Finding new customers can be a difficult thing to do for new service businesses. Even well-established businesses often deal with slow seasons and the need to grow their customer base to keep work flowing. If you search Google, Yahoo, or Bing for how to find new customers, your search results will inevitably suggest you try advertising online.
There's a ton of info to be found on running paid search ads. However, to be competitive and get a good return on those ads, you have to spend a lot time learning the ins and outs of running ads. Of course, if you can spend the time mastering search ads, you're unlike most small service business owners, and you might just be in the wrong business. That time, for most service professionals, is better put into getting jobs done and finding new customers in person.
Ads aren't exactly the kind of thing you can just put on autopilot and forget about it, waiting for a flood of customers to call you up. Search ads in particular aren't easy.
We'd like to share 3 reasons small service businesses should be wary of search ads in 2017.
1. Search ads are too complicated for most people
Google is a software company, and engineers make the big decisions at Google. The trouble with engineers making key user-focused decisions when building software is you often wind up with applications and software that only engineers can understand. Such software is often far less friendly and intuitive than other applications designed and built by teams who care about making sure their software is as simple as humanly possible. Of course, Google definitely tries, and often tries harder at keeping things easy when they know a tool is being used by the masses (like how easy Google search has always been). On the other hand, when it comes to dealing with their more technical products like AdWords & Analytics, the interfaces are an absolute mess and a complete nightmare to deal with. If you're just trying to run a few ads for your service business in your local area, you're not going to find AdWords making things easy for you.
AdWords does have a simplified version now, called AdWords Express, but it removes so much of the useful functionality for the goal of simplicity, that it makes it much more difficult to get any value out of it. There's a balance—and finding such balance isn't an easy task. However, at the end of the day, when you're coming home from running your window washing, landscaping, or any other service business, you probably don't have the time to spend trying to figure out complicated software—especially when you're not even guaranteed it will pay off.
2. There is too much competition with larger brands
One of the biggest problems with search ads today is the competition. Or, to be a bit more specific, the trouble is that competition among advertisers isn't isolated in any meaningful way. National brands, regional brands, and local small businesses are all competing for the same ad placements (that's the opportunity to actually show their ad to a person performing a search).
So, what does that mean for the smaller guys like you, when you're trying to get your ads shown to someone in your area searching for a handyman, a cleaner, a plumber, or some other kind of service?
When search ads force you to compete with large regional and national brands for the same ad space, you're forced to pay more than you want or can afford, without having the marketing budget the bigger brands have.
We did a Google search for plumber here in Chattanooga, TN. Two of the top-three paid ads were national brands, not local plumbers. To make matters worse, one of those ads was for the BBB. We're wanting to find plumbers, and we're being shown advertising for non-local companies, and a questionable business-rating company that doesn't even provide what we're searching for. Why are they even there? Because they can afford to pay. If you're a small service outfit, you're just not going to be able to compete with that—which means your ads are rarely going to be shown to the people searching for your service that ought to see your ads.
3. Cost vs Benefit
Search ads are traditionally pay-per-click—meaning you pay a specific amount every time a person clicks on your ad when they see it in search results. This can be a pain, though, since a click doesn't mean a customer did anything other than look at your website. Depending on the search terms you're paying for, you will find your ads have different conversion rates—the rate at which a click turns into a call or email, and ultimately a new customer with a job to do—for different terms. Some terms will see higher conversions rates, while others will be lower and possibly worthless. The point being, every click on your ad is not going to generate new work.
Search ad prices—the per-click cost, called cost-per-click or CPC—can range anywhere from 50 cents to $50. If you're pretty good at finding keywords—these are the combination of words you set as the triggers to show your ad—that aren't already being targeted by big competitors, you might be on the lower end of the per-click price range. Chances are, however, you're going to want the same keywords that are wanted by your larger regional and national competitors, and you'll find you're paying at least a few dollars for every click. This means you'll need to set and closely watch your budget, or your advertising bill will get out of hand rather quickly.
SmartInsights gathers info on conversion rates for different industries, and they've recently released some updated numbers on search ad performance:
- Average conversion rate across all industries is just 2.7%
- Conversion rates for consumer services is higher at 5%
- Finance & insurance have the highest conversion rates at around 7%
What does this mean to small service business owners like you?
In simplest terms using those averages, if you paid $100 a month for search ads, at a cost-per-click of $2.00, you should expect to get 1 to 2 calls, emails, or job opportunities at best.
These are just averages, after all, and there's always potential to do worse than average. Of course, you could also beat the average and get more calls, especially if you don't have much local competition. But we're just focusing on setting reasonable expectations for how your search ads might perform.
Is that good value? It might be. It just depends on where your business is at. The value might be there, but the real problem is with getting it all set up, learning how to use it, and staying on top of it.
So should you use search ads?
Probably not. If you do, we think you'd be better off getting some outside help with figuring it out. Google AdWords and other search-based advertising options aren't for the faint of heart, and it's probably best to leave it to the professionals. As a WorkWeek customer, we do offer consulting and Google AdWords campaigns, but only if it makes sense in your area, and with your service industry.
There are, however, a few alternatives for generating work with online marketing. If you have a customer list already, sending emails to those people is a great way to drum up work. You can offer deals on new services, or offer them discounts or referral bonuses for sending new customers your way. WorkWeek includes easy-to-use email marketing tools for you to reach out to customers, and we'll even help you plan, write, and evaluate those email campaigns and offers.
There's also Facebook ads. A lot of small businesses are seeing good results from localized Facebook advertising--where you can specifically target your city and certain kinds of people with special ads, discounts, and offers. Sadly, Facebook can be just as complicated, if not more so, than AdWords, although the return seems to be higher. We know Facebook ads can be a great boost to growing awareness of your company in your local area, and we offer Facebook ad campaigns when you're a WorkWeek member.