How much does an ad cost online for small businesses?

How much does an ad cost? It’s a common question for small businesses—especially when it’s time to get the word out quickly about a new product, service, or expansion.

For small business owners, there isn’t a flat rate for every type of ad out there. The cost of an ad will depend on the type of ad, which advertising platform you use, your target audience, location, and several other variables.

Here’s what you need to know about typical advertising costs and how to create an effective advertising budget that reaches the right customers.

How much does an ad cost? Traditional ads vs. digital ads

Traditional advertising options include things like billboards, newspaper ads, direct mail, and TV commercials. These types of ads typically incur a flat fee per advertisement. The geographic location of the ad (e.g., New York City) and its physical placement (a front-page ad versus a classified ad) are the biggest factors in determining price.

For example, four weeks of billboard advertising in New York City costs an average of $5,110 while digital billboards cost a more reasonable $524. On the other hand, a 30-second ad on TV can cost anywhere from $1,000 to more than $50,000 to produce and an average of $104,700 to air.

Digital advertising options include search engine advertising, social media advertising, and other types of display ads that appear around the internet. Online ads are usually paid for on a pay-per-click (PPC) basis, which means you’ll only pay when someone clicks on your ad, not every time it’s shown to a potential customer.

Although traditional advertising still has its place, ad spending in that space decreased by 2.6% in 2023 while digital ad spend increased by 8.2%. For many small and local businesses, digital advertising provides a better return on investment due to its flexibility and lower average costs compared to traditional ads.

Factors that determine how much an ad costs online

Estimating the cost of advertising online can be tricky, even for experienced marketers. Web advertising costs vary widely depending on your ad format and which digital marketing channels you choose. Here are four major factors that can help you create an advertising budget and determine how much it costs to advertise a business.

Ad placement

Ad placement refers to when and where your ads show up. This isn’t just about which sites you advertise on but also where your ad is actually displayed. Does your ad have a prime spot on the homepage of a website or is it just one of many banner ads?

The placement of an ad can greatly determine the costs of advertising online—it can even separate free advertising options from paid ads. For example, you can post on many social media platforms for free, but you’ll need to pay to turn your post into a paid ad that appears in customers’ news feeds.

Likewise, you can add or claim your Yelp Business Page for free and also invest in Yelp Ads. With Yelp Ads, your business page is placed 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.

Location and industry

How much does it cost to advertise a business online? That depends on your location and industry. For example, if you’re advertising on search engines, the most in-demand keywords will have a higher cost-per-click (CPC) than others—that’s why it’s important to put together a keyword strategy before launching an ad campaign.

Competitive markets and high-value industries will have higher advertising costs than others. On Google Ads, the average CPC for online education is $9.95 compared to $0.68 for the electronics industry. Businesses in the medical, legal, and real estate industries face some of the highest advertising costs online.

Your region also makes a difference. For instance, Facebook Ads in North America average $0.40–0.65 per click versus $0.05–0.10 per click in Central America and Southeast Asia.

Audience targeting options

Some online advertising platforms make it easy to reach particular demographics by targeting users based on age, gender, or other distinguishing features. Although this can lead to more conversions, it typically increases your average cost-per-click.

For example, Facebook and Instagram ads offer ad retargeting, which is when your ad is shown to users who have already engaged with your content.

Another type of ad targeting is programmatic advertising, which delivers ads to smart TVs, streaming platforms, and other mobile devices based on advanced factors like device type or even time of day. Many programmatic ads use real-time bidding, a type of ad auction that can significantly drive up how much an ad costs.

Production values

Finally, there are your production values—that is, how much time and money you invest in the quality of your ad. For TV advertising, viewership is just part of the picture: You wouldn’t plan on running ads during the Super Bowl if you didn’t have the budget to create a high-quality TV commercial with a major celebrity.

Production values are just as important for digital ads whether you’re running video ads on YouTube or banner ads on a social network. High-quality ads make your business more appealing and some advertising platforms have strict quality guidelines —they won’t show your ad if it doesn’t meet the criteria.

So if you’re wondering how much do advertisements cost, be sure to factor in graphic design, photography, and ad copywriting to give it that professional sheen.

How much is paid advertising?

Now that you know which factors determine how much an ad costs, the next question is: How much is paid advertising on some of the most common advertising platforms? Here’s what you can expect to pay for ads on the most popular websites and ad display networks.

Social media advertising

Social media is important and can be a cost-effective advertising option as these platforms allow you to target specific demographics, such as B2B customers on LinkedIn or Gen Z users on TikTok. You can even partner with influencers or post free content to your social media page as part of your content marketing strategy.

