Do PPC Ads Work for B2B Companies?
It’s a question we get all the time. Do search ads work for companies in the B2B space? We’ve heard a ton of different opinions on this, and there are some nuances to consider. But in the interest of keeping things simple.
Yes, they do work, and they work incredibly well, but with some caveats. They won’t work for every B2B business. In this article, we’ll take a look at some of the factors you should consider when assessing if PPC is a good fit for your company. As a B2B PPC agency, we’ve seen it all. Let’s dive in!
Efficacy can depend on your sales cycle
Given the lengthy sales cycle that many B2B brands face, the ROI or payoff can take a lot longer. So patience is needed, factor in your sales cycle when deciding to invest in paid search marketing. Don’t write off PPC before running a campaign for enough time to do your sales cycle justice.
Typically we recommend running a pilot that is at least 2x longer than your typical sales cycle (so if your sales cycle is 3 months, you shouldn’t call it quits on paid search until you’ve tested its efficacy for at least 6 months).
You’ll need a decent sales team to handle demand
Don’t put the cart before the horse. If you don’t have a salesperson or ideally a sales team in place that can handle elevated demand, do not run paid search. You will waste your budget, stress your team and possibly induce premature aging.
As a general rule, develop a forecast for how many additional leads PPC will bring to your business, then gauge your sales team’s capacity. Be realistic here, if it looks like there will be dropped balls due to demand they can’t handle, it’s worth scaling up your sales capacity first.
For service businesses, there’s another element to consider: delivery capacity. Do you have the bench to staff new projects? Can you handle an influx of new customers or will you have to hire to fulfill that demand? If so you may face service delivery bottlenecks that can cause your return on ad investment to decrease.
You need to spend money to make money
Paying $30,000 to acquire a customer! That’s an incredible amount of marketing spend. What if I told you that this $30k turned into an initial contract signature worth $725,000, with a commitment to use our client as their vendor in coming years. That $30k doesn’t seem so expensive now, does it?
And that’s what so many firms get wrong about B2B Google Ads campaigns. You need to spend money to make money. For B2B pilot programs, you may have to spend 2-3x your average CAC before making a call on whether it’s going to work, or if you can scale the channel.
Before you dive into any PPC program, make sure you know the unit economics of your business inside and out. This article does a pretty good job of explaining the key metrics you need to calculate.
Precise B2B targeting is tricky
While in recent years Google has introduced some features that allow you to target firmographic attributes, in general, the beauty of paid search is that it allows you to target intent. Which in our humble opinion is even more powerful than demographic/firmographic targeting.
In order to get around this, you can use cookie-based remarketing lists or even upload customer email addresses to Google Ads for targeting. But for a first-touch cold audience, it’s challenging to reach the exact buyer persona you want.
You can target ads by company size and even industry, but since Google doesn’t have data on every single person searching on their platform, it’s very restrictive to serve ads to only these targets, as you end up missing out on high-value prospects that aren’t in those audiences.
But as mentioned above, the reason why Google is a trillion-dollar company is because they enable advertisers to reach people that are in-market and actively looking for a solution to their problem.
Don’t be afraid of high-cost keywords
30 dollars per click sounds crazy, right? Well it isn’t if you’re selling high-margin, six-figure services or product deals. This is a stumbling block that novice marketers face, seeing high cost per clicks scares them away from testing search ads, in favour of more labor-intensive B2B tactics like cold outreach.
The cost of a keyword is based on competition, and what other advertisers are willing to pay for it. If you see a high cost per click for your product or service, assume that competition is high, and that competing advertisers can justify the associated high cost per lead with a customer LTV that is multiples higher.
As such, if your offering isn’t priced appropriately, you’ll run into trouble here, but then you’ve got bigger problems than marketing.
As a rule of thumb we’ve found that PPC works best as a lead gen channel for B2B product and service-based firms that have a ticket size of around $2.5k, but ideally $10k – $250k. That’s the sweet spot, but there’s wiggle room at the high and low ends.
Interested in running a B2B PPC pilot? Get in touch and we’ll help you assess whether the channel is a good fit for your business with a free discovery call.