For SaaS startups, Google Ads (formerly Google AdWords) presents a potentially untapped goldmine for customer acquisition. While the idea of purchasing ad space for SaaS software might seem daunting due to high CPC bids for software-related keywords, sometimes reaching as much as $100, and fierce competition, it’s not an insurmountable challenge. The initial costs associated with Google Ads can feel like a hurdle for SaaS startups with limited budgets and user value data. The beginning of your campaign might even see you losing money on each customer.

However, with time, Google Ads has the potential to transform into a highly effective customer acquisition tool for your SaaS startup. Accurate targeting, bidding, and optimization can result in thousands of new daily users at a cost-per-acquisition that spells significant profitability. This article outlines seven strategies that SaaS startup owners and marketers can use to navigate high CPCs and leverage Google Ads to generate profitable leads and loyal customers.

1. Leverage video ads on the Google Display Network

Using the Google Ads Keyword Planner often reveals shockingly high suggested CPC bids for common SaaS keywords, reaching as high as $100 per click.

However, it’s important to remember that these bids are for Google search traffic. Advertising on the Google Display Network (GDN) allows you to reach a comparable audience at a fraction of a fraction of the CPCs of a search network campaign. The GDN offers several benefits over the Search Network. Its vast network of millions of websites provides immense reach, enabling you to connect with a broad target audience across various sites. Additionally, it’s significantly more cost-effective. While the average AdWords CPC for the Search Network ranges between $1 and $2, it’s less than $1 on the Display Network.

The GDN has its drawbacks. Being a numbers game, display advertising won’t yield the same conversion rates as search ads. A significant portion of users Around 86% of the people won’t even pay attention, requiring a higher volume of impressions to achieve comparable conversions to a smaller search campaign. However, the GDN’s greatest strength lies in its ability to deliver extensive exposure at a low cost. Instead of high bids for laser-focused targeting on the Search Network, you reach a broad audience, building brand recognition among some and driving conversions from others. For maximum impact at minimal cost, use video ads. This way, you can increase your brand’s visibility among both existing and potential customers without paying a premium for every impression on the Search Network.

2. Utilize Gmail Ads to directly target competitor customers

Gmail Ads offer a powerful way to reach your ideal audience directly. For SaaS startups, this audience is none other than your competitors’ existing customers. Gmail Ads allow you to target campaigns specifically to those receiving emails from your competitors, giving you direct access to individuals already using similar products. Several approaches can achieve this. One method involves targeting keywords frequently used by your competitors. By subscribing to their email lists and observing their language patterns, you can identify and utilize these words and phrases as target keywords. An even more precise method is to target your competitors’ domains directly. For example, below is a Gmail Ad from DigitalOcean, a cloud infrastructure provider, clearly targeting users who receive emails from other cloud storage companies through domain placements.

Here’s what the expanded ad looks like:

Such utilization of Gmail Ads allows you to connect with the same audience you would through search engine marketing but at a significantly lower cost.

3. Expand your reach with lookalike audiences

Startups often face two key constraints when attempting to scale their Google Ads campaigns as rapidly as their larger counterparts:

1. Their audience is limited to those with an immediate need for their product.
2. They lack the data necessary for rapid and effective scaling. One of the simplest ways to overcome these limitations is to leverage lookalike audiences. If you use a retargeting pixel, targeting similar audiences allows you to reach people exhibiting browsing patterns similar to your website visitors.

By incorporating similar audience targeting into your campaign, Google analyzes your retargeting list for common or similar cookies. This allows you to scale rapidly and effectively by reaching a similar audience without relying solely on keyword or placement data.

4. Implement precise targeting and effective remarketing

Given the inherent interest in the product that drives most SaaS website visits, remarketing provides an excellent avenue for SaaS startups to re-engage potential customers and keep their brand top-of-mind. There are two primary approaches to remarketing. The first, “Remarketing 101,” involves placing an AdWords tag on your website and targeting all visitors with ads.

While this basic remarketing strategy can generate conversions, refining how you target previous visitors can dramatically enhance results. Unlike e-commerce websites, where customers return to purchase different products, SaaS websites typically offer a single product. Consequently, targeting customers who have already converted holds little value. Therefore, instead of targeting all website visitors, create a custom audience based on converted users and exclude them from your remarketing audience. This ensures you don’t waste resources marketing to existing SaaS subscribers, allowing you to allocate more budget towards reaching motivated potential customers.

