What is paid advertising?

Paid advertising can be a powerful tool for businesses of all sizes looking to accelerate their reach and growth.  It gets you in front to your potential customers through specific targeting at platforms like: search engines, social media, and websites.

Depending on your marketing goals, there are many digital advertising platforms and formats for you to choose from.

And it can get confusing very soon, especially if you’re new to this.

In this post, we’ll share our insights and 5 key areas to consider when strategizing for your paid advertising:

1. When to consider paid ads
2. Which platform and who to target
3. How much to budget for
4. What metrics to track
5. How to optimize for results‍

When should you use paid ads?

Should you start running ads?

Paid ads is a good idea in these two scenarios:

1. You are early in product building: Your goal is to get early batch of users and test your messaging, targeting etc. At this point, you need to set realistic expectations with your ROAS and CAC.
2. You’ve found product-market fit and ready to scale: You roughly know what resonates with your audience. At this time, you can start focusing on cost efficiency.

Paid ads can be your powerful growth channel given the right investments.

Pros:

• It is scalable, unlike other growth channels such as Product Hunt, Newsletter.
• It produces high volumes of data rapidly, helping you learn and iterate faster.

Cons:

• It takes at least 3 months for campaign to be cost efficient / profitable. Ad platforms need time to learn from your data.
• You need to allocate substantial resources (effort, time, money) to launch great campaigns.

A common pitfall for startups venturing into their first paid ad campaigns is losing momentum after a few weeks, resulting in wasted funds and missed learning opportunities.

Hence, before jumping into paid ads, ask yourself:

• Have you exhausted other cheaper growth channels that could help you improve your website conversion rates, messaging and targeting?
• Can you commit to 1 to 3 months of resources and spend?

Which platform and who to target?

Choosing which type of paid ads and platform for your digital ads ultimately depends on where your users are. Think about your target audience’s demographics, interests, and behaviours, which platform suit their profiles?

The common types of paid ads include:

• Search engine advertising (Paid Search): Google ads
• Social media advertising (Paid Social): Facebook ads, LinkedIn ads, TikTok ads
• Display advertising
• Video advertising
• Native advertising

What is Paid Search?

Paid search advertising is a type of digital marketing strategy where brands place their ads in the search engine result pages (SERP) of Google, Bing, and other search engines.

It’s great for driving traffic and getting high-quality leads, and eventually customers.

What is Paid Social?

Paid social advertising is a method of advertising your product or service on social media to a targeted audience.

It’s great for building brand awareness and retargeting specific audience.

Comparison between Paid Search and Paid Social

💡 Tip: Don’t just spray-and-pray. Do a competitive analysis to find out where and who your competitors are targeting. Learn about their Ideal Customer Profile and messaging that resonates.

How to allocate budget for paid ads?

If you’re just starting out, consider allocating an amount that's manageable enough to risk, yet substantial enough to collect meaningful data.

If your budget is too low, it takes longer for the ads platform to optimise your campaigns, thus lower performance and slower learning for you.

If your budget is too high, your ROI will be low as paid ads is subjected to the law of diminishing return.

• For Paid Search: High budget for product with low search volume means that ads will show for random low intent keywords.
• For Paid Social: High budget for product with small audience means that ads will either be (1) shown to random people or (2) very frequently to the same group of people, making them desensitised or even have negative sentiment to the brand.

💡 Tip: Try out this template we use to get an estimate of budget, conversions and customer acquisition cost.

‍How to measure paid ads performance?

You can't improve what you don't measure.

Below a list of digital marketing metrics you should know, sorted by importance in the context of paid advertising.

💡 Tip: Compare your metrics against industry benchmark or other channels.

How to optimize ad campaigns?

• Iterate with A/B tests: Compare different variations of ad copies and creatives to see which perform better for you.
• Avoid costly paid ads mistakes by analysing competitors’ ads: Which of your competitors’ ads survive the test of time What USPs do they focus on? How much budget and effort have they invested?
• Leverage on industry trends: Adapt based on seasonal changes, algorithm updates, new creative directions.

Conclusion

We've just uncovered the 5 key areas to consider when strategizing for your paid advertising.

From when to run paid ads, targeting platform and audience, budgeting, metrics to campaign optimization - the exciting journey has only just begun.