Small Business Out of Search Ads?

Search advertising is expected to boom in 2007, but small and medium sized businesses may not be able to get in on the action. A new study indicates the bulk of search ads will go to larger companies and brands.

by Kristina Knight

According to a report in Business Week, small brands are getting clickthroughs but they aren't getting the customers. That, in turn, is leading more small and medium businesses to actually cut back on search ad budgets. Why aren't they getting the clientele? Apparently as more users shop around online, the clickthroughs from search ads are wasted. For example, e-tailer BabyAge bought $1.2 million in search ads, received many clicks but actually netted fewer buyers than clicks. The result? They basically doubled their search ad costs.

On the other hand, big brands are seeing large increases in revenue because with their larger inventories they can lower prices - meeting the consumer's want of low prices - and taking those customers from smaller businesses. That drives the cost of their search ads down.

As more big brands move into search advertising, the smaller brands are moving to social marketing. Trying ads on blogs or niche shopping sites rather than trying to compete with big brands for a small piece of the search pie.