PPC for SMBs: Small But Growing Numbers

Tuesday Mar 9th 2004 by Robyn Greenspan
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Most small- and medium-sized businesses haven't yet fully recognized the value of pay-per-click advertising, but interested prospects could swell the ranks of small business adopting such marking tactics as localized search technologies evolve.

Pay per click (PPC) programs are a service in which an advertiser selects specific keywords or phrases and then creates a listing that will show up when someone searches for that particular phrase. The advertiser selects an amount they are willing to pay for each click on their listing which results in a visit to their site — hence the term "pay per click". At Overture and Google, small businesses can bid anywhere from $.10 up to $5.00 for each click.

Small- and medium-sized businesses are beginning to buy their way into the paid search market, according to a report from The Kelsey Group and ConStat, but the majority haven't yet recognized the importance of pay-per-click (PPC) pricing. The collaborative study revealed that only a small portion of SMBs are currently involved in PPC, but there is potential for a substantial number to join the ranks over the next year.

Culled from the responses of 460 advertising decision makers at small- and medium-sized businesses, the survey found that 11 percent were currently involved in PPC campaigns, and 34 percent were interested in using PPC. Nearly three-quarters (73 percent) of the interested prospects expect to implement PPC within the next year.

Greg Sterling, director of The Kelsey Group's Digital Directories: Interactive Local Media Continuous Advisory Service, commented on the inspiration for smaller businesses to utilize PPC.

"In our sample, which has a comparatively small number of actual PPC users, but a larger number that are 'interested in' it (combined total of these categories was 200), the attraction appears to be the perception that PPC will drive traffic to company Web sites and that it's a low-cost method of acquiring customers."

Paid search players have been working on ways to bring smaller businesses, and especially local businesses, into the ranks of their advertisers. Most recently, FindWhat.com teamed with Verizon SuperPages.com to introduce PPC pricing to the Internet yellow pages site. Google is beta testing features that let advertisers target their ads by region, and Overture is working on local search that involves targeting by radius.

Sterling found that SMBs are primarily interested in using PPC to drive traffic to Web sites, with two-thirds of respondents claiming traffic as the major reason to implement the program. More than half (56 percent) cite the low cost of PPC, while 52 percent believe PPC is a less expensive method for acquiring customers.

The majority of respondents — 43 percent — indicated they weren't interested in PPC at all, while 12 percent were unsure. Sterling cites the perception that PPC is a niche activity, as 60 percent of those who were not interested believed paid search was not appropriate for their businesses.

Despite current misperceptions, PPC captures 23 percent of advertising budgets, and the survey found evidence that 54 percent of PPC users expect to increase their paid search activities over the next year.

Currently, small businesses that are using PPC have little need for outside management resources as 48 percent are using only one general message for all ads, and updating it infrequently.

"Only 20 percent [of respondents] expressed an interest in or were using outside administrators. However, as PPC expands beyond this population of 'early adopters,' there will be a definite need, in our view, for outside help to create and manage campaigns. This is especially true of traditional small businesses that have historically relied on 'offline' forms of advertising such as newspaper classifieds and print yellow pages," Sterling noted.

Adapted from ClickZ.com.

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