The Catalyst

The “$3 CPC” is a waste of money for most local advertisers

If you asked local advertisers to choose between a $3 cost-per-click on Google’s Adwords or a $100 spot on local broadcast television, how many of them would make the best decision for their business?

More importantly, how many of us are prepared to show them which decision is best?

When we do the math and calculate the real cost of advertising, paid search generates many fewer leads at a much higher cost-per-customer than local broadcast TV. Of course, plenty of experts and skeptics still argue against this point, claiming paid search programs can’t possibly be inefficient, given their nature. Well, they’re wrong.

And now we have proof.

Make no mistake, there is still plenty of money pouring into paid-search, at national, regional and local levels. And that money will continue to pour in. In some cases, this decision will make sense for the advertiser. But for most local advertisers, it won’t be money well-spent.

We’ve been adamant about this topic because paid search is one of the fastest growing media out there. A lot of mistakes and poor assumptions are being made. Millions of dollars — diverted from other media — are being wasted, and a lot of qualified leads are going elsewhere. And, unfortunately, a lot of local media sales entities are missing out on a huge opportunity to help local advertisers — and themselves.

Any local broadcast salesperson who has a hard time believing this, try this profitable little exercise:

1. Do a Google search on one of the major service or retail categories within your market.
2. Make note of all the local businesses using paid search (right-side of the Google search).
3. Find out their cost-per-click (CPC). You can ask them or find it right on Google.
4. Use the ESA CPC vs CPM tool to demonstrate the difference in advertising effectiveness to the advertiser — right down to customer acquisition cost.
5. Repeat!

There is an assumption that no “apples-to-apples comparison” exists between traditional (broadcast TV) and new (paid search) media, especially since their pricing models appear to be quite different.

That assumption is now history.

ESA's CPM vs CPC "Paid Search Killer"

In five minutes time, any paid search advertiser can see, with your help, whether or not paid search makes sense. In short, many local advertisers cannot afford the $3 CPC. Seems counterintuitive, but the numbers don’t lie. Just like the fool’s gold of the $5 cost-per-spot on cable, the seemingly cheap cost-per-click of paid search can lead to a slow death for a local business.

Just in case you were wondering how many local businesses are spending $3 per click in your market: dozens of them. Okay, I’m sandbagging. The number could be in the hundreds.

This CPM vs CPC “paid search killer” is a tool developed by ESA, and available for member stations at no cost. If you’re interested in helping local businesses make an informed media decision, you can request your copy below. No strings attached.

Advertisers today have a choice to make: You can buy your media cheap, or your future customers cheap. It’s one or the other, not both.

Local media reps have a choice to make too: take five minutes to prove this to yourself, or forfeit a serious window of opportunity to somebody else.

GET YOUR COPY OF ESA’s CPM vs CPC SPREADSHEET
ESA & Company has an easy-to-use spreadsheet that will prove the efficiency of broadcast television versus paid search for local advertisers. Help your clients understand the big picture.

Price: FREE for ESA member stations. | Contact ESA for your copy.

Dave Eckstein is a partner in the firm ESA & Company, based in Red Bank, New Jersey. Dave specializes in highly profitable market share growth for local business and gets a kick out of demonstrating a declining cost of customer acquisition for his clients.