Who Is To Blame? Paid Search (PPC) For Small Business

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As much as 90% of small business owners cancel their paid search campaigns within 6 months!

Presumably this is driven by the same issue that drives most small business decisions — it’s not making money!

The case, originally interpreted from a report from the Borrell Associates by Search Engine Land revolves around three different parties that may be guilty  —

• the third party Pay Per Click (PPC) management firms
• the ad networks (Google and the others)
• the small business owner.

Guilty?  The 3rd Party PPC Management Firm

Since the third party needs to turn a profit on the sale (or they will cease to be a third party) a great percentage of the PPC “spend” from the small business will go to what is typically called a “management fee.”

These management fees can be as high as 50% of the ad spend which significantly erodes already thin margins on PPC driven sales.

Another problem is the methods by which third party PPC management services use to ensure that they will turn a profit.  Most PPC ad managers are either automated completely or managed by a developer that has far too many accounts to truly optimize the account for maximum ROI.

It is very difficult for a swamped account manager to ensure that each customer is receiving attention — in my experience – the squeaky wheel gets the grease.

Automated PPC managers are not up to the task either — most PPC managers will tell you that it requires a human touch to maximize the ROI on a pay per click campaign.

Guilty? Google and the Other Ad Networks

Google and the other ad networks must do something to stem the tide of cancellations, after all this is their “bread and butter.”   Education is the answer.

If small business owners could be given the technical knowledge necessary to properly optimize a PPC campaign, many more would see positive ROI from these campaigns.  When business owners see positive ROI, they don’t cancel — they increase spending.

Google has done a good job with their online training videos and certifications but it appears that they will need to do better if they plan to remain a dominant company into the next decade.

Guilty? The Small Business Owner

In my experience, there are times when the client must take part or all of the blame for a poorly performing online marketing campaign.  This does not just apply to PPC but to all forms of marketing.

In some cases, the client can damage the ROI of an otherwise properly managed paid search campaign.  I believe the old saying is “they know just enough to be dangerous.”

However, in most cases the client is innocent.  Generally, the client is too busy to worry about this end of the business — that is why they hired a professional!

My Verdict:

If we had to convict only one party for the problems with Paid Search for small businesses — it would have to be the 3rd party management firms.

Appropriate expectation setting at the time of sale is the most controllable source of cancellations — it is the responsibility of the 3rd party PPC management firm to set expectations.    Businesses that will continue to grow must adjust the commission for sales representatives to include not only acquisitions/sales but also the retention of the clients.

Secondly, 3rd party PPC firms will have to learn to live with lower “management fees” and make their money from other add-on features to their PPC products.  The cancellation rates are far too high to expect to continue doing business this way.

Small business owners are extremely busy — not stupid.

They know positive return on investment when they see it — successful PPC management firms will learn to produce it.