Online Advertising Costs For Plumbers Went Up Over 100% In The Last 4 Years

We all know the saying, “it takes money to make money”, and it is totally true. In order to run a successful plumbing business you need to invest money in equipment, technology, tools, trucks, gas for the trucks, uniforms, employee training, insurance, permits, office lease, salaries, office supplies and much much more. Of course, all of the uniforms, tools and trucks won’t do you any good unless you get service calls, right? That’s why it’s normal to also budget for Marketing and Advertising expenses.

Up, up, and away!

Price increases are a normal thing in our economy. Inflation causes the price of goods to go up, and as a result, wages go up too. But, just how much do they go up? Well, it varies from year to year, but on average a 2% inflation rate per year is normal. So yes, uniforms will cost a little bit more each year, the price of the tools will increase and employee salaries will also go up, but that is countered by the increase in the cost of your services.

The problem with paid advertising

Unlike normal price increases on regular goods and services, paid advertising has increased dramatically over the last few years. And when we say dramatically, we are not saying 2% or even 10%. Think more like 100% and higher!
Just 4 years ago, a click on a Google Adwords paid ad in position #1 for the search term “plumber [insert city]” would cost you anywhere between $20 – $25 per click. Today, that same click will cost you in the neighborhood of $45 – $50.

Need another example? Let’s try with Facebook. If last year you would’ve had the plan to increase the presence of your plumbing business in social media, using a regular geo-targeted Likes campaign, you would’ve pay about $0.70 per Like. Today, on that same campaign you would be paying closer to $1.55 per Like… more than double!

Why is paid advertising increasing so much? Well, there are several reasons for that. One, is that right now all businesses are doing some kind of paid online advertising, so the higher the demand, the higher the advertising costs get. Second, is that the big media companies like Google and Facebook are getting bigger and bigger. They are investing more, hiring more, growing more, and expecting more in return. Forbes Magazine published a list of the 10 most valuable companies in the world. In the list you’ll find brands that have been around for over a century! But, on it you will also find two companies that have been alive for less than 20 years (spoiler alert: Google and Facebook), and yet have managed to get on that amazing list. How have they done it? I’m not going to tell, but don’t worry, just continue paying for those clicks 😉

But wait, there’s more, price increases in advertising are only half of the problem. The other half is the decrease in reach and exposure. As we already mentioned, most businesses are doing some kind of paid online advertising, and most of them are doing it on the most popular platforms, Google and Facebook.

The problem is that the rate of advertisers is growing much faster than the rate of users, which means that there are more ads to be shown, but less users to see them. If Google and Facebook would allow advertisers to blast out indiscriminately, users would be bombarded by ads, and would eventually stop using the applications. So, how do they counter this? They create algorithms to control the actual ad reach, so ads are shown less times. But wait, won’t that mean that they will make less money if they show less ads? Yes! But this is exactly where the click cost increase comes in. As a result, advertisers pay more, but reach less people.

Unfortunately, if you want to stick with Google and Facebook, there is no way around this. You have to play by their rules, and their rules are expensive!

Luckily, paid advertising is not the only way to go. There are other marketing alternatives like organic growth, email marketing, reputation development, and of course, the all too mighty customer retention that will allow you to sell more to you current customers, and get more word-of-mouth business.

I hope you don’t get me wrong. The idea of this blog post is not to scare you away from paid advertising, but instead to open your eyes to the opportunities that organic growth can bring to your business, and to your bottom line.

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