Online advertising is simply paying to put your business in front of people who aren’t already looking for you — or who are searching for exactly what you sell at the moment they search. This guide explains the main channels, how you pay, and how to think about a budget, without assuming you’ve done any of it before.
The main channels
Almost all online advertising falls into a few buckets. Most small businesses start with one and expand only once it’s paying off.
- Search ads — text ads shown when someone searches a keyword (Google Ads, Microsoft Ads). Best for capturing existing demand: people already looking for a plumber, a dentist, a product.
- Display ads — image and banner ads shown across websites and apps. Best for awareness and re-engaging past visitors, not for immediate sales.
- Social ads — ads inside Facebook, Instagram, TikTok, LinkedIn. Strong targeting by interests and demographics; good for creating demand rather than capturing it.
- Video ads — YouTube and social video. Higher production effort, useful once you know your message.
How you pay: CPM, CPC, CPA
The pricing model decides what you’re actually buying — views, clicks, or results. In one sentence each:
- CPM (cost per mille) — you pay per 1,000 times your ad is shown. You’re buying visibility.
- CPC (cost per click) — you pay only when someone clicks. You’re buying visits.
- CPA (cost per action) — you pay when a specific action happens (a lead, a sale). You’re buying outcomes.
Which one is “best” depends on your goal and how well you can measure. We walk through the trade-offs in CPM vs. CPC vs. CPA — what each ad model actually costs you. For the official mechanics of bidding in Google Ads, see Google Ads Help.
Setting a first budget
You don’t need a big budget to learn something; you need enough to gather data. A workable approach:
- Pick one channel that matches your goal (search if you’re capturing demand, social if you’re building it).
- Set a monthly figure you can lose without pain — many local businesses start at $300–$1,000/month.
- Run it for at least a month before judging. Early numbers are noisy.
- Track one primary result (calls, form fills, sales), not vanity metrics.
Measuring whether it worked
The only question that matters is whether the money came back as more than you spent. That means tracking conversions, not just clicks, and knowing your cost per result. Our guide to reading your ad metrics explains the handful of numbers worth watching.
Next steps: if your goal is capturing people already searching, start with search ads. If you’re introducing something new, start with social. Either way, decide how you’ll measure a result before you spend a dollar.