In advertising, one small detail can make a big difference in the success of your campaigns and your ability to leverage a marketing budget. You don’t risk damaging your brand or waste ad spend by learning through trial and error. To help, we’ve found the most vital advertising statistics to help small businesses avoid the stupid mistakes that even smart marketers make.
Here are 19 surprising advertising statistics every small business should know:
1. GMB can provide about $2,700 worth of free advertising per month to local businesses
Over one-third of businesses using Google My Business (GMB) are getting about $2,690 worth of free advertising per month. And for many, this figure is actually a lot higher. This is because 34% of GMB listings are seen more than 1,000 times per month. If a business was paying for Google Ads to achieve this level of exposure, at the average cost-per-click (CPC) of $2.69, it would cost thousands.
In case you were thinking a CPC of $2.69 sounds low, you’re not wrong. While that’s the overall average, there are so many industries that see way higher CPCs. For example, the average CPC for divorce law firms is upward of $27.55 in Chicago. If that firm was in the top results of Google local listings, it would get approximately $27,550 worth of free advertising per month.
Takeaway: Every local business with a physical location should create and build their GMB profile to help increase online visibility for free. Learn how to create a Google My Business account.
2. Only 24% of Google Ads keywords generate a return
There’s loads of data that states that the average advertiser on Google Ads yields a return of $2 for every $1 spent. However, what this fails to mention is just how much ad spend is wasted on irrelevant keywords. According to a study from the Google Ads powerhouse, Disruptive Advertising, the average advertiser wastes 76% of their Google Ads budget on searches that fail to ever produce any value.
Takeaway: Your return on ad spend (ROAS) is driven from a small percentage of your overall ad spend. If you’re not a Google Ads guru, consider outsourcing your PPC advertising to the pros, such as Disruptive Advertising or Hibu. The price you pay for monthly ad management might be far less than what you’ll waste on useless keywords.
3. Email marketing is over 3X more effective than Google Ads
You might hear that “email is dead,” but this couldn’t be farther from the truth. In fact, email marketing has one of the highest average ROIs out of all major marketing channels, with an average ROI of 675%. In comparison, Google Ads has an average ROI of 200%.
Takeaway: Marketing to warm leads is simply more effective than marketing to cold leads, so always be sure to invest your marketing budget into fostering warm leads first, and then cold leads to build awareness, second.
4. People spend more when shopping in-person
As great as ecommerce is for businesses, the reality is that people still purchase more in-person. According to an article from Forbes, around seven out of 10 people spend over $50 when shopping in-store compared to around half of those shopping online. This might be partially due to the fact that people are purchasing higher priced goods in-person, but it’s also in part because people are more likely to be impulsive in-store compared to online.
Takeaway: Even if your ecommerce business is not in the position to open a physical store, consider getting your products onto the shelves of retailers, whether that’s local shops or national big box retailers, such as Walmart, CVS, or Home Depot. Learn more about how to open a retail store.
5. Digital marketing effectively drives in-person sales
Just because you’re running a brick-and-mortar business, that doesn’t mean you shouldn’t be marketing online. A staggering 53% of purchases are actually “digitally influenced,” according to a report from GroundTruth, the leading location-based marketing and ad tech company.
Takeaway: Don’t overlook the value of digital marketing. While many digital ad platforms felt irrelevant to offline businesses in the past, there have been great advances to help leverage digital data to drive foot traffic. Check out GroundTruth to learn more about these advances.
6. Too bold a marketing claim can cost businesses millions
You don’t want your ads to discredit your brand (think of the television ads where people say how nice a car looks, only to be left amazed that such a car could be a Buick). However, going too far with singing your own praises can also be a surefire way to discredit your business.
For example, during a recent discussion with a friend who was staying at the hotel Kimpton the EPIC, my friend laughed and said how it’s not that epic. Though Kimpton hotels are known for high-end accommodations, and this particular location has a high 4.5 out of 5-star rating on Google, the bold claim of “epic” in the title (and in caps, nonetheless) is too much. It automatically feels too boastful, making people quick to downplay it and refute the claim.
Not only do claims that are too bold lead to lower customer satisfaction and a general distrust, making such claims can be a liability. Literally. According to NCMIC, making unrealistic claims is dangerous and can lead to lawsuits that cost businesses millions.
Takeaway: Instead of using marketing to tell the world how great your business is, focus on providing such a great experience that your customers tell the world for you. Word of mouth is far more powerful, and it’s a better long-term strategy to focus on being great as opposed to simply saying you’re great.
7. Over $1B is lost per year to Instagram influencer fraud
It might sound like a good idea to summon the assistance of an Instagram influencer, the type with thousands of followers, but think again. While accounts with huge followings will charge a huge amount to plug a business, many of these accounts fail to yield engagement (many of which fraudulently report engagement rates), and approximately $1.3 billion is lost annually to Instagram influencer fraud.
