High-Performing Digital Advertising Helps Small Businesses Grow?

Small businesses are priced out of most traditional advertising options. I mean, really, this year an ad for the Super Bowl cost $7 million, and that doesn’t include the cost of hiring celebrities (many ads featured more than one high-priced celeb), location, direction, and editing. These production costs ad millions of dollars to the cost of airing the commercial during the Super Bowl. I don’t know any small business with that big an advertising budget let alone one willing to blow it all on a single ad. And, if you have a small local business, most of that spending is wasted by reaching viewers who aren’t even in your target market, which is likely within 5-10 miles of your physical location. But all is not lost. Digital advertising is both affordable and effective for businesses of all types, but is especially valuable for small businesses with a limited budget and local target market.

Optimizing digital advertising to promote business growth, especially for small businesses, involves several strategic steps to ensure that every dollar spent on digital marketing contributes effectively to achieving your business goals. Here are some key strategies small businesses can use to optimize their digital advertising and reduce wasted ad spend:digital advertising

Digital advertising for small businesses

There’s really nothing unique about planning your digital advertising strategy when you’re a small business. The two main differences are that: 1) your budget is very tight, so you can’t afford to waste a dime of that budget, and 2) you likely have a very defined target market in terms of demographics and geography, so you have the ability to select a hyper-targeted audience for your advertising to reduce waste.

Let’s take a look at these two aspects of advertising your small business.

Tight marketing budgets

I don’t have to tell you that small businesses’ marketing budgets aren’t very robust. In fact, for many small businesses, a marketing budget is an afterthought, something they do when they can afford to. Of course, that’s the absolute wrong strategy as marketing brings in revenue and without marketing, your business struggles to stay afloat, let alone grow. The first step, then, is to develop a reasonable marketing budget before we even think about how to allocate that budget. Larger businesses don’t take marketing for granted and allocate sufficient funds to ensure the sustenance and growth of their brand, for the most part. In fact, marketing budgets for large businesses often exceed the recommendations I’ll share below.

How much should you allocate to your marketing budget? Well, there are different ways that businesses figure out how much to spend on advertising and marketing. If you want to learn more about these ways, I’ve written a blog post that should allow you to decide which methods you can use to allocate your marketing budget is best for you and how to implement that tool for apportioning your budget to marketing. The simplest of methods is the percentage of revenue method whereby you set aside X% of your expected revenue as a means to generate that revenue. Below is a graphic to help you decide what that percentage should be based on your industry.

marketing budget by industry
Image courtesy of Zippia

There’s also an expert opinion that new businesses must spend a higher percentage of their revenue on advertising than established firms. In fact, Wordstream recommends spending nearly twice as much on advertising as a percent of revenue if you’re a new business versus an established one. This likely comes as a shock to most small business whose owners see marketing budgets as an afterthought versus a critical element for the success of their business.

Well-defined target market

A benefit for small businesses is that they often have a well-defined target market. Because the owners likely live in the community where their business is located and spend time in their operations dealing with customers and prospects, they’re in a good position to develop a distinct idea of who they are. Obviously, their target market includes folks within a defined geographic territory unless they run an online business. If you’re in doubt as to where your customers and prospects come from, run a short survey in your store by asking shoppers for their zip code, then use this information to decide the sweet spot for your business. Don’t be surprised if it doesn’t exactly match expectations. For instance, I was planning a campaign for a client and discovered that most current customers came from nearby, but there was a pocket of customers from another region, as well.

By talking with shoppers online, on social media, or in your store, you can get a feel for what’s most important for them, what problems they face, and other interests they share. You can use these insights to develop a well-defined target audience for your digital advertising. Your intimate relationship with this market gives you a distinct advantage over larger businesses with less well-defined audiences that must waste money when attempting to reach prospective buyers.

Be open to the idea that your audience isn’t a monolith but comprised of several distinct groups. Rather than homogenize your campaigns to try and capture the interest of these groups, you should consider different approaches for different groups. This translates to different campaigns with different landing pages based on group membership as well as different audiences for your campaigns.

Building a high-performing digital advertising campaign

Building a high-performing digital advertising campaign relies on doing your research, planning for a successful outcome based on this research, and flawless implementation that ensures your plans translate into the right actions. Of course, following up to analyze your campaigns and using insights from that analysis to make adjustments to future campaigns will yield higher returns on your advertising, called ROAS for return on advertising spend, over time.

Here are the steps you must follow:

Define clear objectives

Before launching any advertising campaign, it’s crucial to have clear, measurable objectives. Consider both terminal goals, like increased sales, as well as intermediate goals that translate into increased sales over time, such as increasing brand awareness, improving engagement, and generating leads. Don’t discount the importance of intermediate goals or give them secondary importance. Sales result from a sustained effort to move members of your target market closer to conversion over time. Failure to prioritize intermediate goals means your pipeline is always empty and you have fewer prospects moving toward conversion. The graphic below shows how this conversion process moves through several stages prior to making a sale.

conversion process Your goals guide your advertising strategy and help determine the metrics used to measure its success.