Still, making the most of these advertising channels can take a big part of your online marketing budget. TikTok ads cost $10 per 1,000 impressions, but you’ll need to commit to a minimum ad spend of $500 per campaign to get it up and running.

LinkedIn Ads can cost as much as $8–14 per click, depending on which pricing model you choose: cost-per-click (CPC), cost-per-impression (CPM), or cost-per-send (CPS). CPS is for Sponsored Messaging, in which you send a message directly into a lead’s inbox while CPC and CPM are for video ads and text ads.

Search engine advertising

Search ads appear on Microsoft Bing, Google Search, and other search engine platforms. They typically appear on the same page as organic (non-paid) search engine results and are targeted based on specific keywords or phrases, such as “pet food online” or “home cleaning services in new york city.”

Search engine ads are used to build brand awareness or drive new customers to a landing page on your website. But how much does it cost to promote a website on Google Search? According to Instapage, the average cost-per-click is $2.41, but advertising costs vary widely by industry and can be as high as $6.35.

Some search engines offer display ads in which your online ads are displayed outside of search engines on other sites in the display network. These display ads are usually cheaper with an average CPC of $0.59 across the Google Display Network.

Online business platforms

Online business platforms include sites like Yelp where customers can find new businesses, read reviews, and compare their options. These platforms can be a great place to advertise because they provide the discoverability of a search engine along with the content marketing tools of a social media platform.

More than 80 million people visit Yelp each month looking for businesses of all types, from electricians to accountants. When you invest in Yelp Ads, your business will be displayed in key places on the site with a daily ad budget of as little as $5 per day.

Yelp makes it easy to track your performance in the Yelp Ads dashboard, and you can pause or cancel your ad campaign at any time. Plus your ad can be set up easily and quickly using the information you’ve already provided on your business page.

How much does it cost to advertise a business? 4 tips to lower your online advertising costs

A general rule is to spend about 7–10% of your revenue on advertising each year. But if you’re just starting your business, you may work with an even tighter budget. Here are four ways to reduce your advertising costs while still reaching your business goals.

1. Create your own marketing materials

Unlike traditional advertising options, which may require working with an ad agency or production house, digital advertising is easy to do on your own. Even small business owners without any advertising experience can set up their own campaigns using Yelp Ads or another self-service advertising platform.

If you need the help of a copywriter or graphic designer to make your digital ads stand out, you can find freelance professionals on sites like Upwork and Fiverr at varying price points. The going rate for logo design is $100–800, and once you have your initial branding materials, you can use them for future ad campaigns.

2. Understand the pricing model

Estimating the cost of PPC advertising can be a challenge. Some advertising sites use a cost-per-click model while others use cost-per-thousand-impressions (CPM). Rather than a flat price, online advertising costs are often determined in real time based on how much other advertisers are willing to spend to target the same customers.

Since you don’t know how much an ad will cost in advance, you can set a daily budget to ensure you don’t exceed your spending limits. If you’re targeting a competitive keyword, your budget won’t go as far and you may need to increase it. But when you know which pricing model you’re using, it’s easier to get a rough estimate of how many customers your ad is likely to reach.

3. Track your metrics

Take stock of your campaign often to ensure you’re getting a good return on your investment. One way to do this is by tracking the click-through rate (CTR), which is the number of people who click on an ad out of the total number of people who have seen it. A low click-through rate means your ad isn’t working—maybe it isn’t eye-catching or compelling enough to drive people to click. If that’s the case, consider doing A/B testing to optimize your campaign.

Another useful metric is cost-per-acquisition (CPA). This is the total amount of money you spend on a campaign divided by the number of new customers you acquire. If you spent $100 and got two new customers, then your CPA is $50. That’s how much it costs you to acquire each customer. A campaign that costs $1,000 but brings you 200 new customers has a better CPA at $5 per customer.

4. Explore free marketing options

Digital advertising is just one component of a successful marketing campaign. Boost your ad spend with other marketing efforts like email marketing or social media marketing. These free marketing options can help you reach more customers and nurture leads who saw your ad but aren’t ready to buy yet.

You can also drive more traffic to your business website with local SEO, which helps you grab the attention of users who are searching for products and services in their local area. Stay engaged online and respond to customer reviews on sites like Yelp to build your online reputation. All of these steps, when taken together, can expand your web presence and make your ad campaign more successful.

How much is an ad worth? You decide

Compared to traditional advertising options like TVs and billboards, digital advertising is more flexible and cost-effective for many small businesses. Expect to pay $1–2 per click for online advertising, but remember that the cost of an ad can vary widely based on your location, industry, and advertising platform.

Discover more ways to advertise a business with any budget and introduce your brand to potential customers near you.