When is Pay Per Click (PPC) Advertising Viable in SaaS? | With Expert Luis Camacho

Is there any instances where, you know, B2B SaaS companies where you think it's not a good idea and it's not a good strategy to actually run paid media campaigns? If so, what is— when do you see that?

Yeah. Yeah, I think, um, and I think a lot of advertisers can relate to this and it's like the biggest nightmare. Um, but whenever the company doesn't actually have a hold of their sales process, right? A lot of the times, like, they'll try to— it's funny because in the past, like, marketing and sales were completely separate from each other. Like, you wouldn't blend the two, like, You'd never see that in the past. Nowadays, everybody thinks that marketing equates to sales. And in some cases it's true. Right. Um, but I think that's usually more the case with like smaller products. Like I'm talking about like direct-to-consumer, uh, you know, like e-commerce type of things where there's a very short sales cycle. Like you can be very direct response in, in the sense that somebody will see the ad and you can make them want it right away. Um, in B2B, it's a different game because you're showing something. A lot of the times the person you're showing it to is not the decision maker. Um, depending, right, I think whether you have like a bottoms-up, uh, product or a top-down product, like you have to know who you're going after.

Hmm.

Um, but I think that the, the worst thing that, you know, companies can do is spend money on marketing, on advertising specifically, and expect a sale. Especially if they've not cracked that sales process. Like if you're not seeing sales just come from whatever you're doing now, I don't think you should expect to see them come from advertising. Um, because you need to be able to sell those people. Right.

And it makes sense.

So one of the things that we look at is like, if you don't have like lead nurturing campaigns, um, probably not the time for you to start advertising.

And does your marketing strategy change or your campaign change, like how you approach the, The entire kind of strategy when the LTV values are different, let's say, you know, $500 versus $5,000 versus $10,000. Do you look at it differently?

Yes, for the most part. Um, I would say whenever you like, I think marketing strategy doesn't have to change as much as the expectations have to change. Right? Like a lot of times it's for bigger products like that, like bigger LTVs, you want to go, and it depends too on the sales process, right? If you have a top-down sales process, I think content is very, very important because you want that content to make its way into the person that will eventually be making that decision. When you have a bottoms-up like sales process, like Slack or anything like that, you can, I think you can get away with things like free trials and, you know, very direct response response things. Um, because you're, you're wanting to get that user to sign up and then that's when the product kind of takes a life of its own, right? It starts to make its way into like other people into the company. Um, but I think for like longer LTVs, like definitely, uh, like content and just think of it as the top of the funnel approach where you need to do a lot of education before you can sell that product. Uh, so same thing, like longer, like lead nurturing cycles, longer sales cycles. Um, but I think content is a good place to play for those people that do have those like longer sales cycles. And I think typically a longer sales cycle equates to a higher LTV. Um, and that's when you see like a lot of enterprise companies do a lot of content, like, oh, here's like the benchmark report for 2021 and stuff like that, that they push on things like LinkedIn and Facebook.

Makes sense. Um, so I want to kind of put this all together and using kind of a specific example, if let's say, You know, whenever somebody in our audience has a B2B SaaS company, maybe their average LTV of $5,000 and their entire sales cycle, let's call it 40 days. So from the time they become a lead to maybe they go through a demo to then actually, you know, pay to sign up, how do you, you know, can you just walk us through an example of how you'd approach getting this baseline and maybe structure that campaign? What are you looking at?

So typically I would say like there's not enough data, right, to like Like we go back to the client and say like, what's your churn rate? Like, what's your, you know, like I would love to see previous marketing, uh, um, what do you call it? Like data to kind of create that benchmark and also ask for like conversion rates and things like that from them to see, okay, how can we actually pull up any sort of projections for this where, you know, we're gonna be making decisions based off of, um, if it's, Like that, I would say, you know, take a look at your, uh, like, I feel like this is an industry benchmark of like 1, uh, LTV ratio of 1 to 3, right? Where you don't want to spend more than a third to get that specific acquisition. So I would just keep that in mind for, for, you know, most of these things. And you can spend a little above because I feel like sometimes right as you start to get to that 1/3, um, you know, of the LTV, I feel like people start to hit that tipping point and they start to see those results kind of slowly trickle in. Um, so definitely like if, if you're going to be like spending money, just keep that, you know, keep that number in the back of your head. Um, that's a good benchmark to just kind of aim at. Obviously if you can do better than that, you know, by all means, um, no reason to increase your CAC just because you want to be part of that benchmark. But, um, yeah, I definitely just like, I think in this case it'd be about $1,600. So I'd aim for that $1,600 CAC, right? And by CAC meaning an actual paid signup, not a cost per lead, and just do the math, you know, to get to that cost per lead essentially.

Makes sense. And then when you're coming into these campaigns, uh, you know, maybe they already have an existing funnel in place. What do you say are some of the main reasons why SaaS companies are maybe, you know, that, that their efforts has failed or maybe are underperforming?

