Online advertising for small businesses: ultimate guide & best practices (2024 updated)

Every year, businesses spend billions in paid online advertising to put themselves in front of potential customers. They do this because online advertising can deliver exceptional outcomes.

There are so many different options for online advertising that it can be challenging for small business owners to know where to start. The right approach for you will depend on your business, location, advertising budget, target audience, and overall marketing strategy.

Whether you’re a brick-and-mortar shop or an e-commerce business, advertising online can help you reach more potential customers and build an authentic brand.

Here’s what you need to know about online advertising for your small business, starting at the very beginning.

Online advertising vs. marketing

Marketing and advertising are often used interchangeably, but they are not the same thing. Marketing refers to all the steps you take to promote and sell your product or service. It involves identifying your target audience; understanding the market, your competitors, and consumer needs; deciding how to communicate the value of a product or service; and implementing that strategy to reach your ideal customers.

Online advertising is a subset of marketing that focuses on promoting your business via internet-based channels and tools with the goal of getting your target audience to take a specific action. Typically operating on a paid model, online ads are one of many tools available to small businesses as part of their overall marketing strategy.

Tactics such as search engine marketing, display ads, social media ads, and email marketing are all a part of online advertising.

Benefits of online advertising

In this digital era, online advertising is an impactful way for businesses to connect with their target audience more efficiently than ever before.

The key benefits of online advertising are that its:

• Precise
• Fast
• Quantifiable

Precise targeting

One of the most powerful advantages of online advertising is the ability to target precisely. Advertisers can narrow in on their audience based on a variety of factors such as location, interests, behavior, and specific keywords. This level of targeting means marketing dollars aren’t wasted on people who are unlikely to convert.

Rapid deployment and flexibility

Unlike traditional advertising, which can take weeks or even months to launch, online ads can be up and running in under an hour.

This quick turnaround also means that businesses can respond to consumer behavior in real time. Campaigns can be easily optimized based on real-time feedback, from messaging to targeting to budgets.

Measurable success and optimization

Real-time metrics provide a clear picture of advertising campaign performance. With online advertising, it’s easy to see which ads are resonating with your target audience, how much is being spent, and, crucially, how ads are converting.

How online advertising works

While online ads are typically easy to set up from a user perspective, behind the scenes, the online advertising platforms themselves are complex ecosystems built to deliver advertisements to users by leveraging a variety of targeting parameters and auction-based pricing models.

User data and targeting

At the heart of online advertising is the ability to target specific segments of users searching the internet. Platforms collect vast amounts of data on user behavior, interests, demographics, and much more.

Advertisers can then use this data to target their ads to users most likely to be interested in their products or services.

Targeting methods include:

• Demographic targeting, based on age, gender, income level, etc.
• Interest and behavior targeting, based on past online activities and interests
• Geographic targeting, based on country, city, or even a specific radius around a location
• Keyword targeting, based on specific keywords users are searching for

Pay-per-click (PPC) advertising

PPC is one of the most popular and widely used advertising models due to its cost-effective and versatile nature—making it a great example for demonstrating how online advertising works.

With PPC ads, advertisers pay each time a user clicks on one of their online ads. Here’s how it typically works:

It involves identifying your target audience; understanding the market, your competitors, and consumer needs; deciding how to communicate the value of a product or service; and implementing that strategy to reach your ideal customers.

1. You’ll choose a PPC platform, establish what your goals are and what actions you want users to take, and create your ad.
2. You’ll select the keywords you want that ad to appear in search results for/that are relevant to your target audience
3. You’ll bid on those keywords. This represents the maximum amount you’re willing to pay for a click. Note that some platforms incorporate automated bidding strategies that adjust bids based on the likelihood of achieving the advertiser’s goals.
4. Platforms evaluate ads based on relevance, landing page quality, and click-through rate (CTR). This is the quality score, and it combined with the bid determines the ad’s placement.
5. You pay when someone clicks on your ad. The cost-per-click (CPC) you’ll pay is often less than the maximum bid determined by the ad auction process.

Some platforms, like Yelp, allow you to set a maximum monthly budget so your dollars can be used efficiently over time, but you’ll never go over what you’re willing to spend.

How much does online advertising for small businesses cost?

