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How Small Businesses Can Compete Against Big Brands in SEM

Competing against a bigger brand in search engine marketing (SEM) can be tough – they get all the name recognition and the top ad placements, and in many cases, users may have already established purchasing accounts through them (looking at you, Amazon). The good news is, there are actions you can take to compete with the big guys and still turn a profit.

Break Down Bidding with Localization

Even if your business is currently targeted to the entire country (or world), there are likely going to be specific geos where you may do better than others.  Additionally, many bigger brands are likely to use one single bid for an entire targeted area, and you can use this to your advantage.

Using the dimensions tab in AdWords, you can easily pull a geo report at varying levels of granularity. For this example, we’ll look at major metros:

search engine marketing [1]

Can you spot the outlier?

New York is coming in at almost double the cost per action (CPA) of the top two metros (Los Angeles and San Francisco). In this case, you may want to either exclude New York entirely or move it to its own campaign in order to better target bids to an area with more competition (cost per click (CPCs) are nearly double that of San Francisco CPCs).

The prime advantage offered here is, while it’s great for you take this approach at such a granular level, many larger brands advertising across a huge number of verticals may not see a big enough impact on localization to warrant adding that layer of complexity.

What this means is you can pick and choose priority geos where it makes sense to bid higher and actually beat out the bigger brands.

Stress Your Competitive Edge

You may see a bigger brand’s ad in the same auction as yours and think it is the result of significant testing. That might be true – but that testing was likely done on a very large scale. This is to say, their testing may have been an ad template applied to an entire vertical. What works overall for a vertical may not necessarily be what works for a single brand – e.g. iPads and Kindle Fires may both be tablets, but they are generally targeted to two very different audiences.

In the case of lower-cost products, it may make sense to emphasize low prices or sales. Whereas with more costly products/brands, a better selling point would be a lifetime guarantee or generous return policy.

It is also critical when considering ad copy to acknowledge where your company may fall short of a bigger brand. (Ship time and price are common areas that you may not be able to compete on.) However, if you are a specialty retailer, such as an online hockey store, then chances are your selection and expertise will greatly outweigh that of a major brand.

In the ad copy, you can emphasize the newest equipment that you just got in stock courtesy of your connections to industry reps, or mention that you have live chat standing by to help people with their selections. This also helps to set user expectations before they even click – if you stay away from mentioning prices or sales, they are less likely to bounce from the page in the event they don’t see rock-bottom prices.

This ultimately leads to an increase in conversion rates, which allows you to bid your ad up to a higher position.

Manage Cost Per Click Effectively

With many smaller accounts that I take over, one thing I notice almost every time is that budgets and CPCs are not managed to an optimal level. Often, I will see campaigns that hit their budget cap consistently every day.

Budget caps are a great safety net; they prevent overspend and allow you to test CPC limits without breaking the bank. However, it is far more optimal to manage budget and daily spend via adjusting your bids.

To start with diagnosing a budget-capped campaign, I always first check to see what time of day it is going offline (note: this requires using accelerated delivery in the campaign settings, otherwise you will just have to guess). Go into your budget-capped campaign and then get over to the dimensions tab. Under time, you can choose hour of day:

search engine marketing [2]

If you are budget-constrained, you should see fewer than 24 rows of data here. It may stop as early as 4PM. When operating on a fixed budget, this is sub-optimal as you are limiting your potential number of clicks in a day.

For example, say you have $20 to spend on a vertical per day. At position 2, you can get 20 clicks at $1 each and cap out at 6PM.  At position 2.5, however, you might get 25 clicks at $.75 and come in just under budget for the day, having run ads all 24 hours of the day.

There is a delicate balance, however, between making your bids too low and losing volume versus adjusting to the right level and maximizing available spend.

Take Advantage of Star Ratings

One thing you will notice with almost all big brands is that their seller ratings are featured alongside their ads:

search engine marketing [3]

Did you know these are pulled from a variety of review sites by Google intermittently, and then automatically added to your domain’s ads as long as the domain being reviewed matches up?  These are known as Seller Rating Extensions, and I have noted they’re frequently missed out on by small businesses, for whom I would argue they matter most.  (Here’s the official AdWords support article [4].)

In the case of small businesses, reviews can help build confidence in a site/etailer that a customer may have otherwise not been familiar with. Users can be paranoid with regards to whom they provide credit card info to, and as an small business, having those seller ratings in place can help with customer’s trust levels.

To get these ratings, I have advised clients to pick 1-2 review sites they already have a profile on and drive users to those sites for a short period of time after purchasing. The cutoff is relatively small. You only need 30 total reviews with an average rating of 3.5 stars or higher.

Tying it all Together

At the end of the day, there is no silver bullet to competing with the big names on AdWords. Every vertical is going to have a different experience and it takes hard work and experimentation to become, and remain, competitive.

Through some more advanced segmentation, bid management and ad copy selection, you should eventually be able to gain a foothold in your respective niche, and hopefully that will be just the beginning.