I think it comes down to like a lot— you mean they already have everything set up and they're now they're trying to advertise and they see some—

No, they have it. Let's say it's that founder you were talking about. He tried to do it himself. He ran it for 3 months and then you go in and you say, look, what are you seeing wrong there? What have you seen that why they've underperformed? And other than, you know, giving it more time, Uh, what do you typically see wrong that they're doing?

Honestly, I think in those cases, typically it's the, the way that they approach it and the way that they, um, they structure the campaigns, right? So a lot of times it's like there's not a lot of thought into it. They just go in, like, for example, like usually you would, you, um, you structure your campaign in a way that you can see what's driving any sort of performance, right? Like you want to break out your audiences. You want to break out, you know, age groups. If you can, like the more granular you get, the better results you're going to see, uh, in the long-term, because you can see where things are coming from. Uh, and you can, you can break things out after the fact, but I think starting off with a good structure is one of the most important things because you're able to see, okay, uh, maybe a specific city is driving all the sales, right? So you want to be able to, to throw more money at that. And a lot of times it's, The same thing, like just kind of shooting blindly in a sense that, like, even though they're targeting everything that they need to target, they're not breaking it out. So they don't actually know what's happening. So if they get a lead for, I don't know, say $100, but that's above budget, they don't know where it came from and the likelihood that it came from a place that is a place, an audience, you know, a factor or whatever that is. viable, but they don't know. So they don't, they don't really know where it came from. So it's just usually it's account structure. Um, a lot of the times it's not having like the right messaging to the people that are going after. Um, and a lot of times it's just not knowing their numbers too. Like they just, they just go in and spend money and think they're gonna get something back, but They don't know the actual math behind it. So that kind of, you know, doesn't really put them in a good place.

So it sounds like tracking and attribution seems to be a major problem for a lot of founders.

Tracking too. Yeah. Um, a lot of the times, and one of the things that I like to tell people, like, I think by the time, you know, they do start, um, getting on with advertising agency or they bring somebody on board to do this, it's like, it's too late. Um, but I think being able to like, just like if you're in a, in a position where, you know, you're eventually going to advertise, I think one of the best practices that people can do is start setting up all that tracking beforehand. Uh, because it's going to give you those baselines that you're looking for to get off with the right foot forward. And you're also going to have an aggregate of data that you can leverage later on, whether that's, you know, on Google for like retargeting or lookalike audiences, whatever the case may be, but it's things you can use and you can, get a lot out of it.

Yeah, that makes complete sense. Um, Luis, so just kind of switching gears here, going kind of to the rapid-fire questions which we like to kind of end the show with. So just a couple here. Um, what's one piece of advice you wish you had known and would tell your, your 25-year-old self?

Ah, 25, that's only 2 years ago.

Okay, let's get 2022 maybe. Let's go, let's go 5 years at least.

I think I think just to move fast, like very fast. I feel like in the past and sometimes even to this day, I feel like we get caught up in thinking, what's going to happen if I do this thing? Or what am I going to lose? What am I going to gain? I feel like a lot of people just get caught up in the what-ifs. And that kind of put, like, even if you end up doing it at some point, you would've saved so much time if you would've just done it the moment you like thought about it. Um, so definitely just to move fast and, and, and, you know, just take action.

Love it. Um, what, what are, or who are the best 3 resources, whether that's books, uh, or people, maybe mentors or people you follow who you say have been the most instrumental to your success over the last couple of years?

These are actually all very recent, but I feel like in hindsight I can see a lot of, you know, like what I did and stuff like that from that specifically. But so a book that I really like, and I think that it can have some application in business, I think it's just like mindsets, you know, overall. It's called A Happy Pocketful of Money.

Mm-hmm.

I don't know if you've heard of it before. It's a very good book. Talks about like, It's kind of like The Secret, if you've heard of that book. I've actually haven't read it, but people told me it was very similar to it. So it's kind of like that. Uh, very good book. Also Naval Ravikant. I'm sure you know about him.

Sure.

Yeah, he, he, he's, he's amazing. Um, there's a lot of reasons to look, to look up to him. Um, and, uh, I just love where his mind is at with, with a lot of things. Um, I recently went into a huge rabbit hole, um, of his content and his, the, the Almanac that was written. And it's just amazing. Uh, definitely recommend that to anybody that's just looking to be a better human, I think. Uh, and another person is actually my friend, uh, Blake Janiver. He's a client. He is over at, uh, uh, Janiver Ventures, and they do multifamily financing and like commercial real estate loans and stuff like that. But the guy's just brilliant, uh, very cool guy, and, uh, I feel like I've learned a ton from him too. So if you, if you, you know, want to reach out to him or something, I'm sure he'd be Pretty open to a conversation or just saying what's up.