Digital
PPC versus SEO: which is better for an early stage startup?
Ryan McMillan
As a general rule of thumb, always remember that to gain early traction across marketing channels, you need to make a number of small bets, and scale what’s working. Try to avoid going all in on a channel, without having benchmarks across other channels to compare against.
As much as it might surprise you to hear it from the owner of a software marketing agency, that’s especially true for paid channels like Google Ads and Facebook Ads, which can require high upfront investment.
What’s most important is that you ring fence tests and get clear on KPIs, and then follow through and see what the results are. Calling something too early is probably worse than not doing it in the first place!
And, yes, as much as I hate to say it, there are a couple of other acronyms to remember for the reading of this article.
Here they are:
PPC: Pay per click. Think paid traffic from Facebook, LinkedIn or Google.
SEO: Search engine optimisation. Think organic traffic from Google’s search engines.
I’m a big fan of pay per click channels. They’re quick (e.g. depending on budgets and audience size the data flow can happen overnight), they have clear attribution (yes, you should be looking at SaaS unit economics), and most importantly, they work.
Almost all of the SaaS companies that I’ve worked with are able to generate a bunch of close won opportunities using paid search and paid social ads.
But you will need to take into account your cash burn and the opportunity costs of using that money elsewhere. This will show whether it is the right time to use PPC channels.
If anything, I think that it's always worthwhile trialling PPC channels. To do so carefully and in a budget conscious way, focus on high intent or ‘surer bets’ first. This is more likely to get you good results than wide, expansive PPC campaigns.
Here are a bunch of advantages for early-stage startups using PPC channels:
Advantages:
#1 You can start acquiring users right away
Channels like Google Ads and Facebook Ads let you instantly drive high intent traffic to your landing page. Other channels (like SEO) can take time to gain traction and drive new users.
#2 Get a measurable ROI for your activity
Understanding how your marketing activity is contributing to your unit economics is super valuable.Especially when you’re looking for channels to scale.
Most paid ad platforms will allow you to see breakdowns to the lead, MQL, opportunity and closed won stages.
Disadvantages:
#1 Can be expensive
If you don’t set the scope of your paid ads activity properly, you may end up casting ‘too wide a net’. s This can result with poorly allocated ad spend and few leads.
#2 You might start with a high CAC payback period
This is especially true if you’re still trying to get the right product market fit.
As a result, the numbers might not stack up in the beginning (e.g. CAC > 12)
#3 High opportunity cost
Resources for an early-stage company are limited. As a result, choosing to invest in costly paid ad campaigns may mean you need to forgo other marketing activities.
#4 Low brand awareness will result in lower CTR and conversion rates
When your business is new in the market, I’ve found that you may experience lower CTRs and conversion rates. It takes time for your potential customers to become familiar with you and to move through to purchase.
#5 Can be harder for category creation
In particular for search, you need ‘high intent searches’ to generate conversions. If there isn’t a category, you’re often trying to ‘cross-pollinate’ with keyword targeting. This often isn’t successful with paid ads.
My recommendations for a successful PPC campaign for an early stage startup.
Search Engine Optimisation is fantastic. But, just like PPC channels, there are pros and cons to using SEO to launch activity for an early stage start-up.
It’s well-known that SEO is a long-term game. You won’t see immediate results, especially with a website that hasn’t been around for long.
I like to think of SEO as an investment into an asset (your website) that will pay you dividends over time (free traffic). It’s definitely well worth the wait.
At the end of the day, SEO traffic comes in different forms. The main thing that you should focus on is driving the right qualified audience to your website. Regardless of the stage that they’re at.
Here are some of the advantages for early stage startups running SEO campaigns:
Advantages:
#1 Create multiple touchpoints with different content
Users typically require more than interaction with your brand before they’ll buy it. SEO can work at different stages of the marketing funnel, helping to build trust and valuable interactions. This leads to conversions once they’re ready to sign-up.
#2 Free to create (money vs time)
There’s going to be a natural tension in a growing company between investing money into advertising (e.g. Google Ads campaigns) vs. investing time into marketing.
Generally speaking, investing time is using resources such as an in-house content writer. I believe that leveraging your in-house resources as you grow your customer base is a wise use of time. You can keep the output and use it repeatedly over time.
#3 You can rank for high intent keywords
That’s right, rather than paying money to appear for keywords, you can show up in Google search results for free.
This does take time however, and won’t be without its challenges.
In saying that, the CAC payback period on organically generated traffic is a lot lower because you don’t have the ad cost inbetween.
Disadvantages:
#1 It takes a while to work
Time needed to see results may not be something that you have at an early-stage company. Consider what type of content you’re creating (e.g. low in the funnel vs high in the funnel).
It may be wiser to target lower intent, but less competitive traffic in the short-term as you’ll have more chance of ranking.
#2 Need to syndicate well to see an early payoff
Without an established audience it can be hard to get your content infront of users. You can use content syndication to help i, it’ll be hard to get users to find out that you’ve created the content, and therefore it won’t get much traction.
Having some type of content syndication strategy will be worthwhile as you can access other audiences and generate interest in your blog.
#3 you won’t know if its working for a while
While SEO can take a while, frustratingly it can also take a while to see results! It may take up to 6 months or even longer to see meaningful outcomes from your activity.
However, you should start to see trends early on (e.g. keywords moving from 4th page to 2nd page etc.)
My recommendations for a successful SEO campaign for an early stage startup:
So, which should you choose?
The main consideration for marketing teams in early stage startups is to identify marketing channels that work. Then ook to scale those up.
To be able to do that, you need to test multiple channels. If you have the expertise, great. If not, it's worthwhile engaging experts to do it for you.
My advice: think in bets.
Create a hypothesis framework across many channels, set clear KPIs and then execute. Do a little bit of everything. Then reallocate resources (time and money) to those channels once you start seeing results.
If everything works, but there are no clear winners, don’t worry. You’ll need a strong marketing base to create multiple interactions with users anyway. So, set budgets that are appropriate based on the return. Continue running those activities if they make sense.
Lastly, set yourself up with successful nurturing campaigns. There is nothing more disheartening than generating high quality conversions that aren’t nurtured and closed!
