How SaaS Startups Should Be Using AdWords

If you run a SaaS startup, Google AdWords could be the greatest customer acquisition platform you’ve never tried.

Buying ad space for SaaS software can seem intimidating. CPC bids for most software-related keywords are expensive – in some cases, as much as $100. Worse yet, competition is intense, with five, 10 or 50 companies competing for every customer.

As a SaaS startup with limited capital and little data on how much each user is worth to you, it can seem impossible to launch and optimize a profitable AdWords campaign.

Like every advertising platform, AdWords has upfront costs. You’ll spend more to acquire each user as you begin your campaign than you will after months of optimization. At the beginning of your campaign, you might even lose money on each customer you acquire.

AdWords for SaaS startups

Over time, however, AdWords can grow into a seriously powerful customer acquisition tool for your SaaS startup. Target, bid and optimize right and you can bring in thousands of new users on a daily basis, all at a cost per acquisition that’s hugely profitable for your startup.

Below, I’ve listed seven techniques that you, as a SaaS startup owner or marketer, can use to break through the intimidating CPCs and use AdWords to generate profitable leads and loyal customers for your SaaS startup.

1. Use video ads on the Google Display Network

Search for your target keywords using the AdWords Keyword Planner and it’s easy to feel a little shocked. Common SaaS keywords attract massive suggested CPC bids, often as high as $100 per click.

SaaS AdWords keywords expensive

Before you abandon your campaign ideas, remember that these suggested bids are for traffic from Google search. By advertising on the Google Display Network, you can reach a similar audience at a fraction of the CPCs you’d pay for a search network campaign.

The Google Display Network has several advantages over the Search Network. Since it’s made up of millions of websites, it gives your campaign a huge potential reach. If your SaaS software has a broad target audience, you can reach your potential customers on a huge range of sites.

It’s also much more cost effective. While the average AdWords CPC is between $1 and $2 on the Search Network, it’s less than $1 on the Display Network.

AdWords industry benchmark CPCs

The GDN also has a few weaknesses. Since display advertising is a numbers game, you won’t achieve the same conversion rate as you will from search ads. Around 86% of the people that view your ads won’t even notice them, meaning you’ll need a lot more impressions to achieve the same amount of conversions as a small search campaign.

The biggest strength of the GDN is that it provides you with a huge amount of exposure, all at a low cost. Instead of bidding high to reach a laser targeted audience with search ads, you’ll reach a broad audience, some of whom will remember your brand, and others of whom will convert.

To get the biggest impact at the lowest cost, use video ads. This way, you can put your brand in front of both customers and noncustomers, instead of paying a premium for every impression on the Search Network.

2. Use Gmail Ads to target your competitors’ customers

Gmail Ads are powerful tools for getting right in front of your target audience.

For a SaaS startup, no audience is more valuable than your competitors’ customers. With Gmail Ads, you can target your AdWords campaign to only ever reach people who receive emails from your competitors, giving you direct access to people that already use similar products.

There are several ways to do this. One, which we’ve profiled before, is to target keywords that your competitors are likely to use. Sign up for your competitors’ email lists and take note of any words and phrases that they use frequently, then add them as target keywords.

A more accurate solution is to target your competitors’ domains. Below is an example of a Gmail Ad from DigitalOcean, a cloud infrastructure provider. I receive emails from other cloud storage companies, which DigitalOcean are clearly targeting using domain placements.

SaaS AdWords strategy Gmail Sponsored Promotions

Expanded, the ad looks like this:

Gmail ad example SaaS startup

Using Gmail Ads like this lets you reach the same audience that you’d reach through a search engine marketing campaign, all at a fraction of the cost.

3. Use lookalike audiences to expand your reach

As a startup, there are two factors that hold you back from scaling your AdWords campaigns as quickly as your larger competitors:

  1. Your audience is limited to people that have a direct need for your product.
  2. You just don’t have the data to scale your operations quickly and effectively.

One of the easiest ways to get around these limitations is to scale your campaign with lookalike audiences. If you use a retargeting pixel, targeting similar audiences lets you market to people with similar browsing patterns to your existing website visitors.

AdWords Similar Audiences interface

Add similar audience targeting to your campaign and Google will study your retargeting list in a search for common or similar cookies. Instead of waiting to scale your campaign using keyword or placement data, you scale to a similar audience quickly and effectively.

4. Target carefully and do remarketing right

Since few people visit a SaaS website without some level of interest in the product, retargeting is a great way for your SaaS startup to reconnect with potential customers and put your brand right in front of them.

There are two ways to do remarketing. The first approach, which we’ll call “Remarketing 101,” is to put an AdWords tag on your website and advertise to anyone who visits your website.

Remarketing concept diagram

This isn’t a bad way to reach potential customers, and even a basic remarketing campaign that uses this strategy will produce some conversions. However, a few small tweaks to the way you reach your previous website visitors can massively improve your results.

Unlike eCommerce websites, which people will return to in order to buy different products over and over again, SaaS websites usually only have one product for sale. This means there’s no value in targeting website visitors who’ve already converted.

Instead of targeting everyone who visits your website, create a custom audience based on the users who’ve already converted on your website, then exclude these users from the retargeting audience.

