“Buying” customers are likely to do well.
However, it turns out that in the long run it doesn't work out so well.
Direct response digital advertising (such as paid search) has one of the highest conversion rates of any channel.
For the very first time. In the history of time.
No joke, just Google it.
This is the best way to spend money today to generate revenue tomorrow (or even within the next 2-3 months).
But here's why if you're not careful, you could be heading down a dangerous path that could result in higher CPL in the long run.
1. Over-reliance on paid acquisition for long-term growth
There are some big unspoken problems for B2B brands that use paid media.
- Auction-based networks like Google Ads are going to get increasingly expensive in the long run.
- While you may be able to better optimize your ad spend in the short term (A/B testing creative, graphics, audience, placement, timing, etc.), in the long term it will be difficult to control or lower your ROI significantly (as your competitors keep raising their CPCs).
- One reason for this is that you’re competing head-on in the bloody waters of the red ocean for only around 5% of potential customers who are “in market” at the time (more on this in the next section).
- On top of that, you have to deal with the law of low click-through rates (channel minimum spend and performance usually declines over time), making it more expensive to compete in the long term.
- Additionally, the complex, consultative buying process of sophisticated buyers goes beyond simply “click and convert” and often requires multiple ads in succession or going through a funnel before you’re paid a cent.
If you look at a graph of CPC and CPL costs over not just one year, but the past 10 years, you will immediately see a similar trend.
- Paid media (within established categories) will increase over the long term.
- Click-through and response rates for ad creatives often decline over time.
- Thus, your potential ROI and profit margins will also decrease in the long run.
Again, this is nothing new.
The site has been blamed for declining B2B CPCs and click-through rates since 2007.
This isn't because B2B marketers are stupid; in fact, the opposite is true. Low-price transactional sales and impulse buys easy Generate B2C sales through “clicks + conversions.”
So why is this a particular issue for B2B brands today?
Because it forces you to realize that if you want to continue to scale and push your seven-figure revenue into eight, then nine, then ten or more figures, you need to explore, explore, test and expand into other channels.
To make matters worse, paid media is incredibly capital intensive.
- You have to prepay huge amounts of money every month.
- This number is expected to continue to increase over the next five years.
- This is in hopes of boosting revenue in the coming months.
- That way, you should be able to break even on each customer within six months.
- The idea is to make a profit and have the customer “pay you back” in 6-12 months (assuming they stick with the contract that long).
So, if you live in a world where paid CPL is closer to about $5,000 per person, then you're probably Long-term, A Scalable Growth Engine.
and do not have It's a temporary bandaid that might work for the next year or two, but after five years it will become too costly to be useful.
In other words:
- Today, tomorrow, and next month, paid channels will continue to eat up budgets that should be redirected to other channels to increase revenue next year (the power of SEO!).
- For now, all you need to do is keep the lights on and the numbers moving in the right direction.
- This despite lower margins and rising customer acquisition costs for the rest of next year.
I’m not saying you shouldn’t do it if it’s working for you – of course you should!
However, don't be surprised if two years down the line the effectiveness has waned and costs have increased, and you should have considered other channels sooner, two years ago (like today).
Especially with other channels like SEO, you need to lay the right foundations to really see results two years from yesterday.
This problem has only gotten worse over time, as smarter, better-funded competitors have Year It's the building of a moat that you will later have to desperately and vainly recoup by paying a higher premium.
2. Rely on branded, bottom-of-funnel, in-market leads
It’s actually pretty obvious when a B2B brand has been “overly reliant” on paid media for too long.
It's like a shirtless bodybuilder who loves to build up his arms but wears baggy pants to hide the weak foundation of his embarrassingly disproportionate chicken legs.
Outside of SEO, it’s often upside down.
What I want to say is this:
Fire up your favorite keyword research tool, enter your site’s URL to view your organic rankings, and let us know if any of the following red flags ring a bell:
- Your homepage is one of the most visited pages on your site.
- This means you’re relying too heavily on brand-conscious people and ignoring the other 95% of people outside your market who may need your company in the months and years to come.
- Your homepage is cannibalizing other non-branded queries for commercial terms (more on this cliché issue below).
- This often means little to no traffic to pages on your site designed to educate and acquire customers.
