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Here’s What’s Different Right Now!
What’s causing ROI to decline in small business advertising and marketing right now?
By Kip Dodson
The return on investment (ROI) for advertising and marketing for small businesses right now can vary depending on a few key factors, but overall, many businesses are experiencing tighter margins and fluctuating ROI. There are a few reasons for this:
1. Increased Digital Ad Costs: Platforms like Google and Meta (Facebook/Instagram) have seen increased competition, driving up the cost per click (CPC) and cost per acquisition (CPA). More businesses are using these platforms due to their effectiveness in targeting specific audiences, which has led to rising costs, especially for small businesses with limited budgets.
2. Shift to AI-driven Ads: AI-powered campaigns like Google Performance Max and Meta’s AI-enhanced ads can be efficient, but many small businesses struggle to optimize these campaigns without the proper expertise, leading to a less favorable ROI. These systems can perform well for businesses with larger data sets to train the algorithms, but they may be less predictable for smaller brands without as much user data to work with. Not to mention, smaller businesses don’t have the Digital Technology Expertise to mange this sustainably.
3. Economic Pressures: Inflation, supply chain disruptions, and fluctuating consumer demand have affected consumer spending behavior. Many small businesses are finding it harder to get the same level of consumer engagement as before, even with higher advertising spend.
4. Targeting, the Audience is Moving and Tracking Challenges: Data privacy changes, such as Apple’s iOS 14 update, have made it harder for businesses to track user behavior across apps and websites, limiting the effectiveness of targeted ads. Small businesses relying on targeted ads are now seeing lower conversion rates because they can’t reach or track their audience as effectively as before. Further the audience is moving away from traditionally stable and reliable sources for entertainment and information.
However, businesses that are agile, new audience ready and able to invest in technology and capital strategies will be ready for it. Purely digital conversions online, content marketing that can move around, influencer collaborations using the same messaging, and organic social media growth (not paid for stuff) – all need to be set-up on a strong Digital Basics foundation to gain more conversions with better ROI. Proven digital experts, are the ones that show you how the whole system works together now instead of the various silos and sales people you buy from today. Those who can pivot to new partnerships, be agile with new platforms or diversify their marketing efforts (e.g., combining Digital technology experts, web development, Digital ad spend, Digital Basics Scoring, local SEO, Source Formula Score, with your paid-for marketing mix of ads – all into a collective Digital Management Suite) are the ones who will outperform, achieving better returns.
The overall trend is that small businesses need to be more technical, strategic and agile with their chosen DIGITAL partners combined with their advertising and marketing spend to maintain or increase ROI in the current environment.
Put simply, it takes a different approach to see where you are. You have a technology and capital resources issue – not an advertising & marketing problem.
This is why we created EmpowerLocal and Social Local Media – to show you how these trends work in every state, for national firms, locals, the highest performers and for those gaining high online conversions in their own business. The Digital Basics Scoring and Source Source Formula calculations help anyone discover what is working now or not. It shows the pathway for highly successful digital campaigns and purely online conversions. Most importantly, what to do and where is the audience moving as this evolves. You need to know how to follow them. Plus convert those sales using purely online digital formats, as you are right now.
For more information see this: Https://dodsonmc.com/#stop
Your strategy should change. Before you do it, consider the Source Score, Digital Basics Score, Net Promoter Score and who you have on your team right now.
Discover how the Source Score, co-created by DodsonMC, can transform your business. The Source Score is more than just a metric—it's a comprehensive roadmap designed to help you achieve top-tier industry performance.