Understanding Paid Ads: What Every Small Business Needs to Know 💡
- Jeric Turga
- Apr 29
- 3 min read
According to Google, businesses make an average of $2 in revenue for every $1 spent on Google Ads, achieving a 100% return on investment (ROI).
If you're a small business owner trying to grow your brand online, you've probably heard terms like PPC, CPC, retargeting, and conversion rate thrown around. It can feel overwhelming—especially when you're juggling a hundred other things. But understanding the basics of paid ads is essential if you want to make smarter marketing decisions and get the most from your budget.
This beginner-friendly guide will walk you through the key concepts, platforms, and strategies that every small business should know.
1. What Are Paid Ads?
Paid ads are online advertisements that you pay for, typically on a per-click, per-impression, or per-action basis. You’re essentially paying to show your message to a targeted audience rather than waiting for them to find you organically.
Common types of paid ads include:
Search ads (e.g., Google Ads)
Social media ads (Facebook, Instagram, LinkedIn, TikTok)
Display ads (banners across websites)
Video ads (e.g., YouTube)
Paid ads allow small businesses to gain visibility, generate leads, and drive sales—quickly and predictably.
2. Key Terms You Need to Know
Here’s a breakdown of the most important terms you’ll come across:
PPC (Pay-Per-Click): You only pay when someone clicks your ad.
CPC (Cost-Per-Click): How much you pay for each click.
CPM (Cost-Per-Thousand Impressions): How much you pay to show your ad 1,000 times.
CTR (Click-Through Rate): The percentage of people who clicked on your ad after seeing it.
CPA (Cost-Per-Acquisition): How much it costs you to gain a new customer.
ROAS (Return on Ad Spend): How much revenue you generate for every dollar spent on ads.
Retargeting: Showing ads to people who’ve previously interacted with your website or content.
3. Where Should You Advertise?
The best platform depends on your business goals and audience:
Google Ads – Great for targeting people who are actively searching for your product/service.
Facebook & Instagram Ads – Ideal for building brand awareness and targeting specific interests.
LinkedIn Ads – Perfect for B2B businesses or professional services.
TikTok Ads – Effective if your audience skews younger or if you're in a creative niche.
Start with the platform where your audience spends most of their time and expand as you grow.
4. Why Targeting Matters
Paid advertising is only effective if your ads reach the right people. Most ad platforms let you target based on:
Location
Age and gender
Interests and behaviours
Previous interactions (retargeting)
The more specific your targeting, the more likely you’ll see conversions—and avoid wasting money.
5. How to Track Results
It’s not just about running ads—it’s about knowing what’s working. Key metrics to track:
Tools like Google Ads, Meta Ads Manager, and Google Analytics can help you monitor results and adjust accordingly.
6. Common Mistakes to Avoid
Many small businesses lose money on ads because they:
Don’t set clear goals.
Target too broad of an audience.
Send people to a generic homepage instead of a tailored landing page.
Don’t test different ad variations (A/B testing).
Avoid these pitfalls by starting with a clear strategy, tracking performance, and always refining based on data.
Paid advertising can feel complex, but it doesn’t have to be. Once you understand the basics—like platforms, targeting, and key metrics—you’ll be in a better position to create cost-effective campaigns that actually drive results.
Ready to harness the power of paid advertising? Start by selecting one platform that aligns with your business goals, set a modest budget, and launch a test campaign. Monitor the results, learn from the data, and refine your strategy to maximise your return on investment. Paid ads, when done right, can be one of the most powerful tools to grow your small business.
