PPC has been and will continue to be a amazing channel to acquire and retain customers, but little is said about how over relying on paid traffic can easily destroy companies of all sizes. Google and Facebook Ads tend to show up at most startup’s business plans these days, but what founders and marketing professionals tend to ignore is the fact that solely depending on these channels for growth can easily sentence companies to an inevitable demise. Here’s the reasons behind the risk, and how to hedge against it.
Reason #1: Inventory is not infinite, and CPM is not always predictable
Both paid marketing professionals and business owners tend to forget, perhaps due to similar chemical reactions that occur when our brain experiences addiction, that we are bidding in a landscape in constant change, where ad inventory is not infinite, and competition is unpredictable. We forget that today’s battle ground is most probably less violent than tomorrow’s, and that even though we can do an amazing job at staying ahead from our competition, at times, paid traffic becomes unsustainable for some niches.
Bidding wars are more common every day, in many niches CPCs are on the rise, and profitability is almost impossible to achieve in some mature markets. Let’s take Dropbox as an example. Here’s two slides from a well aged presentation exposing their early learnings.
They quickly learned that the cloud storage market had already driven PPC costs through the unprofitability red line.
However, did Dropbox fail? No, why? More on this further down in this post.
Reason #2: Saturation of core audiences
“Let’s find the winning angle, creatives, landing pages and scale up from there into new audiences”. Sound familiar? Easier said than done right? Why? Because in many niches, as we try to scale paid marketing campaigns, we blow through our core audience pretty fast, and often times it’s all higher cost per acquisitions from there.
Hitting the roof is more common in smaller niches, but it happens to companies of all sizes. Google or Bing Ads search campaigns will drive you to the point where you simply have to explore further from those high intent keywords into broader, less targeted keywords that will bring extra volume. Will they bring conversions? Sure, but at a lower conversion rate, which often means unanticipated higher CPAs. Similarly when running Facebook Ads, we tend to wrongly assume that profitable audience groups are limitless, and when investors begin requesting 10x growth, sure, more traffic can by acquired, but quite often at a significantly higher CPAs.
Reason #3: PPC platforms are external dependencies
It’s very easy to forget that PPC platforms are external forces that may become threatening. It’s widely known how recent privacy laws and concerns have caused substantial changes to Facebook’s and Google’s ad targeting capabilities. This was just a very recent reminder that platforms can, and will change their rules at any time. In some occasions this will represent an opportunity to gain advantage over our competition, but many other times it will represent a threat to businesses that can see their reach significantly decreased, or in the worst cases, terminated.
Just recently advertisers where reminded of how even a social media outage can cause businesses to lose tens of thousandths in a single day. This may not seem as a big threat to some businesses, however for many startups, a bad media buying day can potentially have significant consequences, just like experienced media buyers like David Herrman from Social Outlier has pointed out recently through Twitter.
Truly the ramifications of FB being down for 24 hours on the ads side will be lasting for at least the next 28 days. Most of us have ROAS goals to meet quarterly. So, this happening at the end of Q1 really set us back. I still have one ad account down from Wednesday even.
— David Herrmann (@herrmanndigital) March 15, 2019
So what should businesses do about all this?
Leverage PPC to build organic traffic!
How can PPC help you improve SEO results? Google Ads search campaigns are SEO gem mines. I’ve been ranking pages and launching paid search campaigns for a bit more than 10 years, and some of the most successful SEO efforts I’ve had throughout the years have been thanks to paid search campaign learnings. How? One of Google Ad’s most underrated reports is the search terms report. Inside, Google Ads shows us, along with performance stats, the exact search queries used before clicking on your ads. That makes this report a vast source of proven long tail keywords, some of which are not present in the Keyword Planner or any other tradition keyword tool, making them perfect for your next SEO efforts.
“Test with PPC, Scale with SEO”
Search campaigns allow you not only to understand your target audience’s search intent, it also allows you to validate volumes and profitability of keyword categories and specific long tail keywords. On top of this, if you continuously test ad copy (like you should) you already collected the data necessary to understand exactly what you should be using in your title tag and meta description. Having this gold mine of information only leaves you two steps away from SEO rankings. Check how competitive your discovered keywords are (there are multiple tools you can use for this), prioritize those keywords with better performance and less competition, create SEO content and publish it ASAP!
You run ads to drive sales, right? Wrong, you run ads to acquire customers, so if you’re only focusing your ad campaigns on getting people to hit that buy button, you are not only missing out, you’re assuming that either customers will naturally circle back, or that you’ll be able to acquire customers at the same cost in the future. Both are big assumptions and huge risks.
So what can you do? To start out, why aren’t you building AND nurturing your email list? Did a friend tell you email is dead? I’m sorry to drop this to you, but that friend is either lying or simply does not know what he’s talking about.
Email is great, but there’s other opportunities to keep in touch with current and potential customers. This may not be suitable for every business, but using PPC to drive mobile app installs is a great way to build a loyal audience that’s just one push notification away. We recently worked on a fairly large campaign announcing the alliance of one of our clients with a widely recognized brand. To our surprise, on our top converting channels email came in second to a push notification message with a call to action, yes, one push notification.
Use PPC to fuel viral strategies
Third type of organic traffic we’ll discuss here is the acquisition channel that made unicorn companies such as Dropbox, Airbnbn and Uber what they are now, viral marketing. Pretty sure you’ve read the case studies, but, what role does PPC play in the viral marketing world?
1. Quickly learn what feature / content has the potential to go viral. One of the beauties of paid marketing campaigns is the fact that it allows you to quickly learn what angles/messages/offers work, and which one’s don’t. Only a small percentage of ads go viral, but you still can use PPC to constantly test angles in order to understand how a brand can evolve into something people can’t resist from sharing.
2. Promote viral programs. Kind of a no brainer. If your referral offer is solid, PPC can help you put it in the eyes of millionths of potential brand ambassadors. Uber, Lyft and Airbnb all aggressively promote their #1 growth channel (referral programs), through PPC.
3. Leverage your content strategy with PPC. Content marketing has been the craze for the last few years, but not in vane, it’s been in everyone’s mouth because it works. Smart companies are producing attractive content that brings in potential buyers organically, and equally smart businesses are producing content so good, that they’re able to profitably use PPC platforms as a catalyst for viral growth. Are you capable of producing video, infographics or awesome blog posts with potential of winning some shares? Well, it might be a smart idea to fuel your content’s growth with engagement paid campaigns.
Paid marketing platforms are amazing solutions that enable businesses of all sizes to profitably acquire millionths of customers every year. I plan to continue launching PPC campaigns, hopefully for many years to come. However I have also been a witness of how over relying on PPC platform can put businesses at great, sometimes lethal risk.
Understanding the risk and being knowledgeable about how to mitigate it can transform a threat into an opportunity, and my hope is that at least one marketer or business owner uses the info above to build a more solid marketing strategy for his or her endeavor.
Have you implemented other strategies to leverage PPC in order to boosting organic traffic? Please share those below!