPC campaigns–and maximize the impact of your ad spend–you need to be able to effectively track those campaigns. And while this may sound simple on the surface (how much did we spend, and how much did we make?), in reality, it’s a lot more complicated than just money out and money in.
It’s important to note here that many marketers use the term ROI (return on investment) interchangeably with ROAS[2], which stands for “return on ad spend.” The difference is that return on investment is about the impact of your overall advertising efforts (for instance, the return across all of your PPC campaigns), while ROAS is a way of understanding and evaluating the impact and return for a specific PPC campaign.
You may have one campaign that focuses on value propositions, one that focuses on urgency messaging, and one that offers a discount or incentive of some kind. ROI is a good metric to understand the total effectiveness of all of those campaigns, while ROAS lets you drill down to see which campaign and which specific ads are performing best.
Budgeting and planning for your PPC advertising[3] is somewhat similar to your other digital marketing efforts. You need to know who you are trying to reach, where they are, and what they are worth. But PPC is unique in that you can set the specific amount you are willing to spend on certain ads, and adjust that spending as you determine which ads are performing the best.
So what did we learn about PPC budgeting from our survey respondents?
More than 20% of them are spending somewhere between $5,000 and $7,500 each month on their PPC campaigns. And more than one-third of respondents, or 38%, are currently spending more than $7,500 each month on their campaigns.
Even for a highly successful small business, these numbers are significant, so you can see why it’s so important for small businesses to stay on top of PPC campaigns to ensure that spending isn’t going to waste. These figures also underscore the importance and efficacy of PPC advertising; after all, small business owners and marketers would not be putting this kind of money into outlets that were not returning results.
To further drive home this point, almost 40% of SMBs surveyed indicated that they’re currently spending at least half of their overall digital marketing budget on PPC ads.
Of those respondents, almost half are already planning to allot 50% of their overall digital budgets to PPC campaigns in the coming year[4], suggesting a growing confidence in this strategy.
PPC campaigns show impressive performance
It’s well established that PPC campaigns are effective tools for your company’s marketing, but they do come with challenges. Perhaps the most persistent issue is effectively tracking the full performance of your campaigns.
Growing concerns around data privacy and the impending crackdown on third-party data brokers have made performance tracking even more challenging. However, organizations and ad outlets–including Google, Facebook/Meta, and X (formerly Twitter)–have adapted and are constantly working on providing valuable data to help advertisers optimize. Google Analytics and other platforms are also finding ways to provide a clearer picture of ad performance without compromising user’s data privacy.
Our survey results indicate that the adjustments that have been made so far are working, though, as respondents seem to have a fairly clear picture of the ROI for their PPC campaigns.
In fact, nearly two-thirds of our respondents reported that they were bringing in $5 for every $1 they spent on PPC ads, making PPC a highly reliable strategy. Even more impressive, more than 20% of our respondents indicated that they were seeing an ROI of $10 or more for every dollar spent on ads. From brand awareness to product- or offer-specific ads, the total cost of PPC efforts has proven to be worth every penny to our respondents.
ROI is not the only critical metric, though. Cost-per-click (CPC)[5] and conversion rates are also important to understanding the full impact and return on a PPC advertising campaign. Among our survey respondents, nearly half have seen conversion rates of 9% or more, with 21% indicating conversion rates of 11% or higher.
Despite these positive results, our survey respondents still reveal a lack of confidence when it comes to tracking the performance of their PPC campaigns. In fact, nearly 20% of our survey respondents felt less than confident in their ability to track, analyze, and understand the full return on investment of their PPC efforts, and less than half felt “very” confident in their ability to stay on top of these metrics.
As we discussed earlier, this lack of confidence is concerning when so much hinges on a team’s ability to analyze and optimize the effectiveness of PPC campaigns to avoid dumping valuable resources into a failing strategy.
PPC Campaign Strategies and Tools
Our group of respondents were asked about the strategies and tools they use for PPC management, and the results indicated that most were using a broad, evenly distributed approach across popular channels and platforms.
Not surprisingly, small businesses ranked Google Ads (formerly AdWords) as their number-one choice for running their PPC campaigns. Social media companies like Meta, X, and LinkedIn are also popular choices for PPC spend, fueling the rapid growth of that medium.
When it comes to the tools used to track and analyze ROI for multiple campaigns and platforms, nearly half of these companies indicated that they use some combination of marketing analytics software or marketing automation software.
