With Limited Ad Dollars, What’s The Answer

Each small ecommerce business tries to squeeze every drop of value out of his limited advertising dollars. Online advertising options have grown very congested in the last few years, saturating the marketplace and making it more difficult for a business to get noticed — unless it is doling out some serious cash.

New search engines are popping up regularly and each one is trying to capture a share of the $13 billion online advertisers are expected to spend in 2006. Ecommerce businesses often feel pressure to initiate pay-per-click campaigns (“Everybody’s doing it.”) and can find themselves spending a lot of money and getting few sales. So, with limited advertising resources, what’s the answer for small ecommerce businesses?

The pay-per-click approach may not be the advertising answer for your business. You may be better off investing money in optimizing your search engine to raise your location on organic searches. You may also be better off blogging, creating opt-in newsletters, conducting email campaigns or writing stories for print publications, online news sites and trade publications within your market expertise — all of which cost very little.

Pay-per-click advertising is likely a logical component for many online retail and service businesses. However, because the search engines are so crowded these days, pay-per-click advertising should probably be only a portion of your media mix.

<em>Practical Ecommerce</em> recently conducted a pay-per-click test with four search engines — Google, Yahoo!, Ask and MSN. On behalf of two online businesses, we purchased $50 of ads for each of them on each search engine. The ads ran for a 24-hour period. Granted, spending $200 every day across four sites isn’t something most ecommerce owners can do as most don’t have a $73,000 annual advertising budget. However, our test allowed us to sample the results from each search engine and create an analysis that we believe will be helpful to ecommerce owners who are considering a pay-per-click campaign as part of their promotion mix. If you’re wondering if there is a difference between the four major search engines, our project may help you answer that question.