You have questions about paid ads for your local business, and our experts have the answers. Join Hibu’s Chief Product Officer, Nick Hopkins, as he talks about the intricacies and importance of paid advertising for small and medium-sized businesses.
On this episode of Ask an Expert with Hibu, we asked our CPO, Nick, some of the things you’ve probably been wondering about when it comes to running paid ads for your business. He broke down how paid ads are one of the fastest ways to generate leads when combined with a strong organic marketing foundation, how businesses can determine the right advertising channels and budget, and what metrics matter most when measuring success.
Nick also shares how Hibu specifically uses data, AI, and ongoing optimization to improve campaign performance, while highlighting new advertising opportunities that can help local businesses stay ahead in an evolving digital landscape.
Check out the full video below!
[Transcript]
Nick Hopkins
Nick 00:05
Local marketing doesn’t have to be complicated. This is Ask an Expert with Hibu, where we break down the strategies helping small and medium-sized businesses grow smarter online.
Nick 00:14
Hi everyone, I’m Nick Hopkins, Chief Product Officer here at Hibu. And in this episode of Ask an Expert with Hibu, we’re going to be covering some popular questions about paid advertising for local businesses.
[On-Screen Question: How important are paid ads for a local business?] 00:25
Nick 00:31
Paid ads are probably the most direct and immediate lever that a that a business owner can pull to drive more leads to their business. So, you know, they're really easy to run, to increase, to decrease over time, et cetera. That said, you know, our view is that, you know, paid ads always need to be run on top of a good organic marketing program, and they complement that marketing program. So, you want to set a foundation of having good online presence, you want to set a foundation of doing good organic marketing.
But then the lever you can pull and adjust up and down again is the paid ads. If you want to drive more demand, you want to drive more leads to your business, et cetera, you can increase or decrease that spend over time.
[On-Screen Question: How do you determine which platform is best for a local business?] 01:09
Nick 01:15
We run ads across all the major networks. We run on Google, Meta, Amazon, and Microsoft, you know, the big four globally. In an ideal world, we like a business to run an omnichannel program, so to run ads across all those and then to be able to adjust over time as we as we see the data come in, we understand which channels are working the best. That said, we do have a huge amount of historical data on what channels will perform the best for certain types of verticals and certain types of geographies. So, we use that to guide the initial conversation and the initial structure and allocation of spend. And that helps us come out of the starting gate with a better mix to begin with. We're actually investing in and rolling out a new technology called media mixed modeling as well now.
And what media mix modeling does is takes all of our historical data, so it's literally 30 million rows of campaign performance data across those different channels, brings it into a massive statistical model, and then for any given business and any particular geography or type of geography, we can tell out of this media mix model what the best mix is to get the most cost effective leads for the business. And so, we use that as a starting point. And then obviously we adjust over time as again, we see the actual data for that business come in, we can change the, you know, the marketing spent up and down for the different channels.
[On-Screen Question: What kind of a budget should a local business expect to spend in order to see results from local ads?] 02:35
Nick 02:42
Yeah, I mean the rule of thumb, if you talk to like the small business administration or other experts out there, the typical rule of thumb there is a business should be spending about 10% of their total gross revenue on marketing. That obviously changes with the life cycle of the business. So, you know, a business that's just starting out, getting their name out there, doesn't have a lot of organic presence yet, probably wants to spend more than that. You know, it can go up as high as 20%. An established business or one that maybe, you know, that the owner's getting ready to retire and doesn't really want to grow the business anymore, might be on the low end of that, maybe 5- or 6%. But that 10% is typically the rule of thumb.
And what we're doing when we take that budget is we're then again, allocating it back to those different channels and trying to make sure that we have enough budget on a given channel. So, if you don't have sufficient budget to spend effectively on all four of those channels I mentioned before, you may narrow that to two or three and make sure you have enough budget to run a really effective campaign on the channels easy to select.
[On-Screen Question: How do we know if paid ads are generating an ROI for a small business?] 03:42
Nick 03:49
We equip each of our campaigns with a technology we call multi-channel lead tracking. So, what that does is lets us measure phone calls and other types of leads, you know, holistically across the entire business, every point of contact with the consumer. For both paid and organic. And so what that does is lets us look at the total lead volume that's coming in, adjust the marketing accordingly, optimize the marketing accordingly, make sure we're getting an effective lead volume. And, again it allows us to go and adjust the campaign over time, you know, to make sure we're optimizing that cost per lead for the business.
