8 Misconceptions about Google Ads for Small Business

Using Google Ads for a small business is a great way to reach new customers and drive sales. But it’s important to set the right expectations.

In this post, I address several misconceptions about Google Ads that are common among first-time advertisers.

1) You must spend thousands for Google Ads to “work” for a small business. (False)

This is generally not true.

Google Ads has no required minimum budget, and I often encourage small businesses to “test the waters” with a limited budget before ramping up their ad spend. (See my related post: Does Google Ads Work on a Small Budget?)

So, why do people assume you need to spend thousands a month to see results? There are a few reasons for this misconception:

Agency profitability: Most PPC agencies charge for Google Ads management based on a percentage of their client’s ad spend. As such, many agencies require a minimum ad spend to make it work for them. If the percentage is too low, it doesn’t make financial sense for the agency to take on the work.
Management costs for the business: On the flipside, it doesn’t make financial sense for a small business to pay an exorbitant management fee when its ad budget is tiny (unless the agency is somehow producing monstrous returns on that ad spend).
Campaign challenges: Some types of businesses do need to spend more because of higher click costs, limited search volume and/or more challenging conversion goals (like sales of big-ticket items). You can certainly still try a small budget, but it may require a longer waiting period to see results (which will also make it harder for Google’s algorithms to optimize your bidding for conversions). More on that below.

In short, every situation is unique.

There are indeed some scenarios in which a small business might need to set a sizable budget from the start. But there is no requirement, and I’ve seen many businesses run successful campaigns starting with a small budget.

Related reading: Which Google Ads campaign is best for a small business?

2) Your targeted keywords will match users’ search queries. (False)

Sadly, this is less true than ever.

There are two things that new advertisers need to know about keyword targeting in Google Ads:

By default, all keywords entered into a Google Ads campaign are set to “Broad Match.” This means your ads can be triggered by a nearly unlimited array of other search queries, which sometimes don’t match the intent of your keywords at all (unless you change the match type).
Even if you change the match type to “Phrase Match” or “Exact Match,” those controls are looser than ever. Your ads will still show for other searches that Google deems as closely related (even when Google is wildly wrong).

When I audit small business Google Ads accounts, I often find that all the keywords are entered as broad match. The reason: they didn’t know there was another option, or they were simply following Google’s recommendations.

I can’t stress this enough: using broad match keywords is one of the worst mistakes a small business can make when using Google Ads. There are some exceptions to this, but generally speaking: when your budget is limited, you should only be targeting the keywords that are most valuable and relevant to your business.

3) Google Ads is cheap for small companies. (False)

Yes, Google Ads is a very cost-efficient form of marketing compared to traditional media. But “cheap” is a relative term. Let’s start with the basics.

In Google Ads, you pay for clicks on your ads. The cost of those clicks can vary widely depending on the competitiveness of the keywords you’re targeting.

First-time advertisers are often shocked to discover that these clicks can get very expensive in some industries. For example, keywords for lawyers and home services like plumbing and remodeling can easily exceed $20-$40 per click.

That being said, not all clicks are that pricy. Across all industries, the avg. cost per click is $2.69 for Search campaigns, according to Wordstream. Some are cheaper, some are more expensive – it all depends on how much other advertisers are bidding on those same terms.

(Extreme example: For one law firm using smart bidding, I’ve seen a single click go for $255. Ouch.)

In contrast to that example, another one of my clients, in the pool and spa niche, has consistent CPCs of about 40 cents each. So again, the costs vary widely.

Always use the Keyword Planner tool in Google Ads to get a rough estimate for what you’ll pay for your keywords in your target area.

As a rule of thumb: the cost of Google Ads clicks will generally increase in tandem with the return/profit that an advertiser can earn from their ad spend. In other words, the more money that can be made from your ads, the more competitive those keywords will generally be (because other advertisers will be trying to capitalize on it too).

This brings us to the next misconception …

4) Simply using Google Ads is guaranteed to make money. (False)

To be clear, advertisers can and do earn substantial returns on their ad spend. But businesses should never assume their campaign will be wildly profitable without considering the many factors that will affect their potential success.

Those factors include, but are not limited to:

Demand & search volume for the targeted keywords
Cost per click
Conversion rates
Cost of the products/services being advertised
Profits earned from sales (and return on ad spend)

Consider, for example, that the average conversion rate of Google Ads campaigns is about 5% across all industries (most of my accounts do much better, but as always, these rates depend on many factors). That means, out of 100 clicks, about 5 will “convert” – meaning that someone calls your business, fills out a form, makes a purchase – or whatever you define as a valuable conversion action.

