Three Mistakes Business Owners Make When Thinking About Digital Marketing

Through running a digital marketing agency, I talk to a lot of business owners.

During these conversations, the following assumption and question often comes up:

“I personally never click ads on Google or Facebook, and no one I know clicks the ads either. I am having trouble seeing how this is going to work... Do people really click the ads? ”

I have been asked this so many times that I decided to write about it. For sake of simplicity, let’s assume our hypothetical business owner’s name is Steve.

First, Some Numbers

  1. Google’s 2018 ad revenue was $116.3 billion USD. At an average cost per click of $2.50 - that implies people clicked Google Ads 46.5 billion times.

  2. Similarly, Facebook’s 2018 ad revenue was $55B USD with a $0.30 average cost per click, producing 183 billion clicks.

This is some hard evidence that our business owner Steve might be slightly off the mark in his assumption.

Where Steve Went Wrong

There are 3 errors that Steve has made with his reasoning:

1) Steve assumes his customers think like he does.

Business owners, compared to the average internet-surfer, are extremely marketing savvy - even if they don’t think they are. For example, Steve understands the difference between paid and the organic Google results. Steve believes a top organic result is more reflective of high quality, and thus chooses to click it.

Most people do not think like this. According to a study conducted by Ofcom, about half of adults are unable to identify the paid ads in Google’s search results.

2) Steve is basing his assumption on an extremely small sample size. Steve has discussed digital marketing with 20-30 people in his life and these discussions have helped to form his conclusion that most people do not click on ads. However, this is not indicative of the market at large. Often, digital marketing campaigns only need a one to three percent click-through-rate to be massively successful and produce a huge return on investment. This means that even if one in a hundred people click the ad - the campaign will still pay for itself many times over.

3) Steve cannot grasp the large numbers of people that are going to see his ad.

Below is a screenshot of an ad our agency ran for a client on Instagram. This ad has been displayed to 1.4 million people around the world.

Screen Shot 2019-02-28 at 10.20.25 PM.png

People, including Steve, are generally not good at understanding really large numbers. Sure, you can imagine 5, 10, 50, maybe even 1,000. But picturing almost 1.4 million unique people looking at your business’ ad is difficult. If you notice above, it cost less than $500 for our agency to display this ad to 1.4 million people. Approximately 1% of the people who saw this ad clicked on it. At surface level - those metrics might not sound amazing until you realize this happens at scale. For less than $500, 16,000+ potential customers clicked this ad.

The take-away

If Steve wants to remain competitive in 2019, he is going to have to break through the three false paradigms outlined above.

Modern digital marketing campaigns are the most effective way to get a business’ message in front of millions of possible customers. Compared to traditional media, the cost of digital marketing is still extremely cheap. The companies who take advantage of this are truly going to succeed.