[On-Screen Question: How has AI changed the way digital marketing companies manage paid advertising campaigns?] 04:25
Nick 04:32
Yeah, it's interesting because, you know, the theory and the premise from, you know, Meta and Google and others is kind of we've got AI in our system, so we'll do it all for you, right? You know, Meta literally comes out and says, “Give us your money and tell us your website and we'll do everything else for you. We'll build your ad creative and run your campaign for you.” But the fallacy in that, and why it's really not that simple, is that if you do that without having all the rest of the underpinning of your marketing program together, you're going to get the wrong type of leads, right? You're not going to get a cost-effective spend for your business.
So, what to us is really critical is while we want to leverage that AI within their algorithms to do optimization of campaigns, because they do a great job of that, we want to make sure that the campaign is set up from the outset to drive the right type of leads for that business.
So, that means making sure that all the content on their website, is aligned with all the content in their ad creative, that the targeting is set up properly for the ad campaign. So, we're getting the most out of each of those channels that we possibly can get.
So, AI adds a layer of, you know, what sounds like simplicity but actually ends up in some ways being complexity. Although it does add a lot of power, horsepower, in the algorithms to do the actual targeting and generate results.
[On-Screen Question: What industries tend to person best with paid ads, and which industries are more challenging?] 05:52
Nick 05:59
It's not, I mean the ones that are challenging are maybe the ones that have a really niche product or a very niche audience where you can't necessarily spend the budget you want to. You know, but outside of that, it's not so much whether they're challenging or not. The cost structure definitely changes from vertical to vertical, right? So, a roofer or a lawyer, especially a lawyer who's specializing in say, tort law or something like that, is going to inherently have a higher cost per lead than, say, a restaurant or a taxi company or an auto repair shop, right? But the systems generally adjust to that, right? So, we may need more budget to be successful for a lawyer or a roofer. They may pay more per lead, but the business that they get on the back end of that when they convert that lead is much higher as well, right? The cost to repair your roof on your house or replace the roof on your house is much higher than the cost of going and having your transmission tuned up in the auto repair shop. Right. So typically, the systems kind of adjust for that. So, you know, most of these systems work on a bidding basis. So, you're bidding for inventory, you're bidding and, you know, the price you're paying in that auction is based on the value of what's coming out of the other end of that auction, you know, which is the lead.
[On-Screen Question: How does Hibu differentiate its paid advertising products from other digital marketing agencies?] 07:13
Nick 07:20
In terms of differentiating, it starts with really looking at it holistically. So rather than going out and saying, well, we're going to run a search campaign for you—and there's lots of agencies that specialize in just doing search—or we're going to run a display campaign or social campaign for you, we're building up your marketing program from the ground up. So, we're creating that foundation for you, making sure you've got all the right content on your website to be found and ranked and indexed well. Make sure that it aligns with your marketing goals and what you're trying to achieve. We build a content marketing or SEO program on top of that. And then the paid ads are complementing that. So, we're making sure that all the elements of your marketing program are aligned. So that's the first thing.
Beyond that, it's a, you know, we have a huge amount of historical data. We've been running literally tens of thousands, hundreds of thousands, of performance campaigns over the years for all different types of businesses. We're able to leverage that historical data to bring it in and set up the campaigns for success from the get-go. So, we're not having to learn from scratch for each campaign as we go. We're running a plumber campaign. We know what is successful in a plumbing campaign, and we can make that work well.
And then more recently, we've been adding some really cool features. I mentioned the media mix modeling before, but things like first party data targeting, right? So that's a that's a technology and a capability that is used really extensively in enterprise advertising. Large brand advertisers use it all the time, really successfully. And that's about creating an audience of who is your ICP, who is your ideal customer, what do they look like? So, we take all the leads we generate, reviews regenerate, contacts we regenerate from our marketing automation program, we compile that into an audience of the customer profile we want to reach. And then we upload that into Google and Meta and Microsoft and soon Amazon. And that tells them what the ideal audience is, and it really refines the targeting. That's, again, a technology that is very difficult to operate at a small scale, you know, at an SMB level. They typically don't have enough data, they don't have the technology to combine that, you know, to capture that data and then deliver that data back into those advertising systems. We do that on their behalf, it's all automated within our platform so we've been able to scale that up to deliver that kind of technology to the SMB.
[On-Screen Question: How customizable are Hibu’s paid ad campaigns for different industries?] 09:35
Nick 09:42
And often it's focusing, you know, beyond the vertical, right? Down below that. So, you may have a plumber who does everything, but the things that they really care about promoting are, you know, water heater repair or kitchen renovations, right? So, one of the things we do is we're onboarding clients is we take them through, “what are your key lines of business, what are the key profit centers for your business, where do you really want to focus your marketing?” And then we build the marketing program, again from the website on up to the paid ads, to make sure that it's aligned with those goals and make sure that again, we're bringing in the types of leads that they actually want for their business that are going to be profitable for them and rewarding for them.