But remember, not all conversions will translate into a sale. So businesses need to set realistic expectations for how many clicks it will take to generate revenue, what it will cost and how much of a return those clicks can produce.

These projections should be calculated before starting an ad campaign, so you know what to expect.

5) Cost per click is the most important metric. (False)

To be clear, it does matter how much you pay per click. However, if you’re tracking conversions (and most businesses should be), then that’s not the metric you should be using to gauge your success.

Instead, the most useful metrics you should evaluate are:

Cost per conversion (Cost / Conv.)
Return on ad spend (Conv. Value / Cost)

Why are those more important?

Consider these two examples:

An avg. cost per click of $0.10, which converts at 1%. So for every $10 in clicks, a conversion is generated.
An avg. cost per click of $0.50, which converts at 10%. So for every $5 in clicks, a conversion is generated.

See the difference? Even though the 2nd CPC is 5 times higher, it’s generating conversions for half the ad spend. Or, put differently, you’d get 2 times more conversions for the same budget, even though the clicks are more expensive.

This becomes especially important to understand when using an automated bidding strategy like Maximize Conversions. This bid strategy will generally have higher CPCs, but also much better conversion rates (because it allows Google to bid more effectively on keywords that are more likely to convert based on numerous signals).

So the next time you’re evaluating fluctuations in your cost per click, be sure to also look at your avg. cost per conversion for a better understanding of what your results are costing you.

6) Google knows best. (False)

As a rule of thumb, you should not apply any of Google’s recommendations unless you know exactly what they do and how they will affect your account.

As account managers (across the entire PPC industry, not just here at MarlinSEM), we walk a fine line between promoting the value of Google Ads and protecting our clients’ budgets from Google’s greed interests.

From the moment you start building a campaign, Google will make all kinds of recommendations, such as using Broad Match keywords, turning on the Display Network, using AI to write your ads and so on. First-time advertisers will often apply these recommendations because they assume it will improve their performance. But in reality, many of these recommendations will hurt your campaign. Often, they simply give Google more control to spend more of your budget in ways that deliver poorer results.

Here’s something to remember: Google will never tell you to spend less on ads – even if doing so would mean better cost-efficiency and performance from your budget. Keep that in mind before you apply any of Google’s recommendations. Only you and your experienced account manager know what’s best for your campaigns.

7) Ad copy is everything. (False)

If your ads are performing well, there could be a hundred reasons why – but it’s likely not the ad copy.

As an experienced copywriter and former writer for Macy’s, I have strong opinions about ad copy in Google Ads.

On one hand, your ad copy is extremely important. It needs to be relevant to users’ searches (and your landing pages). Also, action-oriented copy will almost always convert better.
On the other hand, your ad copy doesn’t really matter. Ultimately, your ads don’t do the heavy lifting for generating conversions. Your website does.

Small-business advertisers sometimes think of their Google Ads like print ads, in which the words on a page help to tell a unique story about the business. But the reality is, most people don’t read the copy in full. They’re looking for the quickest and most relevant search result, and they’ll click your ad after a very brief glance.

I want to be very clear here: your ad copy should always be carefully constructed and precisely matched to the intent behind your targeted keywords. But this also means that the copy will usually need to be heavily keyword-driven and action-oriented, which tends to leave less room for creativity and gimmicks.

8) Google Ads will save your business. (False)

If you’re using Google Ads as a “last resort” to save a failing business, then it’s probably not for you.

Google Ads works best for established businesses with proven business models seeking to expand their customer base. Also, now more than ever, it can take time to optimize and improve results from a Google Ads campaign, especially when leveraging Google’s Smart Bidding algorithms. As such, businesses should be comfortable investing a reasonable budget over the course of a few months to get an accurate view of the costs, conversion rates and returns.

I’ve been managing Google Ads for small businesses for nearly two decades. And I absolutely love producing results for these clients and helping them scale their companies. But if an advertiser considers their ad campaign to be a “last-ditch effort,” then it’s probably doomed from the start. (Personally, I never want to be in the position where my services could be seen as contributing to ending the business, which is why I generally would politely decline to take on such accounts.)

Conclusion

Many misconceptions exist about using Google Ads for small businesses, so it’s important to set the right expectations. Always do your research before you get started. While businesses generally don’t need to spend thousands of dollars immediately to make it work, they do need to have a thorough understanding of how the platform works – or a seasoned account manager to guide them every step of the way. But don’t just take my word for it. For more common misconceptions, check out this popular Reddit post with input from other PPC managers.

Need some help?

Reach out! At MarlinSEM, we specialize in helping small businesses get better results from Google Ads. If you need help, request pricing for hands-on account management or email me directly at mike@marlinsem.com.