Online advertising can cost anywhere from a few cents per day to thousands of dollars per month. The cost of online advertising depends on the dimensions of your digital ads, how competitive your keywords are, and how many platforms you advertise on.

It’s not unusual for competitive keywords to cost $1–5 per click on some platforms, but since there’s no fixed rate, the cost of an ad campaign can vary widely.

Small businesses should start small and gradually increase their ad budget. If your ad brings in new leads or revenue, it may be worth paying a higher rate per click.

Types of online advertising

Navigating the varying types of online advertising can seem daunting for small businesses, but understanding the diverse strategies available is crucial for driving growth and reaching target audiences effectively.

This section outlines the most popular online advertising strategies for small businesses, each with its unique benefits and targeting capabilities. From the immediate and precise impact of pay-per-click (PPC) advertising to the visual allure of display ads, there’s an online advertising solution tailored for every business goal. Whether aiming to boost brand awareness, generate leads, or drive sales, small businesses can find a solution to meet their specific needs.

Display ads

Display ads are digital ads that are shown to users online, often in the header or margin of a third-party website. Display ads usually contain text and graphics, and they allow the viewer to “click through” to learn more about what’s being advertised.

You can pay websites for ad space yourself—the same way you would pay for an ad in a newspaper—or you can opt for display advertising through ad networks. These networks automatically match advertisers with available ad space.

Let’s say you’re a dog-friendly restaurant that’s seeking to attract more pet owners. An ad network would place your ad in relevant places, such as pet store websites or pet blogs. In most cases, you’ll only pay when someone actually clicks on your ad.

Most ad networks rely on demographic info, such as age, location, and gender, to determine where to place ads to reach your target market. Depending on the ad network, advertisers can choose between automatic or manual ad placement.

Search engine ads

Search engine marketing (SEM) is similar to display advertising. But instead of showing up on third-party websites, your ads will show up on search engine results pages (SERPs). This allows you to target users who are searching for particular topics.

Search engine marketing differs from search engine optimization (SEO) in that you aren’t trying to get your website content to show up in organic (non-paid) search results. Instead, you’re paying to have your ad shown above, below, or alongside search results.

As with other display ads, you’ll usually pay for search ads with a pay-per-click (PPC) model. This model uses the cost-per-click (CPC) metric to determine how much each click will cost and allows you to set an ad budget for your marketing campaign so you don’t overspend on search advertising.

Social media ads

Social media advertising refers to the placement of digital ads on social media platforms like LinkedIn, Snapchat, and Pinterest. It differs from social media marketing as you aren’t simply posting content for your followers to engage with—you’re paying to get your ad in front of new customers who may not be familiar with your brand.

Social media ads should be designed to match the format of the social media platform. For example, Facebook ads may be designed to look like a news update or blog post, while Instagram ads need to be either an image or video. Like search engine advertising, you’ll typically pay per click rather than per view or impression.

You can use social media advertising to promote a specific product or service, or simply to grow your presence online and attract more people to your social media pages.

Video ads

Video advertising has some overlap with display advertising because you can present your display ads in formats with audio or video content. However, true video ads require a different set of tools and resources than text or image-based ads. As such, it’s worth thinking of them as a separate category.

Video ads may appear on websites or social media platforms, although they’re less common on search engine results pages. They can range from short video clips on TikTok to full-length “commercials” that play before or during YouTube videos.

Although video ads can be more engaging than text ads, creating a video ad may require more time and effort compared to other ad types.

Mobile ads

Mobile ads are another variation of the typical display ad format. Depending on which ad network you use, you may have the option to place your ad in front of mobile users. Since more and more people access the internet from smartphones and other mobile devices, mobile advertising can provide a great return on investment.

Mobile ads can appear on websites and social media platforms as well as within apps themselves. One common type of mobile ad is an interstitial ad, which is a full-screen ad that pops up between other content, such as levels in a video game. This ad type can be a cost-effective way to reach a specific user base, like video game players, but there are restrictions on how “intrusive” interstitial ads can be.

In-app ads

In-app ads are advertisements displayed within a mobile application, offering advertisers the chance to reach audiences using a specific app or group of apps. These ads can vary in format, including banner ads at the top or bottom of the screen, full-screen interstitials between levels or sections, video ads that might even reward users with in-app benefits, or native ads integrated into the app’s content.