[On-Screen Question: How often are Hibu campaigns reviewed and optimized?] 10:20
Nick 10:27
I'd say they're reviewed on a continuous basis. So, we have automated processes that go through and review those campaigns all the time. So, on a daily basis, an hourly basis. So, we're looking at the data that's being generated by those campaigns. We're comparing it to our benchmarks. Again, we have a huge amount of historical data that tells us what should a plumbing campaign look like, what kind of cost per lead should it generate. So, we make sure that their campaigns are running within those benchmarks. If they're not, they get flagged immediately and they get, you know, reviewed by a human being and they get updated or optimized to make sure that they fall back. And we're really successful at, you know, if something sticks its head up, it's the, you know, the whack-a-mole game, right? If something sticks its head up and isn't performing within those benchmarks, we get it back within those benchmarks really quickly.
There are additional reviews that happen. Sometimes they're initiated by the client themselves. They come in, they have questions or they want to make changes and we'll make changes to the program and optimize it or they'll, you know, they'll decide if we talked about lines of business before, they'll decide, you know, seasonally they may change what line of business they're running the campaign for and who will make those changes for it. So those kind of things happen ad hoc, but the overall kind of general performance monitoring is happening on a continuous basis.
[On-Screen Question: What kind of reporting and transparency does Hibu provide to local business owners?] 11:37
Nick 11:44
We have a dashboard for our Hibu One Platform. That dashboard's available obviously 24/7. So, they can come in anytime. They can see everything from, what does their ad creative look like, what kind of targeting is set up for their campaign, what are the results they're getting from their campaign. That's all visible within that dashboard. We also have a real-time notification system within that dashboard. So, if instead of coming in and looking at their data, they want to have that data pushed out to them, they can set up notifications that can be pushed out via email, via text, or via web push and get those on a daily, weekly, or monthly basis for their performance. And obviously, that dashboard is also where they come in and manage the leads that we're generating for their marketing program. So, they into the Hibu One dashboard, they can see a list of all their leads. Those leads are scored via AI, so they're prioritized for them to let them know how to manage. And again, they can come into the dashboard and look at that, which many of our clients do. Or they can rely on having that information pushed out to them, they can tailor the notifications around the types of leads that they're most interested in seeing.
[On-Screen Question: What’s one local ads feature business owners should know about?] 12:44
Nick 12:51
Most of our clients are not really trying to become marketing experts. So, they come in without really understanding how digital marketing works. They don't want to know how the sausage is made. They want the results out of the out of the back end, right? So, they want they want to get those leads. They want those leads to be high quality, they want those leads to be low cost, and they want to be able to convert them into customers. And we give them all the tools to do that. In terms of what I'm excited about, you know, I mentioned the first party audiences, the ability to take our data that we're capturing on behalf of those clients and feed that back into the ad campaigns and make them perform better over time to create that flywheel effect of better and better performance and better and better ROI over time. I think AI is enhancing our ability to do that, in that we can now, you know, use AI to score the leads. We know much better which, you know, which leads are delivering particular value to the client. We can leverage that data on their behalf to make the campaigns perform better and better over time. That's really where a lot of our investment is going these days within our platform.
[On-Screen Question: What innovations or new paid advertising products is Hibu most excited about right now?]13:52
Nick 13:59
Yeah, some of them, like I said, are more within the existing platform. So, using AI, using the data, rear you know, re-energizing the data. But there are some, you know, there are some new, I'll call them ad surfaces, that are that are coming out that are available to SMBs now. So, you look at things like, you know, within the AI LLMs themselves. So, within you know, Google AI mode, for example, is now starting to experiment with ads. OpenAI and ChatGPT is starting to run ad campaigns. Those initially started out really as enterprise scale and not really accessible to SMBs, but they're very quickly evolving and becoming available to SMBs. So, we're doing a lot of experimentation and testing around those to make sure that, you know, we know the right best practices and we can apply them to our local business customers and make them effective.
So, that's one area of excitement, I think, in a similar sort of vein, what we call connected TV or ads on streaming TV. I'm sure if you watch any of the streaming services, you know that a lot of those are ad supported now. Again, those ads started out being really enterprise level, but the technology is there now to take those down to the SMB. And so, we're experimenting with that as well. So those are probably the two, from a paid ad perspective, the most exciting things for me is those new channels for advertising and opportunity to reach a new audience.
Nick 15:23
Thanks for joining us for this episode of Ask an Expert with Hibu. We'll be back with more expert insights soon. And in the meantime, check out Hibu.com to learn more about keeping your local business visible online.
