What is the average ROI on advertising by using google AdSense et. al?<p>Advertising is an assumed cost of business for any medium to large company these days, but I feel there's a growing silent minority who slowly believe, slowly <i>know</i>, that advertising in the online space is unfeasible for a majority of products. Advertisers like google make so much money because online advertising is one of those things that is super easy to keep throwing more money at. I wonder how many companies would benefit from entirely ditching online advertising and pursue alternate methods like direct outreach or sponsored content.<p>We might see 4,000-10,000 advertisements a day[1]. Do you remember <i>two</i> advertisements you saw today? Mere-exposure effect is the only thing going for it. Which may be fine if you're Coca-Cola, not so much if you run an online clothing store.<p>[1]<a href="https://webtribunal.net/blog/how-many-ads-do-we-see-a-day/#:~:text=According%20to%20marketing%20experts%2C%20the,social%20media%20is%20an%20ad" rel="nofollow noreferrer">https://webtribunal.net/blog/how-many-ads-do-we-see-a-day/#:...</a>.
Time and again, people make the same mistake. Online ads work if you are selling a more-or-less commodity. If your product is a propane tank, paying for AdWords to be #1 whenever anyone googles "buy a propane tank" will generate leads (whether acquisition costs would make sense is another story).<p>If you have just designed an AI-powered robot for welding propane tanks, you won't get a single lead via AdWords. Your best bet is trade shows and sales people who <i>know people</i> inside companies that need to weld propane tanks.
> <i>I once joined a company as a consultant - in the previous 12 months, they'd spent their entire $1,500,000 marketing budget on Google/Facebook ads. Using Hubspot we could track leads through the funnel and look at exactly how many customers this money had generated. The answer was 0.</i><p>This just doesn't pass the smell test for me. Places that are smart enough to have raised/made $1.5 MM just for marketing are generally smart enough to roll it out slowly, track conversions, and be adjusting ad content and ad placement along the way. You know, the absolute basics -- "AdWords for Dummies".<p>This makes as much sense as saying that a company spent $1.5 MM on five engineers for a year without a single line of code ever being written.
Feels like a cope post and how much nobody cares about your product.<p>I spend $100 a month on Ads for a physical business and get 1 or 2 people in the door a month who tell me they saw my ad.<p>Can I get $10 mil in VC funding now?
How I know the person who wrote this doesn’t understand user acquisition.<p>They give an example that their conversion rate on their website is (cue some heavy math /s) 0.16 % so if they want to acquire X customers they need to bring in Y traffic.<p>But of course anyone who has done even the most basic user acquisition knows that the way you achieve a visitor to your site is more important than the visitor. Customers who show up organically have a vastly higher conversion rate than the randos who show up from your ad, in fact many of them probably aren’t even going to be real so your conversion rate is going to nose dive as soon as you start using paid acquisition. Happens every time.
But you can drip your money into the ads and see if anything comes back. How could you run it for 12 months and 1.5M?<p>Doesn't even matter whether you have PMF, you can just use the direct feedback: ad was on for two weeks and nobody showed up, let's stop and think.<p>I've run little web shops and you always get some kind of interest. It might not pay back, but you wouldn't get zero.
Sounds like a combination of an unpolished product with insufficient demand and wrong business model. Users today don't want to pay XXX up front for a complicated product, they want a free tier where they incrementally learn about features.<p>I just looked up what I spend on Google Ads for a small campaign on SQL/AI related keywords for <a href="https://aihelperbot.com" rel="nofollow noreferrer">https://aihelperbot.com</a>:<p>- $699.95 (part of a spend $400 to get $400 deal)<p>- 244K impressions<p>- 3.68K clicks<p>- 15 conversions<p>The conversions where "Begin checkout" events for a free trial period (I now run free tier). I don't know how many actually end up paying or cancel the free trial within the first week. Was it worth it? No. But I would consider advertisement once I reach a bit higher revenue. I talked to multiple newsletters who cater to my customer segment but it is still too expensive for since I am bootstrapping myself.
I've heard of similar things, like a team "turning on" Facebook ads and just leaving them running for a total of £1m, with almost nothing to show for it at the end.<p>I don't think many people understand just how much active management these things take. New ad content is needed all the time, new testing needs to be done, ad channels change in cost and effectiveness month to month and need balancing appropriately, targeting needs to be reworked.
