Inflation Has Hit Digital Marketing. Are PPC Campaigns Still Worth It?

by Diane Lovine and Devon Osborne

Contractors nationwide have noticed they are getting far fewer leads from their Google Ads monthly budgets. Why is this happening, and does it even make sense to continue running campaigns? The team at 99 Calls works primarily with service contractors, generating leads for them both via SEO and Pay Per Click and has noticed this trend has been building over the past 18 months. 

The primary means of measurement for Google Ads are cost per click (CPC) rates and cost per lead, which for our team means that contractors receive on average one call (lead) for every 5 – 8 clicks. Cost per click is measured in this way (Total Cost / Total Clicks). 

Causes of Increased Lead Prices

In early 2020, there was a pullback in contractor services in those “elective services” categories such as painting and home improvement. However, contractors who stayed busy throughout the pandemic include electricians, HVAC contractors and roofers when properties required repairs or sustained damages. 

First, the market is flooded with contractors willing, wanting, needing to get themselves found on the first page of Google to remain viable in their respective markets. The result is steeper competition than we’ve ever seen, which is driving prices up. Many contractors are seeing prices higher than they have ever been.

Getting cost-effective leads is even more daunting for those new businesses trying to get established with their first customers. 

Examples of Price Increase By Industry

The Impact on Service Businesses

HVAC contractors have seen a 50% increase in cost per click over the past 14 months. The cost of appliance repair clicks has increased by over 28% with rural locations taking a larger hit than urban areas. Painters and carpet cleaners have experienced 5% – 10% increases over the past year, regardless of whether in an urban or rural setting. 

Escalating prices mean a diminished return on monthly investment. Some contractors have discontinued their digital marketing, while others are looking at leaner profit margins. Larger businesses that have the means for healthy monthly budgets have been able to weather the price hikes much more readily than smaller owner-operated businesses. 

How to Win In This New Environment

  • Conversions matter more than ever. Not every marketing company is the same. In fact, the average firm achieves a 6%-10% conversion rate depending on the industry. Finding an above average marketing company that can achieve higher conversion rates will get you more leads for your budget. 
  • Time to Focus. Are there niche services that you provide that have solid profit margins? If you are a janitorial company, it might be floor stripping and waxing jobs. If you are a painter, you might do wallpaper removal or installation. Marketing niche services may lead to better performance because the competition isn’t as high, so your ads will be shown a higher percentage of the time with the same budget than it will when going after highly competitive search terms.
  • Size matters. Lowering your budget may seem like a logical way to save money, but if you decrease your budget too by too much, you just won’t have enough to work with on a day-to-day basis. On those days when people are searching most for your services, a small budget will drive you out of the spotlight and you’ll be missing opportunities.
  • Pair your Google Search Ads with a pay-per-performance SEO campaign. These campaigns take longer to rank online and to generate leads (sometimes many months longer). But planning ahead can yield big results in the long term because leads generated via SEO are less expensive than with Ads.
  • Stick with the Google Ads. If you are able, continuing with your Google Ads campaigns will yield a positive return on your investment, provided that you use a company with a high conversion rate and that you and/or your sales reps have high sales close rates. You may see slimmer margins in the coming months, but Google Ads search campaigns can still produce positive returns on your marketing investment. In fact, an article by Business of Apps stated that the Cost per Click with Google Ads (Search) marketing is still less expensive than Instagram, Linkedin, Pinterest and Facebook.

For more information on running cost-effective Google Ads campaigns with solid conversion rates, set up a free consultation with lead specialists at 99 Calls.

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