This is no different in South Africa, where online sales tactics experienced a stark increase in uptake, thanks in part to stringent lockdown measures, which seriously impacted the ability of small, medium and micro-enterprises (SMMEs) to do business.
But for businesses new to Google Ads, a lack of knowledge and experience means that many SMME owners are unsure of how much to spend on the platform. This is an important point to consider, as small businesses have to be very deliberate in how they assign their limited resources.
However, the answer to this question will vary on the type of business; the product it sells; the industry it operates in; and the economic climate at the time.
This is because Google works on an auction-based structure. Unlike print advertisements, which are sold at a fixed cost, the cost of running Google Ads will fluctuate on the number of businesses vying for the same visibility.
Except, this then creates a new challenge: how can you properly assess the performance of your industry if the only information publicly available is for competitors based in markets like the United States and Europe? These economies are larger and home to exponentially more businesses than South Africa.
When you consider how Google Ads are structured, this means that there are more businesses in these over-saturated, foreign markets vying for the same attention. This in turn forces businesses in these economies to spend more money to achieve results which should theoretically cost far less, in a less densely populated market like South Africa.
Without relevant data, South African businesses are forced to base their Google Ad spend on information and statistics that do not make sense for the local market. Worse still, this even deters some businesses from harnessing the opportunity presented by Google Ads, as they see the wrongfully inflated prices as too expensive for their limited means.
Thankfully, this is all about to change.
To help SMME owners get a realistic average of what they can expect to spend on their Google Ads in the local market, Adbot spent the past year collecting various data points from our client base of some 1000 small businesses across the country.
From here, we were able to calculate various averages for indicators such as the Cost-per-Click and Click-through Rate for a range of industries. These findings were then compared to the figures shared by international research bodies.
|Average CPC||Average CTR||Average CPC||Average CTR|
|Artist & Photographer||R3.63||7.60%||$1.60||10.67%|
|Automotive Service & Repair||R7.70||7.34%||$3.19||5.39%|
|Beauty & Wellness||R5.19||8.07%||$3.74||5.54%|
|Food & Beverage||R3.93||7.19%||$1.77||7.19%|
|Healthcare & Medical||R4.36||7.78%||$3.63||5.94%|
|Home & Garden||R4.60||6.69%||$5.75||4.21%|
|Internet & Telecom||R14.58||6.98%||$4.90||4.72%|
|Retail & Ecommerce Stores||R2.66||8.18%||$2.23||6.33%|
|Travel & Hospitality||R4.84||8.51%||$1.40||8.54%|
Moreover, when one considers the Dollar-Rand exchange rate, the data indicates that, prior to this information, businesses were paying in some cases more than ten times the market equivalent for Google Ads. For example, while international e-commerce companies typically spend $2.23 (R33,45), local businesses in this category only spend R2.66.
The key, however, is to get in early. Businesses that are the first to adopt Google Ads into their marketing strategies will benefit from lower costs for higher gains. They will have a huge advantage over their competitors, who might only realise the opportunity later.