Search
paid advertising, startups, maximizing ROI, ivan jerkic

Paid Advertising for Startups: Maximizing ROI

Reading Time: 7 minutes

Table of Contents

Picture of Ivan Jerkić

Ivan Jerkić

What do I do? I build ventures – from the concept to product-market fit. And then I scale them.

Hello there, fellow marketers & entrepreneurs! You have probably had some experience with paid advertising for your startup so far. So you know how it can be challenging and fail spectacularly, leaving you with no cash flow if not done right.

In this blog post, I will unravel the world of paid advertising and show you how to maximize your return on investment (ROI) using best advertising practices and leveraging conversion rate optimization (CRO). In other words, how to scale your startup through paid ads without breaking the bank. Let’s begin!

Why Paid Advertising Matters for Startups

Paid advertising can give your startup a competitive edge. It allows you to reach a broader audience quickly and accurately, providing an immediate influx of targeted traffic, potential leads, and often sales immediately. Compared to other organic growth marketing tactics, it is also more certain, i.e., you do not rely on a specific piece of content to go viral or on users spreading info about your brand through word of mouth.

However, successful paid advertising isn’t just about spending money to drive traffic. It’s about understanding how to target the right audience through compelling creative or leveraging data you have and understanding how to maximize conversions to increase ROI.

Case in point, here are a few stories of startups that harnessed the power of paid advertising and CRO to drive a remarkable growth spurt quickly:

  1. Headspace, the popular meditation app, has effectively harnessed the power of Facebook and Instagram ads to reach a large audience. They have carefully crafted their ad creatives to communicate the benefits of regular meditation, often using visually appealing illustrations and animations to catch the viewer’s attention. Headspace has also smartly utilized customer testimonials to build ad trust and credibility.

    But attracting users to download the app was only half the battle. To convert these new users into active, paying customers, Headspace has invested heavily in CRO. They’ve designed a user-friendly app interface that makes it easy for newcomers to navigate and start their meditation journey. Their smooth onboarding process includes a series of introductory sessions that guide new users through the basics of meditation. Additionally, they’ve experimented with different pricing strategies to find what maximizes conversion rates. As a result of these efforts, Headspace has grown its user base and achieved a high conversion rate from free trial users to paid subscribers.

  2. Canva, a graphic design platform, has mastered using Meta Ads to reach its target audience effectively. They’ve experimented with various ad formats, including video and carousel ads, to display the versatility and ease of their design platform. Their ad creatives are visually engaging and often show the product in action, giving potential users a taste of what they can create with Canva.

    paid advertising, canva ads, ivan jerkic

    Beyond their advertising efforts, Canva has put a major emphasis on Conversion Rate Optimization (CRO). They’ve designed an intuitive user interface that allows even novice designers to navigate quickly and create stunning graphics. They’ve also provided a wide variety of templates to help new users get started, reducing the barrier to entry.

    Canva’s freemium model offers a substantial amount of value for free, encouraging signups. At the same time, their premium features are attractive enough to convert a significant portion of free users into paying customers. All these CRO efforts have contributed to Canva’s impressive growth, with millions of users across the globe.

  3. Dollar Shave Club, known for its subscription-based personal grooming products, catapulted to fame with a viral video ad campaign. The company’s humorous and relatable ad resonated with audiences, leading to a massive surge in website traffic. However, the company didn’t just rely on this one-off viral moment. They continued to use paid advertising on platforms like Facebook, Google, and YouTube to reach a broader audience. Their ads often highlighted their affordable pricing and high-quality products to differentiate them from traditional razor companies.

    Concurrently, Dollar Shave Club has significantly optimized its website for conversions. They designed a seamless signup process that made it easy for customers to understand the subscription model, choose their preferred products, and complete their purchases. The check-out process was streamlined and intuitive, reducing the chances of cart abandonment.

    Furthermore, they’ve used persuasive copy, clear call-to-actions, and social proof to nudge visitors toward conversion. These CRO efforts have paid off, with Dollar Shave Club amassing millions of subscribers and eventually being acquired for $1 billion by Unilever.

  4. Zapier, a tool that automates tasks between different online applications, has effectively used Google Ads to reach potential customers. They’ve targeted productivity and task automation keywords, attracting a highly relevant audience to their platform. Their ad copy highlights the time-saving benefits of using Zapier, appealing to busy professionals and teams looking to increase efficiency.

    However, attracting visitors through paid ads was only the first step. Zapier also focused heavily on CRO to turn these visitors into active users. They designed an efficient onboarding process that guides new users through setting up their first ‘Zap’ (the term Zapier uses for the automated workflows it creates). By making this process as simple as possible, they’ve been able to increase the number of users who successfully set up a Zap after signing up.

    Zapier also offers a free tier, which lowers the barrier to entry and encourages signups while providing enough value in their premium tiers to entice users to upgrade. As a result of these combined efforts, Zapier has grown to support millions of users and integrates with over 2000+ online apps.

Choosing the Right Advertising Platform

Different advertising platforms cater to different needs. It’s crucial to understand the strengths and weaknesses of each platform, such as Google Ads, Facebook Ads, and LinkedIn Ads, and choose the one that aligns with your target audience and business objectives.

For instance, if you’re a B2B startup, LinkedIn Ads might be a more suitable platform for you, while B2C startups might benefit more from Meta Ads. Google Ads usually work for both use cases. However, I must stress that even though LinkedIn might be more of a B2B platform or Meta is more B2C – it all comes to a specific case: the audience, communication, and value proposition.

paid advertising, ad platforms, ivan jerkic
Comparison between different ad platforms and placements; Source: Unbounce


Setting a Budget and Establishing Goals

Setting clear advertising goals is crucial for managing your budget effectively. Your goals should align with your overall marketing strategy, from increasing brand awareness to driving conversions.