I used to sell homemade watercolor kits. I tried advertising in a bunch of places: Instagram, Reddit, Pinterest. I was targeting my audience pretty well but it just did not work.<p>I happened to mention this to someone in marketing at my company, and he said buying ads for a single product like that rarely works. Advertising is useful if I can direct potential buyers to a shop where I have a variety of art goods. Then the next time they need something art-related, they might visit my shop. But selling <i>just</i> watercolor kits I was better off making YouTube videos, making posts on Reddit, etc. My CPA was something like $35, and I was selling the kits for $29.99. I ended up selling them to friends and family, and giving a few as birthday gifts.
Huge clickbait. Doesn't even address the answer of "how we got there", just tries to sell you on "how to market properly, my way".<p>How they got there is: They didn't set up analytics and ramped up ad spend way too fast.
As someone who feels allergic to the amorphous marketing talk I found this article refreshingly concrete. I like the idea of specific goals over just "marketing" that I usually hear.
I'm a professional B2B advertiser who specializes in growing start-ups. This article is kind of silly. It's like going to a start-up with a really bad engineering team and saying this is why engineering is useless.
I realise the headline story just is a jumping off point for the article, but it still begs the question: why did it take the company in question an entire year (and $1.5M) to realise their marketing wasn't working?<p>Now that's a story I'd like to hear.
Marketing is not ads.<p>Marketing your product is placement. Was the product placed in the proper market, at the time where it would receive the most eyes? Was the product placed in the proper segment of the market? Was the placement during a time where the market was slowing?<p>Ads are only a tiny portion of marketing. The where, when, and how of marketing are just as -or even more- important for success.
"We Spent $1,500,000 on Ads Without Getting a Single Customer" but they did get the top #1 spot on Hacker News so maybe that's all they wanted? Just wine about spending all this money (poorly) and make a post about it and get free advertising with a trip to the front page of Hacker News.
I don't see how you can spend 1.5m and not see any return.<p>Sure spend 10k, if you don't see results, try something else.<p>I assume they have customers from elsewhere, so they must have a clue who their customers are.<p>I don't really get the venture capital model anyway. If my business is anything like anyone elses, it takes a few years to find out what actually works. You don't need millions to find that out, and you don't need millions in marketing until you've actually found that out.<p>As it is this is a story of a company not knowing what they're doing pouring 1.5m down the drain, and still don't know what they're doing.
it's actually mind boggling how bad the average marketing exec is at most tech startups, there's companies that have raised 10s of millions that have absolute garbage implementations for analytics and tracking. Lots of people just bluffing their way into high paying gigs and throwing money at ads to get results. Even massive companies like Uber and AirBNB threw away hundreds of millions because of dumb ad spend without proper tracking:<p>uber - <a href="https://news.ycombinator.com/item?id=25623858">https://news.ycombinator.com/item?id=25623858</a><p>airBNB - <a href="https://www.wsj.com/articles/airbnb-says-its-focus-on-brand-marketing-instead-of-search-is-working-11667506438" rel="nofollow noreferrer">https://www.wsj.com/articles/airbnb-says-its-focus-on-brand-...</a><p>I'd hire an affiliate marketer who built their own website and grew traffic to make some money over the average VC backed marketing exec. Same goes for most big corporate marketing types, their skillset is worthless for a startup. Any person who has made $1 online from scratch would be better
The article suggests cold emailing. Never use your main domain for sending outbound marketing stuff. It doesn't take many to categorize the emails as spam before the domain suddenly becomes blacklisted and unusable for not just marketing but anything. Your outbound emails will hit a distributed black hole.
I don't understand how people can plan customer growth with OKRs like "get 666,250 additional visitors". Or "increase revenue by 8,000,000 by EOY".<p>First of all, why EOY? And where does that 8m number come from? It just seems so arbitrary. Why not set growth direction with some lower boundary, and have simple guidelines like "If you do X, you will probably slow customer acquisition, so avoid X when makes sense" and "If you do Y, you will probably speed up customer acquisition, so try to do Y when makes sense".
I’m still wondering if they actually clicked through any of their ads. You know just to see if everything is actually working like it’s supposed to. Just like going to your companies website and filling out any of those forms found there. Then follow up if they work or not. Then maybe having a significant other clicking through the ads. To make sure things make sense to them. I mean if you’re spending the money on it might as well kick the tires.
> If you don't have any PMF, don't invest money in marketing<p>A couple problems.<p>1. This is just terrible advice.<p>2. Not all marketing is flashing rectangles. E.g. industry trade shows.
What terrifies me about customer acquisition is that people's preferences are highly homogeneous. Sometimes even finding a group of 100 people to try out a product seems like a massive challenge. People these days don't like to try stuff from non-authoritative sources. People seem to have a lot of trust issues which causes them to seek out known brands/companies.
