Let’s pretend you’ve been operating a local family-owned heating and air conditioning business successfully for many years. Your business, like most, fluctuates from good to average depending on the time of year and you’ve been using traditional advertising methods, newspapers, phone book, and maybe even tried a radio or local cable TV ad.

And then one day you notice that your business has been consistently dropping when you compare year-to-year growth.

You ask some friends, family and customers and they say:

“Maybe you should try that new online advertising thing called Google?”

You do some research and decide to open a Google Adwords account and create your first online marketing campaign to advertise your services.

After the first month you look at the results only to be disappointed. There’s no increase in business, and no new leads. You quit, convinced that the whole internet advertising thing is just a gimmick. You read these success stories of other businesses implementing AdWords successfully within their company and you expect they’re getting an instant return on their investment.

Let’s look at four ways small business owners struggle with Google Adwords and how to avoid these challenges in internet advertising:

1. You’re being too conservative

You start with a very small budget because this is new to you.

Testing the waters with a small budget is a common sense approach, however the problem with this is that you’re not taking into account important data such as the Average Cost-Per-Click of your keywords. If you’re not looking at this you’re more than likely draining your daily budget too quickly and not generating enough traffic to make your campaign work effectively.

Let’s say you’ve set a $20 daily budget, and then you notice that to be listed in the top 3 results it requires a minimum of $2.50 per click.

By using this simple formula you can see how many clicks you’ll get with this budget:

$20 ÷ $2.50 = 8 Clicks

Your budget is set too low. Logic easily tells us that even if 1 out of your 8 ads are clicked and turn into a sale, that would require a conversion rate of more than 12.50%, which although not impossible, happens very rarely in the online world.

You need a healthy online advertising budget.

A logical way to define a healthy budget for your Adwords campaign is to study the average Cost-Per-Click (CPC) for your top keywords, and then consider how many clicks are required to generate enough leads to become profitable.

So in our scenario above, if it takes you 15 clicks to make get one lead and the average CPC is $2.50, you might want to consider increasing your daily budget to $37.50.

15 Clicks x Average CPC $2.50 = $37.50

There is a vast amount of free online tools available to you, such as the Google Keyword Planner. We definitely recommend using these tools to estimate the average CPC and traffic you’ll generate when setting your online campaigns with Google Adwords. When a budget is too low it’s often one of the main problems small businesses run into when trying internet marketing and advertising.

2. Your Business Has A High Level of Competition

Within Google Adwords, it’s important to look at the level of your competition which will help structure the best approach while setting up your campaign.

Assume for just a minute that your online campaign is competing with a couple of large franchises selling the same service.

More than likely these large competitors have a daily budget much higher than yours and they likely can afford higher bids on the same keywords you’re bidding on. This puts you in a tough position. This is a common problem with small to mid-sized businesses when using Adwords and unless you are able to afford a significant increase to your budget you’re going to be like a small fish in a big pond.

In these situations it’s time to get creative! Out-smart the large competition by studying and finding long-tail keywords with less competition and higher return.

3. An Outdated and Poorly Designed Website

“My friends brother knew some HTML and built us this company website in 2001.”

Yes, your website is old and outdated! It’s 2014 and a lot has changed in web design. Are you still using that Motorola flip-phone too?

Going back to our Adwords campaign, if you have a good setup with ideal ad positioning, average CPC and a strong Click-Thru-Rate (CTR) but zero conversions, what do you think is the problem?

In the majority of the cases it’s the quality of the website the visitor clicks to from the ad. If a potential customer can’t easily navigate, gets confused, or even worst can’t figure out how to contact you, that easily explains why there are no conversions.

When your keywords and ads are well targeted and you notice your campaign is driving steady web traffic, then you need to address why your website isn’t converting.

Common issues include: customers can’t use your contact form, don’t see your telephone number or the links on your website are broken. You need to strongly consider redesigning your website. This will improve the experience your have when they land on your web pages. By improving the overall look and feel of your website you’ll also help to increase the quality score of your keywords and the relevancy of your ads. In return this will help lower your average Cost-Per-Click too.

4. Research!

When you’re a small business you’re limited, and it’s sometimes not as easy to accomplish good research. However, with online marketing you really need to take the time to perform in-depth competitive research so you can identify your industry competition.

Additionally, by performing keyword research to pinpoint the right keywords it will lower your overall cost-per-click on those terms. In the long run you’ll be more competitive than then the large businesses with unlimited budgets. Always remember you’re much more agile than they are!

There are many things to consider when setting up your Google Adwords campaign. If you can manage to spend some time and effort setting up a good online marketing strategy and manage to avoid some of the common problems found in this post you should be able to operate an effective internet marketing campaign for your small business.

As always, Raincross Marketing is happy to help your business with online marketing and advertising needs.