Your budget should reflect your goals and be flexible enough to adjust based on the performance of your campaigns.

Patience and agility are the most critical traits in paid advertising. Google Skillshop Academy has a great article on how to budget flexibility coupled with machine learning algorithms enables profitable revenue scaling. Remember, the goal is to maximize ROI, so don’t put unnecessary constraints on your budget if you hit the goal.

Creating Effective Ad Campaigns

Your ad creatives play a significant role in attracting your target audience. Craft compelling ad copy and visuals that resonate with your audience and align with your goals. For example, if your goal is to increase free trial signups, create ads that communicate the benefits of the free trial period. Be clear about your intentions immediately – from the ad creative to the landing page.

Don’t forget to A/B test different ad variations in various formats, such as video, image, carousel, etc., to see what works best for your audience. Constant testing and optimization are vital in improving ad performance and ROI.

On the other hand, make sure that your testing plans align with the budget. To better illustrate it, if you’re spending €5.000 / mo, you cannot A/B test the same amount of ad creatives at the same time as you could with €50.000 / mo.

Targeting and Audience Segmentation

Targeting the right audience is half the battle in paid advertising. Use the targeting options available on your chosen platform to reach your ideal customers.

Effective audience segmentation can help you tailor your ad creatives and offers to different customer groups, improving your click-through rates (CTRs) and conversion rates.

Most ad platforms are equipped with machine learning capabilities that auto-optimize ad campaigns based on the data the platform gathers from various sources, such as tracking pixels, SDKs, or data modeling. You should target different audience segments by providing quality first-party data.

Tracking and Measuring Ad Performance

Once your ads are live, keeping a close eye on how they’re performing is imperative. Monitoring isn’t a one-time activity; it’s a continuous process that enables you to react swiftly and adjust your campaigns based on real-time data.

To kickstart this process, ensure you’ve set up conversion tracking correctly. This involves using pixels, SDKs, server-side API responses, or, generally speaking, “tags” that track a visitor’s actions on your website or app after they’ve clicked your ad. Whether purchasing, signing up for a newsletter, or downloading an ebook, conversion tracking helps you understand which ads drive these valuable actions. On the other hand, they help machine learning systems by feeding back the data needed to optimize ad delivery.

In addition to conversion tracking, it’s crucial to leverage robust analytics tools to measure your key performance indicators (KPIs). These tools can provide comprehensive data on various metrics, such as website or app engagement, cost per conversion, and return on ad spend. Remember, each of these metrics tells a story about your campaign’s performance and can guide your optimization efforts.

Regularly reviewing your ad performance data is akin to checking your compass during a journey. It shows you whether you’re moving in the right direction or need to adjust your course. It can reveal valuable insights, such as which ad creatives resonate most with your audience or which targeting parameters yield the best results.

Leveraging Conversion Rate Optimization (CRO)

CRO is the other, equally important, side of the paid advertising coin. It’s about optimizing your landing pages, offers, and overall user experience to convert more of your paid traffic into customers. Ad creatives, first-party data, and on-platform optimization will only get you as far.

A/B testing, user feedback, and heatmaps are some tools you can use for CRO. Remember, even minor improvements in conversion rates can significantly boost your ROI. For example, if your advertising campaigns are getting 100.000 new users monthly to your landing page, and on average, 2% of them convert to paid customers – an increase of 1 percent would net you 1.000 more paid customers. Therefore, CRO activities have the most significant and immediate impact on advertising ROI if done right.

The “Power Law” of conversion rate optimization; Source: Conversion Rate Experts


Optimizing Your Paid Advertising Strategy

Based on your performance data, continually adapt your ad campaigns. This could mean tweaking your ad copy, adjusting your targeting, or optimizing your bidding strategies.

Remember, the key to maximizing ROI is to scale successful campaigns and pause or adjust underperforming ones. It’s an ongoing process of learning and optimization.

Similarly, apply your learnings from CRO to your landing pages and offers. If a particular page layout or proposition resonates better with your audience, consider using it more widely.

Conclusion

Paid advertising is a two-fold process involving attracting the right audience through targeted ads and converting that traffic through optimization both on the ad platform and on the landing page/offer side.

Remember, the most effective paid advertising strategy combines the power of targeted ads with the efficiency of CRO. It’s about finding the perfect balance between getting traffic and converting it, as well as understanding the bigger picture, to begin with.

So, don’t just spend money on ads. Spend time on optimization too. Your startup’s growth depends on it! Are you interested in chatting about this topic? Let’s connect!

Share this post

Latest posts

meta ads for b2b, ivan jerkic
Growth Marketing

Meta Ads for B2B. Yes or no?

Reading Time: 2 minutes In my recent exploration on my blog, I’ve tackled a burning question: Are Meta Ads a game-changer for B2B marketing? Pitting them against the traditional giants like LinkedIn, I’ve conducted an eye-opening experiment. The results? Well, they might just defy your expectations. Dive into the full story to uncover whether Meta Ads truly have the edge in the world of B2B.

Read more
product first marketing later, product growth, growth marketing, startups, ivan jerkić
Growth Marketing

Product first, marketing later?

Reading Time: 2 minutes Product first, marketing later? This is a ticking time bomb. This post is inspired by Lenny Rachitsky’s research on the initial hires of a dozen renowned B2B startups. While exceptions exist, a clear trend emerges; many favor product development. Why is this risky? Read more in the blog post.

Read more