In-app advertising’s effectiveness lies in the ability to target users based on detailed app usage data, demographics, and behavior, providing highly relevant and personalized advertising opportunities.

Native ads

Native advertising refers to paid ads that resemble existing content on a website. The idea is that the design and style of the ads look similar to the content on the page so they’re more likely to be clicked on. “This formatting helps improve the user experience, making the ad into part of the user’s feed rather than an interruption. While people are trained to ignore banner ads and the like, native ads have a better opportunity of being seen—precisely because they blend in” (LinkedIn).

Native ads can be an effective way to get your brand in front of a website’s active users without interrupting the flow of their experience. However, they must be clearly marked as advertising by being labeled “Sponsored Content” or through hashtags like #ad or #sponcon. The Federal Trade Commission has strict disclosure requirements to avoid “deceptive or unfair practices.”

Email marketing

Email marketing is a direct method of reaching consumers by sending promotional messages or newsletters directly to their email inboxes. Email campaigns can serve various purposes, from nurturing leads and building brand awareness to driving sales and customer retention. With its cost-effective nature and high return on investment, email marketing remains a cornerstone of many digital marketing strategies.

Newsletters

Newsletters are a form of email marketing utilized by businesses to maintain ongoing communication with their audience. They typically contain a mix of content, which might include industry news, product updates, insightful articles, or exclusive offers, aimed at providing value to subscribers while keeping the brand top of mind.

Inbox ads

Inbox advertising refers to the practice of placing ads directly within a user’s email inbox, often mimicking the appearance of a standard email. Inbox ads can appear at the top of the email list or within the body of email messages from other senders. They are designed to stand out from regular emails while seamlessly integrating into the user’s email experience. This form of advertising offers a high visibility rate and the potential for immediate action.

Best places to advertise online

Finding the best place to advertise online requires some planning. Advertising platforms vary widely in terms of the demographics they cater to, which ad formats they accept, and how they determine pricing. Plus, your advertising plan will depend on what your overall online marketing strategy is, such as being focused on lead generation versus increasing brand awareness.

Use this list of places to advertise online to explore your options and find the best platform to advertise your business.

Social media platforms

There’s no single social media platform that’s the best place to advertise your business—it depends on the specific audience you want to target. Facebook has the largest market share, but platforms like LinkedIn, Pinterest, Instagram, Snapchat, and TikTok all have their own marketing tools that can help you reach the right audience.

Social media platforms allow you to choose from multiple formats, including text, image, and story ads, and you can also market to users based on their location, interests, and whether or not they’ve interacted with your business before.

Yelp

Yelp is an online platform that’s especially geared toward small business advertising. It’s free to add or claim your Yelp Business Page, where you can update your address and contact details, respond to customer reviews, and more. Fill out your page with updated and accurate info to attract high-intent customers who are searching for the types of products and services you offer. Businesses with a photo, website, phone number, and business hours listed on their Yelp Business Page averaged 7.6x more page views per month than businesses without that content.

Yelp also offers pay-per-click advertising, which places your ad in key places on Yelp.com and the Yelp mobile app, such as above or below relevant search results in the “Sponsored Results” sections and on your competitors’ pages. Businesses with Yelp Ads get 2.5x more leads—you’ll only pay when someone clicks your ad, and you can adjust your budget or pause your ad at any time.

To maximize the effectiveness of your ad, ensure your Yelp Business Page is completely filled out and accurate. Also consider the Upgrade Package, which includes seven products to help you make a strong impression, such as Business Highlights that showcase what makes your business unique and a Call to Action button to help increase conversions.

Search engine results pages

If you’re specifically looking to increase website traffic, then search engine advertising can be a low-cost way to market your business online. If that’s the route you take, you’ll be looking at search engines like Google and Microsoft Bing.

Google Ads offers two ways to advertise your business. The first is the Google Search Network, which displays your ad on search engine results pages for keywords you select. The second is the Google Display Network, which uses an algorithm to display your ad on participating third-party websites.

Whichever option you choose, create a landing page to welcome new visitors to your website and introduce them to your business.

Local business associations

Teaming up with your local chamber of commerce or another small business association may seem like an old-fashioned advertising idea, but it can be a great way to promote your business locally and get to know other small business owners in your area.

Not only will you learn about networking events and promotional opportunities, but you can also get your local business featured on the website of your local chamber and other relevant professional associations.