There are a variety of options on the market, but perhaps the most beneficial feature of these tools is that they make it easier to analyze results across multiple segments of a campaign, which makes adjustments and budgeting much easier and more efficient.
SEO and CRM software were also mentioned by more than 40% of respondents. Notably, almost 40% reported using a spreadsheet like Microsoft Excel or Google Sheets, perhaps for their ubiquity and ease of use. The bigger surprise was that nearly 10% of respondents either didn’t know how they were currently tracking ROI or that they were not currently tracking it at all.
It’s also noteworthy that almost 37% of our respondents reported using click fraud detection and prevention software to avoid draining their PPC budgets through inauthentic clicks.
We also wanted to understand how small businesses handle their PPC staffing responsibilities, and almost one-quarter of them indicated that they had just one staff member who was responsible for managing these campaigns. Nearly 20% of SMBs had a dedicated team in-house to manage their PPC efforts, while 24% utilized some form of outside agency.
The Benefits and Challenges of Working With a PPC Agency
As mentioned before, more than 20% of the businesses we surveyed are already leveraging outsourced experts to support their PPC advertising efforts. We asked that cross-section of SMBs to share their thoughts on the top benefits of collaborating with a digital advertising or PPC firm, and their top three responses were:
- Better, more accurate understanding of ROI on PPC campaigns (42%)
- Improved conversion rates (41%)
- Improved market forecasting (38%)
Of course, as with any business investment, there are also potential downsides to consider when working with a PPC agency, and our respondents were honest about the challenges they’ve faced as well, led by simple cost vs. profit considerations:
- Cost of agency/service eats into profit margins (34%)
- Increased workload for internal employees (25%)
- Difficulty finding the right agency for our business (24%)
Whether you’re concerned about increased costs or extra tasks, it’s important to consider all factors when choosing to work with an external PPC agency. When factoring in the benefits cited above–improved conversion rates and market forecasting, better targeting, etc.–concerns about the short-term impact on profit margins might be missing the big picture.
Of those SMBs who have not worked with an external agency, nearly 40% indicated that it was because their internal teams were capable of handling the duties themselves. And while larger companies might have the resources to field a capable, in-house PPC team, smaller businesses might not even be aware of what they’re missing by not working with an experienced PPC agency.
An additional 13% of companies who haven’t engaged an external agency stated that they were unable to find the right provider in their area. Fortunately, there are online resources available to help alleviate this pain point.
Pay Per Click Spend is Worth the Cost for SMBs
The majority of SMBs agree that PPC campaigns are not only valuable, but that they will continue to be a critical component of their digital marketing strategies for the next 3-5 years. Additionally, 83% of small business owners believe that increasing their PPC spend and efforts would significantly increase their company profits.
Looking at the full range of responses, it’s clear that small businesses are not only benefiting from PPC campaigns, but that they are actively planning to put more time and resources into them in the future. Making PPC advertising a robust part of any digital marketing strategy is a proven way for any business to achieve KPIs and foster growth opportunities. However, there are still several ways for SMBs to get more out of their current efforts.
This is where dedicated PPC agencies and digital marketing firms with extensive PPC expertise can be helpful. These businesses have the expertise and resources to create campaigns, but more importantly, they have the tools and insights to maximize return and help SMBs get more results from their budgets.
Our report shows that PPC campaigns work for small businesses, and they plan to continue using this effective digital marketing tool even more in the near future. But these businesses may not be getting as much as they could be from their efforts.
Specialized PPC agencies have the expertise and resources to help SMBs strategize and analyze their PPC campaigns to better understand what’s working and what isn’t. This type of support can result in more effective PPC campaigns and fewer wasted resources.
Sources
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- 7 Powerful Benefits of Using PPC Advertising, Search Engine Journal
- How to Measure the ROI of PPC, Ruler Analytics
- How Can You Set a Budget for PPC Campaigns?, The Ad Digest
- 93 Online Advertising Statistics You Need to Know for 2024, SEMrush
- Cost Per Click (CPC) Explained: What It Is & Why It Matters, SEMrush
UpCity’s Survey Method
This survey was conducted using Pollfish in November of 2023 among 500 U.S. small business leaders to learn more about their pay-per-click advertising campaign strategies, results, goals, and challenges. Respondents were screened for their role in overseeing PPC campaigns for a small-to-midsize business.