- Additionally, top 5 rankings with little MOFU or TOFU relevance can help you future-proof your pipeline for years to come, or reduce advertising costs through improved targeting across multiple channels.
Or, essentially, this:
What is going on here?
Your services are bottom-deep and only reach a small percentage of your potential customers, while the wider, broader, larger, deeper pool of potential customers who will undoubtedly need your services in the future does not exist.
Now, let's add this problem to the last one.
Marketing channels aren't really siloed, unlike the marketing team that manages them. (Ironical, don't you think?)
Let’s say your marketing team starts allocating 10% of their paid budget to SEO as a “proof of concept” to get SEO “on track.”
Is that okay? I think so.
Is it enough? Not really.
SEO reasons:
- It takes a long time, but the ROI will be greater in the long term (12+ months) than in the short term.
- Unlike paid advertising budgets (which are like a hamster wheel and must continue to grow over the long term), Greater than By investing upfront You don't need to spend that much for 5 years or more. (as a % of total marketing budget).
Having received hundreds, if not thousands, of referral calls over the past 15 years, I know this is disappointingly common.
That means you’re spending 10% of your paid budget on SEO this year.
It's not something that will affect next year's results, and it's not something the team (and the accountant) will have any problems with. certainty It will soon overtake advertising as the primary method of acquiring customers.
So what happens?
They cut their budget in year two and deprioritized things like SEO and content.
And then you’re right back on the paid media hamster wheel.
“Because SEO and content weren’t doing much for us.”
Yeah.
3. Search intent cannibalization and content structure mismatch lead to less profitable rankings
By now, you should be aware of the waterfall effect of these mistakes.
The first problem leads to the second, which in turn leads to the third.
It's a self-reinforcing negative spiral.
A stressful job (your job!) means skipping nutritious eating habits, which leads to low energy and sedentary behavior, which leads to weight gain, which leads to poor eating habits and even more sedentary behavior, which means more weight gain next year, and the year after, and the year after that.
Here’s how this third mistake compounds the first two mistakes on your site.
Your product page ranks highly for “many keywords.”
yay?!
However, it's not actually optimized well to target either one.
So, it’s highly unlikely (impossible) that you’ll rank in the top 3 for any of these keywords.
In other words, your “pretty good” ranking is actually a lie.
Based on the average SERP CTR, this means you’re unlikely to see more than about 5% of your potential traffic, meaning it’s not going to be enough of a “change” for your accountant to increase their budget.
If you view the organic SERPs to see why you’re not yet in the top 10, you’ll notice that none of the next results are product pages, but comparison listings, UGC or reviews of the tool.
Do you think this was a one-off, just a special moment?
Think again.
Let's take the exact same “alternatives” style query idea for a completely different brand in a completely different space, and see what comes up.
Wow, that's awesome!
This time, the intent match is slightly better; at least for this particular website, it's the community or UGC pages that are ranking.
But these are clearly not optimized for search. At all.
Because that's not the main reason why this company has them on their site in the first place.
So they got these “pretty good” rankings almost by chance. A complete fluke.
Some kind of lucky coincidence? Indeed.
But is actually ranking in the top 5 on these pages and capturing roughly 70-80% of the people searching for these keywords really a “winning” strategy?
And then show these people the pages that are best suited to converting profitable leads into potential buyers?
No, not anytime soon.
Conclusion
Paid media is effective for generating B2B leads.
But that's part of the problem.
Because if you only Relying on paid media to the exclusion of everything else puts you on a dangerous path that will lead to higher CPLs in the long run.
This eats up a large portion of the marketing budget, makes salespeople lazy by forever expecting only leads with a credit card in hand, and makes management think they can continually cut investments in everything else across the brand.
and that have a rapid and devastating effect if and when You’re going to start the SEO and content farming process that you should have done years ago.
Every marketing channel becomes more competitive over time. Every marketing channel becomes more sophisticated over time. Hence, the start-up costs for every marketing channel also become higher over time.
However, SEO and content, if done properly, can actually reduce your CPL after 5-10 years, unlike most marketing channels.
But only if you actually invest properly today.
Opinions expressed in this article are those of the guest author and not necessarily those of Search Engine Land. Staff authors are listed here.