Local websites won’t have the same global reach as big-name ad networks, but they can help build your brand’s online reputation and highlight your credentials.

6 steps to effective online advertising

Once you’ve decided where to put ads, online advertising for your small business may be easier than you think. Follow these steps to successfully market your brand.

1. Define your budget

Before you leap into crafting those eye-catching ads, it’s essential to establish financial foundations with a budget. Decide upfront what you’re ready to invest in online ads.

The good news is that online advertising comes with a lot of flexibility. As your campaigns take off and you begin to gather insights, you’ll have the opportunity to adjust your spending.

2. Do your research

Next, do some research and develop a marketing plan to ensure you get the best return on your investment. That includes getting familiar with the latest advertising conventions in your industry and seeing what your closest competitors are doing.

While it’s good to get creative and think outside the box, you’ll need to adhere to certain advertising standards to ensure you don’t run afoul of any guidelines. Some social media platforms may have restrictions on what types of products and services you can advertise, and you’ll need to disclose any “sponcon” or branded journalism.

By studying online ads from other businesses, you’ll get a sense of how digital advertisements look in your industry and area  and how they fit in with your existing marketing efforts.

3. Find your target audience

It isn’t enough to choose a marketing platform and hope your content reaches the right audience. You’ll have a better chance of reaching your ideal customers when you use advanced advertising methods like keyword research and retargeting.

Keyword research is especially important for search engine advertising. In most cases, the cost per click will be based on how popular a keyword is—that is, how many other businesses want to get their ad in front of people searching for the same search terms. Choose less common keywords for a more cost-effective keyword strategy.

Meanwhile, remarketing and retargeting focuses on showing ads to people who have already visited your site or purchased products from you. Retargeting ads works best with social media and email marketing campaigns.

4. Create your advertisements

Next, it’s time to create your ads. It may be as simple as writing ad copy, or, depending on your ad format, you may need to hire a photographer or graphic designer to create high-quality content for your online ad. This is especially true for video ads or native ads with high production values.

Start the design process early and leave room in your marketing budget for potential video and audio production, editing, copywriting, and any other skill your ad requires.

Not all ads require that much work, though. Some platforms make it easy to create new ads based on existing content. For example, with Yelp Ads, you can create custom ads based on the information that’s already featured on your Yelp Business Page.

5. Launch your ads

Now you’re ready to launch your ads. For most display ads, you’ll be prompted to select an ad budget: the amount of money you’re willing to spend on PPC ads.

Since you’ll typically only pay for an ad if someone clicks on it, the cost to launch your digital ad is generally $0. The cost for each click will depend on factors like how many people are targeting the same keyword. Setting an ad budget ensures you won’t be stuck with an astronomical bill if your ad gets more clicks than you expected.

With Yelp Ads, you can spend as little as $5 per day and raise or lower your ad spend at any time. There’s no long-term commitment or fee for canceling your ad.

6. Track the results of your campaign

Once your ad is up and running, keep an eye on the metrics to ensure you’re getting a good return on investment. Key advertising metrics include:

Impressions: the number of times your ad has appeared to a viewer

Click-through rate: the number of times someone has clicked on your ad as a proportion of impressions

Bounce rate: the percentage of visitors who leave your website without viewing any additional content or taking an action

Conversion rate: the percentage of visitors who take a preferred action, such as making a purchase or signing up for your newsletter

A low click-through rate may mean that your ad isn’t appealing enough or isn’t reaching the right audience. A low conversion rate means that your ad is working but your website or landing page isn’t compelling enough. Use these insights to make adjustments to your ad, and continue to optimize it until you’re satisfied with your return on investment (ROI).

Use online advertising to elevate your small business marketing efforts

Wrapping up this comprehensive guide on online advertising for small businesses, it’s clear that the digital landscape offers a vast number of opportunities to connect with potential customers.

With its precise targeting, rapid deployment, and measurable outcomes, it’s clear that online advertising has immense value to small businesses. Choose from an array of types of online advertising as well as the various platforms you’ll run them on. Be sure to do proper research and define your budget before launching your ads, and evaluate their performance regularly to ensure they’re effective.

For those just beginning their online advertising journey, Yelp Ads presents a great starting point. With its user-friendly platform and targeted reach, Yelp Ads can help small businesses tap into a local and engaged audience.