Choose the right platforms

Not all advertising platforms are suitable for every business. Depending on your target market and objectives, some platforms are better than others. For instance, if your target market is younger, especially teens and young adults, TikTok and Instagram make sense as platforms for your advertising. If you operate a B2B company, LinkedIn is your best bet. Facebook is a good bet if you have a more diverse target market, or you want to sell your products directly from the platform. If you’re interested in reaching prospective buyers closer to making a purchase decision, search ads like Google Ads are the natural choice as the CTR (click-through rate) for these ads is much higher than for social media ads, where Twitter and Facebook lead the pack (search, in general, offers reach to users closer to making a buying decision).

Utilize targeting options

Most online advertising platforms offer advanced targeting options, including demographic, geographic, and behavior-based targeting. Successful advertising on social media platforms relies heavily on choosing the right audience using these targeting options, while search ads are more influenced by choosing the right keywords, so you show up when users search for content related to your business.

When done right, this targeting allows you to reach your best prospects and waste less of your budget on reaching folks who have no interest in your products. With most platforms, you only pay per click (PPC), which further reduces wasted budget as you only pay when someone is interested in your brand. Leveraging these options can help you reach specific segments of your target audience more effectively, reducing the chances of your ad spend going to waste.

In addition, Meta (Facebook and Instagram) offers specialized targeting to help improve your ad performance, such as look-alike audiences and other options. You can also use retargeting, which selectively shows ads to users who have visited your website in the past.

A/B testing

A/B testing, which can mean comparing the performance across any number of options, is a boon to any business using digital advertising. In traditional advertising, you just couldn’t figure out the optimal combination of messaging, images, and CTA (call to action) that performed best in a given situation (except for direct mail) and the timing was such that by the time you figured out what was working, it was too late to fix anything. Not so with digital advertising. I can selectively create any number of ads, show them to some subsegment of my audience, determine which works best, and then push out my best-performing ad. Google Ads even performs multivariate ad testing by combining a group of headlines, CTA, links, and descriptions to quickly determine the best combination for your ad. This saves you money and optimizes your ROAS.

multivariate ad testing for digital advertising
Image courtesy of VWO

In the image above, multivariate testing is faster and more effective than A/B testing. Regularly testing different elements of your ads, those with the greatest impact on performance, like headlines, images, and call-to-actions, can help you understand what resonates best with your audience. Use this data to optimize your ads for better performance.

Optimize for conversion

Ensure your landing pages are optimized for conversion. This means having a clear value proposition, a compelling call-to-action (CTA), and a seamless user experience. High-performing landing pages can significantly improve the ROI of your advertising efforts.

Be sure you’re sending traffic to the right landing page based on the ad itself. If your ad promotes a sale on jeans, the landing page should feature jeans on sale, not your general shopping page or a page showing all your jeans. If your ad targets younger shoppers, the landing page should feature young models and styles likely to appeal to your younger demographic. BTW, Google Ads uses a quality score that includes the relationship between your landing page and your ad text. A higher quality score means you pay LESS for each click.

Don’t worry about having too many landing pages as experts show that having between 10 and 15 landing pages results in 55% higher conversion.

Track and analyze performance

Use analytics tools like Google Analytics to track the performance of your ads. And don’t stop with assessing CTR. Follow clicks all the way through to conversion to determine the ROAS of your campaigns.  GA4, Google’s most recent analytics tool, integrates with your Google Ads campaigns to make this much easier. Analyzing metrics like click-through rate (CTR), conversion rate, and cost per acquisition (CPA) will help you understand what’s working and what’s not. This insight allows you to make data-driven decisions and adjust your strategies accordingly.

Here are a few of the additional metrics you should collect to ensure your campaigns do well once they hit your website so you don’t waste money collecting clicks that don’t generate revenue. Just like you want to assess terminal goals, you should assess these metrics to ensure you effectively paid traffic sent to your website.

event tracking
Image courtesy of Matthew Woodward

Focus on customer lifetime value (CLV)

Instead of solely focusing on short-term sales, consider the long-term value of each customer. Acquiring customers who are likely to make repeat purchases or subscribe to your services can offer a higher return on your ad spend over time. Once you attract these customers, you should prioritize strategies to keep them.

The flip side of CLV is that some customers are too costly. For instance, customers with a high return rate cost you money in shipping, preparing orders, and returning items to inventory. While you might not want to get rid of these customers, you certainly don’t want to encourage them to make additional purchases, so you might implement a policy that encourages them to shop elsewhere.


By implementing these strategies, small businesses can optimize their online advertising efforts, ensuring that they are cost-effective and conducive to long-term business growth.

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Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our full range of services.