On top of that, there’s a much darker side to Instagram influencers — one you won’t want your business associated with. More and more of these influencers are being exposed for what they really are: sex workers using social as a platform to market their services. Advertisers need to be incredibly diligent when choosing an influencer to work with in case a seemingly innocent influencer is exposed.
Takeaway: Dumping thousands into the pocket of a random, seemingly legit influencer is often a waste of money. If you want to try social media influencers, use a platform such as Grin to find legit influencers or hire on a PPC basis rather than a flat fee. In return, you only pay when followers actually interact with your ad.
8. In 2021, a return policy is a form of advertising
Yes, you read that right. These days, online retailers should view a free return policy as a form of advertising. A whopping 51% of U.S. consumers won’t purchase a product without free returns, but any business using sites such as Amazon, eBay, or Etsy should offer free returns to help increase their brand visibility. How so? Every business is fighting to land at the top of product listings, and generally those with free returns are considered a better result than those without.
Takeaway: While e-retailers tend to be afraid of the cost of returns, if you’re selling online, you need to offer free returns. The reality is losing out on over half of all sales is not worth the nominal cost of an average return rate of just 5% to 10%.
9. Just 1 bad review will undo 40 glittering reviews
We all know how powerful bad reviews can be. But did you know that all it takes is one bad review to undo 40 great reviews? That’s right — and a study published in Inc. magazine shows it. If you’ve ever actively tried to get happy customers to leave reviews, you know how difficult it can be. So the fact that one bad review can wipe out dozens of good reviews is disheartening.
Takeaway: Be sure to monitor your business’ online reputation and help mitigate any negative reviews by being quick to respond to said reviews in a positive way. By taking charge and offering sincere apologies, and better yet, a solution, you can help restore confidence in those reading the reviews. What’s more, in doing so, you open the opportunity for disgruntled customers to retract their negative review.
10. There are more fake reviews than real reviews online
It’s not just fake news generating misinformation, but fake reviews powering shady businesses. Some businesses have upward of 50% fake reviews on Google. And never mind Amazon. The ecommerce powerhouse is well-known for its mass quantity of fake 5-star reviews, which help products rank higher as well as sell more. Reportedly, an astonishing 61% of electronic reviews were found to actually be fake. But it’s not only positive reviews that can be fake.
What if you found out that the bad review you got is actually a fake review? While it sounds like something a business looking to skirt responsibility for their shortcomings would say, in reality there are fake reviews lurking all over the internet. And that includes those confusing negative reviews that seemed to come out of left field.
On the other hand, positive reviews can be fake as well. That competitor who you know isn’t exactly well-loved, who has dozens of too-good-to-be-true reviews, may actually have bought fake reviews. Though this is illegal, and platforms such as Google, Amazon, and Yelp actively try to prevent and remove fake reviews, that doesn’t mean they don’t exist.
Takeaway: If you believe you have a fake review, let the platform know. For example, if you’re trying to remove a review from Google, flag the review from your GMB account and complete the follow-up survey.
11. Building a brand through mass retailers is a death sentence
OK, maybe death sentence is pushing it. But, those ecommerce giants do not provide a brand-building ad strategy.
In the past, businesses sought out shelf space with major retailers. Getting your product into a store like Walmart meant the product could essentially sell itself. With ecommerce overshadowing big-box retail, people assumed that using sites like Amazon would be a strategy to build a brand.
Instead, what many have found is that while dumping thousands into promoting products on these sites proved effective in gaining sales in the short term, many of these businesses soon went out of business with this strategy.
And no, this doesn’t make any sense. And yet this is what has really happened with companies using sites like Amazon or stores like Whole Foods to build a brand.
What these companies do is use the small, successful business to discover products that sell well. They then create their own version of the product, which outranks the original product, and undercuts its price. In return, consumers quickly switch to the seemingly same product that’s available at a better price. Of course, this practice is illegal as it breaks antitrust laws, but the reality is that it still happens (and probably more than you can imagine).
Takeaway: Never use a big-box retailer to build your brand. Instead, build your brand and then use big-box retailers for distribution. These sites can’t plunder your sales if people aren’t simply buying your product because of its quality or value, but because they are a fan of your brand.
12. Product placements cost more than the average TV advert
Of course all television advertisements are paid, but did you know that 71% of product placements paid? It’s true, and some would say product placements eerily serve as a form of subliminal advertising. While they’re no secret, viewers don’t necessarily pick up on product placement and instead generally see them as organic. After all, people order a Coke in a restaurant all the time, right?
Since viewers are thinking much about these placements, they don’t feel like advertisements. However, they are still highly effective—thus why companies will pay anywhere from $60,000 to $250,000 to make a quick appearance on a television show or movie. In contrast, the average television commercial costs around $115,000.
Takeaway: Even if neither ad type is within your budget, the overarching message here is that sometimes it’s more effective to keep your marketing low key and avoid sounding like a sales pitch.