This way, you won’t waste money marketing to users who’ve already paid for your SaaS, giving you more money to spend reaching motivated potential customers.

5. Use CLV, not CPC, to determine return on ad spend

It’s hard not to wince when you see the suggested bids Google lists for SaaS keywords. While the average CPC for most SaaS keywords seems high compared to the monthly cost of SaaS products, it’s important to keep things in perspective when you calculate return on ad spend.

If you offer a SaaS product at $49 per month and your cost of acquiring a paying customer is $150, it’s easy to write the campaign off as a failure. However, the correct way to examine ROI for a SaaS product is to look at the lifetime value (CLV) of the customer being acquired.

SaaS churn rate

Most SaaS products have a churn rate of between one and five percent. This means that one in 20-100 customers cancel their subscription every month. If you have an average churn rate of five percent, you can estimate a 20-month average lifespan for each new customer.

At $49 per month, this means each new customer you acquire is worth, on average, $980. From this perspective, the $20 suggested CPC bids Google’s Keyword Planner returns no longer look so expensive.

Instead of wincing at high CPC bids, view the cost of advertising your SaaS product next to the amount you can expect to make from each customer. Once you use CLV to determine ROI, and not CPC, you’ll realize that even the toughest AdWords keywords aren’t as costly as they seem.

6. Target competitor keywords to win over new customers

Software is an intangible product. You can’t feel it, you can’t smell it, and you can’t see it. This makes the process of assessing and comparing software difficult, which is why most people in the market for SaaS software compare several options before they buy.

SaaS companies understand this, which is why they make it easy to test their products through free trials. As a startup, you can take advantage of this need to compare by targeting competing brand names and products as keywords within Google AdWords.

Competitive ads for SaaS startups

Companies running aggressive competitive ads on Basecamp’s brand search

Competitive keywords might be expensive, but they have one huge benefit for your customer acquisition efforts: they work. When you consider the lifetime value of a SaaS customer, the cost of bidding on competing keywords becomes far more manageable.

Google imposes some restrictions when you advertise using competing brand names. Firstly, you can’t use a competitor’s trademark in your advertisement. Second, you should never add any false claims or unfair comparisons to your ad copy or landing page.

The easiest way to put this strategy into action is to bid on a competitor’s brand name. If you’re part of an email marketing SaaS startup, you can add a competitor’s brand and product name to your campaign using keywords, like this:

[constant contact]

“constant contact”

+constant +contact

You can also target specific keywords related to your competitors. This lets you compare your product to theirs on a feature-level basis. Here’s an example of price-related keywords that you can use to compare your SaaS software to a competitor’s offering:

[constant contact pricing]

“constant contact pricing”

+constant +contact +pricing

 

[constant contact price]

“constant contact price”

+constant +contact +price

Paired with a landing page that’s all about your software’s value for money, this type of keyword can drive a steady flow of trial signups and paying customers to your startup.

If one of your competitors has a poor reputation, you can take advantage of it by advertising on the same search engine results page as their bad reviews, using keywords like these:

[constant contact review]

“constant contact review”

+constant +contact +review

When you compare like with like – for example, your reviews and their reviews, or your pricing and their pricing – you force potential customers to make a decision between your product and theirs.

Offer better value for money, better features, or a better reputation, and you’ll reach customers that weren’t searching for your business.

SaaS startups AdWords strategies competitive pricing

WordStream’s great guide to bidding on competitors’ brands goes into the how and why of this strategy. If you have a limited budget and want to have a big impact on a targeted audience, it’s an excellent tactic to add to your startup’s PPC strategy.

7. Streamline your AdWords account

AdWords offers a massive variety of great features, but not all of them are relevant for a SaaS startup. Many of the features that AdWords offers are aimed at eCommerce websites, retailers, direct marketers and other entities well outside the SaaS space.

Since AdWords is built for such a huge variety of marketers, understanding what can and does work for you can be challenging. Here are some of the AdWords features you can skip through to streamline your account and focus on what works for you:

Shopping campaigns

Shopping campaigns are great for retailers, but since you’re only selling one item you won’t see any positive results from using product ads.

Real-time updates

Real-time updates are largely useless for SaaS products. Although you can use them to market your software during a short-term sale, they’re unlikely to produce significant positive results.

Call extensions

If you sell a very expensive SaaS product, call extensions can help you get people on the phone and close deals. However, at the typical $49 to $99 SaaS price point, encouraging customers to call you isn’t a scalable strategy.

Instead of focusing on extensions, which you can use to optimize your AdWords campaign once it’s already producing profitable leads and sales, focus on keyword targeting and improving your ad copy in the early stages of your campaign.

Is your SaaS startup using AdWords?

AdWords is easy to write off as “too expensive” to work for your SaaS startup, especially if your software is modestly priced. However, with the right strategy it’s possible to bring in customers, earn valuable brand exposure, and produce a steady stream of leads at a very reasonable cost.

Is your SaaS startup using AdWords to earn new trial users and bring in new customers? If not, try running a campaign using the techniques listed above. With the right keywords, ad creatives and bidding strategy, you could be pleasantly surprised by the results.

About the author

Eyal Katz is Marketing Director of AdNgin, an ad revenue optimization platform for online publishers and bloggers.

Find out how you’re REALLY doing in AdWords!

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