5. Determine return on ad spend using CLV, not CPC

The suggested bids for SaaS keywords in Google Ads can be disheartening. While the average CPC for most SaaS keywords might seem exorbitant compared to monthly subscription costs, it’s crucial to maintain perspective when calculating return on ad spend. For instance, if your SaaS product costs $49 per month and acquiring a paying customer costs $150, dismissing the campaign as a failure would be premature. Instead, the accurate way to evaluate SaaS ROI is by considering the lifetime value (CLV) of each acquired customer.

Most SaaS products experience a churn rate of between one and five percent, indicating that between one in 20 and one in 100 customers cancel their subscriptions monthly. With an average churn rate of five percent, the average lifespan of each new customer is approximately 20 months. Therefore, at $49 per month, each new customer generates an average revenue of $980. This perspective makes the $20 suggested CPC bids from Google’s Keyword Planner seem far more reasonable. Instead of focusing solely on high CPC bids, consider the cost of advertising your SaaS product alongside the potential revenue each customer represents. Using CLV, rather than CPC, to determine ROI reveals that even the most competitive Google Ads keywords might not be as costly as they initially appear.

6. Target competitor keywords to capture new customers

Software’s intangible nature makes assessment and comparison challenging, leading most SaaS prospects to evaluate several options before making a purchase. SaaS companies recognize this need for comparison and offer free trials to facilitate the process. As a startup, you can capitalize on this by targeting competitor brand names and products as keywords within Google Ads.

Example of companies running aggressive competitor ads on Basecamp’s brand search. While potentially expensive, competitor keywords offer a significant advantage: they yield results. When factoring in the lifetime value of a SaaS customer, the cost of bidding on these keywords becomes far more manageable. However, Google imposes certain restrictions on using competitor brand names in advertising. Firstly, incorporating a competitor’s trademark in your advertisement is prohibited. Secondly, your ad copy and landing page must be free of false claims and unfair comparisons. Bidding on a competitor’s brand name is the simplest way to implement this strategy. For example, an email marketing SaaS startup could target a competitor’s brand and product name using keywords like: [constant contact] “constant contact” +constant +contact Targeting specific competitor-related keywords enables feature-level product comparisons. Here’s an example of price-related keywords for comparing your SaaS software’s value proposition to a competitor: [constant contact pricing] “constant contact pricing” +constant +contact +pricing

[constant contact price] “constant contact price” +constant +contact +price Coupled with a landing page emphasizing your software’s affordability, this approach can generate a steady influx of trial signups and paying customers. Exploiting a competitor’s negative reputation is also possible by strategically placing your ads on the same search engine results page as their negative reviews using keywords like: [constant contact review] “constant contact review” +constant +contact +review By facilitating direct comparisons – for instance, contrasting your reviews with theirs, or your pricing with theirs – you compel potential customers to make a clear choice between your product and your competitor’s. Offering superior value, features, or reputation can attract customers who were not initially searching for your brand.

For a deeper dive into this strategy’s mechanics and benefits, refer to nexus-security’s comprehensive guide on bidding on competitor brands. This tactic proves invaluable for startups operating with limited budgets seeking to maximize impact on a targeted audience.

7. Streamline your Google Ads account for efficiency

Google Ads boasts an impressive array of features, but not all are relevant for SaaS startups. Many cater specifically to e-commerce, retailers, direct marketers, and other industries outside the SaaS realm. Given AdWords’ broad target audience, identifying effective strategies can be challenging. Here are some Google Ads features you can safely disregard to streamline your account and prioritize what works:

Shopping campaigns

While beneficial for retailers, shopping campaigns and product ads hold little value for SaaS businesses selling a single product.

Real-time updates

Real-time updates offer minimal benefit for SaaS products. Although potentially useful for promoting short-term sales, they are unlikely to generate significant positive results.

Call extensions

Call extensions can be beneficial for high-priced SaaS products by facilitating phone-based sales. However, for SaaS products typically priced between $49 and $99, encouraging calls is not a scalable customer acquisition strategy. Instead of focusing on extensions, which are more effective for optimizing established campaigns generating profitable leads and sales, prioritize keyword targeting and ad copy improvement during the initial stages of your campaign.

Is your SaaS startup leveraging the power of Google Ads?

Dismissing Google Ads as too expensive, especially for modestly priced SaaS products, is tempting. However, the right strategies can attract customers, build valuable brand exposure, and generate consistent leads at a reasonable cost. If your SaaS startup isn’t currently utilizing AdWords to acquire trial users and customers, consider implementing the techniques outlined above. With strategic keyword selection, compelling ad creatives, and an optimized bidding strategy, the results might pleasantly surprise you.