Chapter 21: Paid Advertising

Marketing and advertising can be a waste of money or a fantastic investment. Your product, marketing site, audience, and messaging are all significant factors. The reality is that it’s difficult to understand the value of your advertising efforts. And it’s even more difficult if you were to run multiple advertising campaigns and constantly tweak your marketing site.

Over the last four years, we’ve spent somewhere in the neighborhood of $20,000 on advertising. That has been spread out over many different forms of advertising and many sources. Some of that went toward impression-based ads while some of it went toward Google AdWords.

In all honesty, I haven’t spent all that much time or effort tracking our advertising’s efficacy. I’ve spent some time, but for the most part, our advertising has been little better than haphazard. We use Google Analytics to monitor the quality of traffic from various sources, but we rarely measure any advertising metrics beyond that. As a sole founder, my time is scarce, so we usually just throw small amounts money at advertising now and again without spending all that much time on it.

I can’t give you definitive answers about what you should or shouldn’t do, and there’s no simple “spend $X advertising here” solution. It’s much more subtle than that.

Don’t Try to Make Advertising Into a Silver Bullet

I strongly believe that if we’re having to advertise, we haven’t made a compelling enough product. That’s a bit of an oversimplification, but I believe that’s the safest mindset. A good product with clear messaging is much more valuable than advertising. Advertising can boost a good product or really help a great product, but no amount of advertising can overcome a terrible product. Don’t fall into the trap of thinking that spending heaps of money on advertising will fulfill your wildest dreams of growth. It can be a good complement to other forms of marketing, but without the other pieces, you’re just burning money.

Look Into Branding And Lead Generation

There are two major types of marketing. Branding, usually in the form of impression-based advertising, gets your name out there and helps you stay in the front of people’s minds. It’s unlikely to pay off directly in terms of new customers, but it’ll contribute to your growth over the long term. Because of branding’s long-term nature, it’s difficult to accurately measure. But in the early days of a startup, it can really help get the word out. Unfortunately, to see significant short-term results from a branding campaign, you’d probably need to spend several thousand dollars a month for several consecutive months — and that assumes that your product and marketing sites could convert the traffic once it were to arrive at your site.

Lead generation is a much more precise form of advertising. It also requires more time and effort to manage. If branding is a shotgun, lead generation is a sniper rifle. One of the best sources for this type of advertising is Google AdWords — it’s not cheap, but if you work on your ad copy and landing pages, it can be incredibly effective. We regularly see Google AdWords send higher-quality traffic than our organic search results; visitors from Google AdWords bounce at a lower rate, spend more time on the site, browse more pages, and sign up for free trials more often.

Don’t Send Good Traffic to a Bad Site

One of the biggest mistakes you can make with advertising is to spend money to bring people to a site that doesn’t offer a compelling reason for people to sign up. If you plan to use advertising as a significant component of your marketing strategy, set aside the time to regularly make improvements your marketing website. One of my biggest frustrations is that I’ve never had time — or made time — to work on our marketing. I’ll toy with it every now and then, but we’ve never made anything more than a superficial commitment to marketing. This is part of the reason that we haven’t advertised as much.

Spend Some (But Not All) Your Time on It

In Sifter’s early days, I made the mistake of thinking that advertising was a quick and easy way for us to put small amounts of extra cash to good use. Unfortunately, it’s not quite as easy as spending money — you also have to work on messaging, copywriting, designing, and managing it all. You should also set aside some time to analyze the results after each ad campaign. But keep in mind that optimizing your ads and landing pages can consume large amounts of time if you get caught up in Google AdWords or other targeted marketing. Just don’t fall into the trap of thinking that advertising won’t require significant amounts of your time and attention.

Measure Your Efficacy

Google Analytics is one of the simplest and cheapest ways to measure your traffic quality and understand whether your advertising is worth it. You’ll want to set up some goals and maybe even some custom reports, but starting with Google Analytics is the best bang for your buck in your early days. There are several services like KISSMetrics and Mixpanel that can provide deeper insights into customer behavior, but they require some up-front time to set up, and their monthly fees aren’t insignificant. If you’re bootstrapping, I’d suggest putting those off until you feel like Google Analytics isn’t providing you with enough actionable information. This will save you time and money, and if you put some effort into using Google Analytics, you should have more than enough information to last you for quite some time.

Don’t Forget About Search Engine Marketing

Search Engine Marketing (SEM) is difficult to use effectively, but it can be incredibly powerful once you get the hang of it. (I’m specifically talking about pay-per-click search engine marketing, not search engine optimization.) Search Engine Marketing requires time, research, analysis, and a fair amount of cash. Throwing ten-dollar clicks at a terrible marketing site is nothing more than a quick way to burn cash. If you’re not careful, you could easily burn through several thousand dollars just learning how to play the game. Don’t try to dabble with this if you’re not committed to experimenting, analyzing, and iterating on your messaging and landing pages.

If you want to give Search Engine Marketing a try, I think your best approach is to set aside some time to read about it and learn as much as you can. Then over the course of a week, buy some ads, try what you learned, and monitor things. As you learn more and gain confidence, slowly start to expand your campaigns. During this time, you’ll want to constantly update and manage your landing pages. You’ll probably you’ll lose money for your first month or two, but don’t let that get you down. Over time, your ads and conversion rate will improve, you’ll learn which keywords and key phrases are best for your product, and you’ll start to turn a profit.

Once you’ve perfected the formula to the point where nearly every dollar you spend on pay-per-click ads is profitable, your only effective limit is the amount of search traffic in your niche. So if your niche only sees ten searches a day, you’ll run out of potential searches long before you run out of budget. But let’s say that you get to a point where every dollar you spend on pay-per-click ads generates five dollars in revenue: how much of your money would you spend to buy clicks? I’d hope that your answer is “all of it.”

Continue to Chapter 22: Gimmicks & Promos

This is a chapter from the first edition of Starting + Sustaining, a book about bootstrapping a successful hosted web application business. The second edition, a massive update, will be out in Spring of 2017. You can subscribe here to be notified when it launches.