[rcarrigan87]

Size of business really isn't important, life time value of a customer is really the primary metric when evaluating whether or not a paid channel will work for your business.

If you can convert a lead profitably then it makes sense to advertise in that channel.

If you spend $400 per lead and you convert 1 out of every 10 leads to a paying customer, then it costs you $4,000 to acquire that customer. If the life time value of the customer is $10,000 with a 50% profit margin ($5,000), then you just profited $1K!

PPC is really a game of arbitrage. Where it gets hazy is calculating correct LTV (considering customer turnover, referrals, etc.) and properly tracking conversions. It's not an exact science but good advertisers can get accurate enough.

[rfergie]

The key difference for small businesses is that the fixed costs of learning and managing the system can skew these numbers.

For bigger advertisers these costs are insignificant in comparison to the media bill