This article conflates advertising and marketing right from the get-go rendering most of its advice, at best, as quite limited. Blowing $1.5MM on ads with no result is a sign of no marketing at all.<p>Marketing is a two way process you should start right away -- "before starting", actually.<p>Marketing is understanding your <i>market</i>: who wants your product, who uses it, who decides that it should be used, and who pays for it (sometimes four different people), both at the micro (individuals) and macro (demographics, market lifecycle ("crossing the chasm"), external factors (changing environment)). And then <i>why</i> -- what matters to them? And only later in the process do you start to think of <i>how</i> you might reach them -- ads? What kinds? What tone do you set?<p>At the very beginning you want to get some idea of 1- would <i>anyone</i> at all actually ever use this and 2 - how many o of those people will there be on day 0 and how many in a few years?<p>The other thing you learn is how to design your product: what features actually matter, and for my SaaS how big a back end infrastructure will I need -- with multiple answers like in the first year and when it's time to scale. Lets' you design a small product with affordances for later, revenue-funded changes to make it scale. You don't need K8s on day 0, maybe never, or maybe someday so you design your MVP without supporting k8s but with it in the back of your mind. This all comes from marketing.<p>Many years ago I raised a $20MM A round (when $20MM was a lot of money and there were rarely seed rounds and no "pre-seed" nonsense) on a powerpoint-deck-only plan with no TAM $ analysis at all. It was a drug, and I knew (from talking to doctors and patients) that on day 0 people would pay thousands, and their doctors could sell it to them (specific market where that was the case). Then I had a slide talking about demographic trends (aging baby boomers). Because the marketing was so compelling the investors did their own TAM in their heads.<p>I mention that not because I think you should ignore TAM! But in my case TAM $ was impossible to calculate; OTOH I had enough market data (and the one VC who did some DD doing his own survey confirmed it, to his surprise) that I knew enough about the market to be able to talk about how I could steer (as much as you can in the pharma business) as certain numbers turned out to be wrong.
In somewhat related news Studio Ghibli recently released new last Miyazaki animated movie - The Boy and the Heron - with pretty much no marketing, as in not even a trailer. Its opening box office surpassed that of Spirited Away.
I see this sort of headline and have a visceral reaction, but this time it wasn’t justified (woot). Some thoughts:<p>> I once joined a company as a consultant - in the previous 12 months, they'd spent their entire $1,500,000 marketing budget on Google/Facebook ads. Using Hubspot we could track leads through the funnel and look at exactly how many customers this money had generated. The answer was 0. In total, the ads brought in two leads to the website who never even booked a demo for the product. For $1,500,000.<p>I would posit that this isn’t entirely true. This is what Hubspot saw, but ( unless they’re doing really scaled Account Based Marketing) they’re going to miss non-click signals in the funnel and misattribute results.<p>I’ve done a ton of B2B SaaS marketing over the last ~18yrs and most (>70%) of the marketing ROI comes from reaching your target accounts at scale - and they never fill out a lead form. Instead they respond to your sales team that has already reached out, resulting in sales taking the credit. I’ve quantified this effect several times now with a number of companies so I’m quite confident in it.<p>That said, it doesn’t mean the company he cites was doing great - far from it! They definitely needed to get their house in order and spending $1.5mm was clearly not the right path. Was it zero effectiveness? Unlikely. Was it really effective? Absolutely not.<p>> But how do you know if your business is ready to invest in marketing? To answer this question, you'll need to understand if your company have some form of product market fit - PMF.<p>Agreed. I typically warn clients that are early on in their growth journey to focus on product led growth, start a referral program (I end up doing that a lot) and get their organic growth in order. Paid ads should be an amplifier on a strong foundation, not the foundation itself.<p>> If you don't have any PMF, don't invest money in marketing - you might end up like the examples mentioned in the introduction.<p>It’s less about not investing and more about being smart. Referrals are great and low cost, investment in SEO early on - those are where to put the energy. They are great ways to accelerate your path to product market fit without burning excessive cash.<p>> How did we arrive at this number? As a rule of thumb, the pipeline in startup SaaS businesses usually comes from:
>
> - Marketing: 40%
> - Cold-outreach/sales: 40%
> - Partnerships: 20%<p>Just like my own experience with the ratio of B2B SaaS conversions from leads vs. sales outreach through paid, be very careful here ascribing a rule of thumb to your business. I’ve seen companies with very different mixes of sources, all very healthy. Your business may see greater opportunity from marketing and nearly zero lift from sales, so don’t assume this is a metric to shoot for.<p>Overall, I enjoyed the article and I’m glad to see that despite the clickbait-y title it was a more levelheaded read.