How Google Ads Helps Put SME’s Out Of Business

Photo by Christian Wiediger on Unsplash

After the events of 2001, the Dot Com Bubble crash had seen tech companies as a here today gone tomorrow kind of business. Out of the ashes, a few companies (like Amazon & Google) managed to survive while it also created fertile ground for new tech companies to sprout their seeds.

Fast forward almost 20 years later, and technology companies have become some of the dominant players in the world economy today, and there is no better example of that than Google.

The search engine has become the gateway to the internet with a monopoly market share. Google’s rapid growth has turned them into the gatekeepers of the internet.

There infinite power and results in millions of small businesses from all around the world, relying on the search engines ability to send them relevant traffic for them to keep the doors open.

This over-reliance on Google for leads and sales is what fills its coffers each day in what has now become a race to the bottom for many SMEs (small and medium-sized enterprises).

We only have to look as far as this months core algorithm update to see how Google can shut a business down within the blink of an eye.

Google Ads Aren’t a Silver Bullet

During my time in digital marketing, I’ve seen many companies build successful sales funnels using Google Ads and continue to do so to this day.

In contrast, however, I’ve also seen the other side of the coin.

Where businesses solely relied upon Google Ads only to continue to eat into margins, gain fewer leads over time and eventually ended in them closing their doors.

So why do some businesses find success with paid search advertising while others can’t?

Firstly there are several market-related factors at play, which can vary from industry to industry. While there a few consistent behavioural practices that almost guarantee a businesses road to failure, which is what I would like to touch on.

The hot-hand fallacy

The “hot hand” (also known as the “hot hand phenomenon” or “hot hand fallacy”) is the purported phenomenon that a person who experiences a successful outcome has a greater chance of success in further attempts.

Google Ads is still very much unrivalled as a marketing channel when it comes to seeing results quickly, and businesses get hooked on this form of traffic and the promise of instant results.

This mindset is where the first mistake comes into play, thinking that paid search traffic will always continue to produce the same results for the same spend for the foreseeable future.

Clicks grow more expensive over time, especially if your accounts are not optimised regularly. This results in wasted marketing spend, high price for click-through rates and ultimately less margin per sale.

A lack of understanding and education

Google Ads is their flagship product and how the tech giant makes most of its revenue, so it’s in their interest to ensure that the auction for clicks continues to become more competitive.

As more businesses get desperate, they tend to throw money at the problem, money that drives cost per leads through the roof and gradually makes the competition for leads unsustainable.

Those who cannot compete fall out of the ecosystem, while those that survive are now paying a more for their leads.

No attempt to wane off of Google Ads

If Google Ads is your only source of leads or sales, you leave yourself open to a single point of failure and also say no to the potential other channels may be able to offer you such as:

  • SEO
  • Content marketing
  • Affiliate marketing
  • Display advertising
  • Remarketing
  • Social media marketing
  • Email Marketing
  • Mobile & App Marketing
  • CRM

While these channels may not be your core function or strength, its essential to look at other avenues of attracting traffic and leads. By leveraging other channels, you help broaden your funnel and create a more significant churn of users, which can lead to lower acquisition costs.

How should SME’s approach Google Ads?

Google ads are a powerful tool, but placing all your eggs in one basket has never been a smart approach to business or investing.

Invest in SEO

If Google Ads works for your business, then there is no reason why SEO cannot work for you too. Ensuring you’re business ranks for relevant keywords you don’t have to pay for each time a user clicks on your links.

SEO takes a considerable amount of time and expertise to get right especially if you’re in a competitive field

Build direct lines of communication

Instead of focusing only on sales as your marketing goal, SME’s need to look at adding secondary purposes such as building up a contact list and marketing directly to potential customers.

  • Sign up for your newsletter
  • Download your app
  • Subscribe to web push notifications
  • Subscribe to your social media channels
  • Sign up for SMS alerts

As you gradually convert your traffic into a highly targeted customer database, you can start communicating directly with your audience and bypass Google.

Being able to speak directly to your potential customers provides you with the freedom to:

  • Customise your messaging
  • Customise your offerings
  • Take advantage of tactical opportunities
  • Reduce the cost of reaching customers

SME’s can still succeed

If SME’s want to succeed in this competitive internet environment, they will need to look at how to leverage Google Ads effectively to achieve different business goals and not just on converting users.

Those who play the long game and remain within a sustainable cost per lead model instead of chasing growth will end up picking up more customers over time as others burn through cash reserves and can no longer compete.

When we take into account the rate which new businesses fail each year, it’s easy to see why those who operate within their means and provide excellent service will eventually see a natural consolidation of clients over time.

About the author

Ché Köhler is the co-founder of nichemarket, a South African Business Directory and digital marketing agency. He is an avid blogger who specialises in writing about marketing tech and cryptocurrency.

Source: SME South Africa




Co-founder of nichemarket, a South African Business Directory and digital marketing agency —

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Ché Köhler

Ché Köhler

Co-founder of nichemarket, a South African Business Directory and digital marketing agency —

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