13. High income does not equate to higher consumer spending
Household income has become a standard piece of audience demographics, and while it sounds good to target those with a disposable income, that doesn’t mean they’re spending more. On the contrary, some people with more money have it because they don’t spend as much. On top of that, having a higher income or net worth does not necessarily equal disposable income. Remember, water seeks its own level.
Don’t believe it? One study found that the lowest-income families in the U.S. (those within the bottom fifth of earners nationwide) spend 40% of their income on luxury goods.
Takeaway: Depending on what your business is selling, if you reduce your audience to only those with a high income, you may be reducing your sales. For example, while a company that sells high-end wine cellars wouldn’t be advised to market to all income levels, a business that sells high-end makeup or consumer electronics would be.
14. Massachusetts has the highest consumer spending per capita
Businesses selling online should consider spending per capita when thinking about geographic audience targeting. Which states spend the most might surprise you. For example, Massachusetts has the highest consumer spending per capita at $55,095. At the other end of the spectrum, the state with the lowest consumer spending per capita is Mississippi at $31,083, according to the Bureau of Economic Analysis.
Takeaway: If you’re advertising with platforms such as Google Ads, which enable advertisers to pinpoint and target audiences by geographics, consider these types of metrics when allocating ad spend (or in the case of Google Ads, adjusting your bids by location).
15. Marketing pros choose YouTube over Facebook for video ads
It’s true. Nearly 80% of professional marketers say that YouTube is the most effective video marketing platform, according to a study published by SproutSocial. There are a number of reasons why this is the case, from it being the most preferred platform for watching videos (behind Netflix) lending to a highly engaged audience to the fact that over 90% of buyers have discovered a brand through YouTube.
The average cost-per-thousand (CPM) on YouTube Ads is $7.50—slightly higher than the average CPM on Facebook Ads of $7.19. However, a nominal price difference aside, what matters isn’t as simple as which is more affordable, but which actually provides a better value.
A major difference between the two platforms is that those coming to YouTube are actively looking to watch a video, whereas people are not going to Facebook to watch video content. In return, your video ad is more likely to reach an engaged audience on YouTube.
Takeaway: Unless you’re creating a genius, viral-worthy video, consider opting for YouTube ads over Facebook Ads for your video content.
16. Chat bots harm your sales
You’ve probably heard about how live chat is a powerful tool for both sales and customer service. However, if you’re like most businesses, you don’t necessarily have the time or resources to have someone manning the live chat 24/7. To overcome this, businesses started turning to live chat bots. However, the reality is that bots are bad for business.
When people want help, they want to talk to a human. Leaving your customers (or potential customers) in the hands of even the most intelligent bot will still harm the quality of your service, the reputation of your business, and your bottom line. According to Forbes, chatbots lead to an 80% decrease in sales and satisfied customers.
Takeaway: Skip the chatbot. Customers are all unique individuals, and businesses should treat them as such.
17. Billboards have a higher ROI than Facebook Ads & Google Ads combined
Outdoor advertising gets overshadowed by more glamorous digital advertising channels, but they’re actually more effective. Outdoor ads such as billboards generate $5.97 of product sales per $1 spent. Compare that to Facebook Ads at $4.50 generated per $1 in ad spend and Google Ads at $2 generated per $1 in ad spend.
Takeaway: Consider using outdoor advertising to reach your target audience with highly creative ads. Learn more about billboard advertising.
18. Offline ads can go viral too
Outdoor ads aren’t just guiding people to tourist traps and fast food joints. They’re quite effective for products of all types, and generate a very strong return on ad spend. On top of that, outdoor ads can actually go viral.
For example, Spotify, the online music streaming service, transformed a subway stop in New York City into a David Bowie tribute. An enormous portrait of the artist spanning beams over the stop captured the attention of an Instagrammer, who shared an image.
The outdoor ad, intended to drive traffic to Bowie’s music on Spotify and to the David Bowie Is exhibit at The Brooklyn Museum, was so eye-catching and astonishing that it became a viral hit. Spotify couldn’t have purchased that much visibility in an ad campaign; the cost would have been enormous.
Takeaway: Eye-catching and generally interesting outdoor ads are a great way to gain user-generated advertising. For ideas, check out these billboard design tips.
19. Great customer service is a highly effective marketing tool
Happy customers will market your business for you, and word of mouth remains the most valuable marketing tool in the overall marketing toolkit. One of the best ways to generate happy customers who want to spread the word about your business is by providing great customer service.
One of the leading ways to do this is via social. According to BigCommerce, by providing great social media customer service, you can get upward of 71% of customers to refer others to you.
Bottom Line
Many business owners hesitate to spend on advertising. Their hesitation stems from not understanding which advertising channel offers the best return on investment (ROI) and return on sales (ROS) for their business. Armed with a better understanding of the industry and these advertising statistics, small business owners can spend their money wisely and with the confidence that they are doing their best to generate positive ROI.
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