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Google Ads is no longer suitable for small businesses. Here’s why.

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Google Ads is no longer suitable for small businesses.

Increasingly, my agency and many others are seeing that Google Ads is becoming less effective for new customers who spend less than $ 3,000 a month on media.

Just a year ago, companies with new small accounts (less than $ 3,000 / month) had an average return of advertising spend (ROAS) of 3: 1 in all industries after the first month of advertising.

The average ROAS for small accounts is 1.5 to 1 – or barely break-even in the last six months.

Of course, this is only an agency’s experience.

So I reached out to other agency owners I know and made some inquiries on Facebook and Twitter to ask what others are seeing.

It seems that while some are still claiming reasonable returns, many others are seeing the same thing as me.

Google Ads doesn’t seem to be working for businesses that are spending less than $ 3,000 a month.

Why isn’t Google Ads working for small businesses?

Over the past few years, Google has slowly but surely changed the game.

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Some of these changes were made in the name of privacy.

Some came under the guise of making the platform easier to manage for less experienced marketers.

But rest assured, Google made the changes to make more money.

It would be nice to think that I’m just cynical, but it’s hard to argue with my assumptions based on the company’s earnings.

We no longer live in a world of pure auctions.

It’s difficult to determine the actual price of a click – or even the real factors that led to the pricing of that click.

Google’s energetic attempts to put its customers in automated bidding structures have taken the advertisers out of control.

If the advertiser has no control, the algorithm determines the cost-per-click.

This forces local advertisers to compete with national big-budget brands that are automatically inserted into results where they may not even be relevant – just because Google’s ad algorithm assumes that a click could result from placement.

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Does Google think it’s smarter than humans?

For those not involved in daily paid search – Google made it harder to optimize your paid search spend.

Google is increasingly requiring advertisers to rely on Google to optimize their accounts.

Gone are the days when advertisers were presented with the data and allowed them to make their own decisions.

In typical Google fashion, Ads has become robotic marketing for consumers, looking for patterns amidst many data points that they believe make up an audience’s psyche.

It’s ironic that Google is encouraging marketers to turn to humans rather than robots when it comes to SEO.

In paid search, Google believes its robots appeal to people better than real people.

Google says “feed me”

In order to make decisions, the Google robot needs food.

In other words, the Google Ads algorithm cannot make decisions unless it draws from data.

So in order for Google to serve ads to the right people at the right time, the sluggish robot needs to see data on where the right people are at the right time.

Once Google understands this, the results can be spectacular.

But unfortunately, this point kicks in at some point recently after an advertiser has spent more than $ 3,000 a month.

Over time, in theory, a small advertiser should see the benefits of the Google Ads learning algorithm.

But reality is changing user behavior, changing budgets, and changes at Google itself make it so, so little advertisers are more likely to give up before they see the results the big guys see every month.

Most small businesses don’t have six months to a year to spend $ 3,000 a month to get results.

Even small accounts that “take a break” seem to have to start this process all over again.

It’s almost like the advertising algorithm suffers sudden and complete amnesia as soon as an advertiser stops feeding Google.

Am I spending enough to be effective?

Understanding how much you need to spend on Google Ads is always difficult.

It’s harder to know if you can afford to pay enough to get results.

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I asked my friend Navah Hopkins, VP of Strategic Marketing at AdZooma and one of the world’s most recognized and distinguished paid search experts, for her advice.

Here’s what she had to say:

“Google Ads can be a powerful tool or a frustrating waste of money. It all depends on how much you can invest in generating leads and understanding what your campaign goal is.

Typically, you want to make sure that you have enough budget by the numbers to get enough clicks per day to get at least one lead / customer. Depending on the industry / market, this can mean 10 or 100.

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

If you have a 10% conversion rate:

  • Average US 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:

  • Average US 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 is critical to include customer value, location, and industry in the discussion. While it’s not impossible to get value on a smaller budget, any budget under $ 5,000 will find it difficult to power the algorithm (which will ultimately cost you more because you will be more in the learning phase) and not achieve the goals can be responsible for. “

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Navah is nicer than me.

We all know that it takes money to make money.

But most small businesses can’t afford to spend $ 3,000-5,000 a month just to see if a marketing channel works for them.

And that’s exactly what Google is asking of small businesses.

This despite the fact that the search engine has spent millions of dollars in recent years encouraging small businesses to use their platform.

Numerous small businesses come to me with their $ 100 free Google Ads coupons they received from a marketing campaign and ask what results they will get with their newfound windfall.

The answer is practically nothing.

Now it seems that these promotional coupons are worth even less.

Google has created the impression that if they only use the Google Ads platform, small businesses will be successful.

Millions of small businesses hear the news and run to Google to part with their hard-earned cash with the zeal of a gold prospector who went to San Francisco in 1849 – Google is selling the shovels.

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But once the pay-per-click drug makes these small businesses dependent on the results, they up the ante, take away the controls, and say, pay up or quit.

But preached enough.

If you can afford to spend the money, Google Ads is awesome.

If you can’t spend the money, you’d better take another ride.

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