Does Paid Search Work for B2B Marketing?

Destroying money is a crime, but you’re doing just that when you don’t have a paid search strategy in place. Image via Shutterstock.

Paid search advertising doesn’t get a lot of love from B2B business owners. Having audited over 350 B2B paid search accounts, it’s pretty easy to see why: Paid search is a great way to lose a lot of money.

In particular, it can be difficult to succeed at paid search advertising in the sorts of niche markets most B2B companies target.

The smaller your market, the harder it is to identify profitable search terms and — even when you’ve found a good keyword — turning clicks into conversions and sales can be a real challenge.

For example, a few months ago I audited a B2B account that had spent months and $150,000 on paid search advertising without producing a single sale.

Is it any wonder the owner thought paid search was a waste of money?

This “Aha!” moment brought to you by Friends. Image via Giphy.

But here’s the thing, if you do it right, paid search is actually one of the best ways to grow a B2B business. For many of our B2B clients, paid search is their biggest source of leads and sales!

The question is, how do some companies succeed where so many others fail?

Succeeding at paid search

To successfully market a B2B company, it’s important to understand the differences between B2B marketing and B2C marketing.

Perhaps the biggest difference between B2B and B2C is the value of a sale.

For example, the average ecommerce transaction is worth $85 to $120. Even if you factor in repeat business, you might make $250 per customer.

Assuming a 50% profit margin, your Cost Per Acquisition (CPA) needs to be < $125 just to break even.

On the other hand, the lifetime value (LTV) for B2B companies is often between $20,000 and $200,000!

For B2B companies, even with a profit margin of just 10%, you can have a CPA of over $1,000 and still produce a great return on investment!

Take advantage of your LTV

So, how does your LTV affect your paid search campaigns? Well, the bigger your profit margin, the more room you have to figure things out.

This is important, because even the best-managed campaign is rarely optimized from the get-go. A well-designed campaign will save you a lot of money during the learning curve, but truly optimized performance takes time.

If you’ve only got a $100 profit margin to work with, it can be hard to make ends meet while you get your strategy right.

On the other hand, if you’ve got a $50,000 profit margin, one sale will more than cover the cost of getting your campaigns working correctly.

This gives B2B companies a huge advantage over B2C companies.

B2B vs. B2C
B2B, light-heavyweight champion of the world?

For example, last year we started running paid search campaigns for a B2B company in the insurance industry.

The client wanted leads for $150 or less, but we took advantage of their long-term profit margin ($1,000 to $10,000+) and ran a broad set of campaigns with a variety of keywords to identify which keywords produced the best results.

During our two-week blitz, our Cost Per Lead (CPL) was $250; however, the data we acquired during this period allowed us to identify several highly profitable keywords using the Keywords and Search Terms reports.

Using those keywords and a killer landing page strategy, we quickly cut their CPL in half. In fact, the campaigns were so effective that they produced an explosive growth phase for the company — resulting in millions in venture capitalist funding!

If you use it right, your LTV can be one of your biggest advertising assets.

Identify your audience

Often, who you think you’re targeting isn’t always who you’re actually targeting.

Unlike B2C companies — which are usually familiar enough with their audience that they know which keywords will produce results even before they start advertising — it can be difficult for B2B companies to find the right keywords for their niche.

After all, in a niche market, it can be hard to predict which keywords your audience uses when they are looking for your product or service.

In an effort to try and get in front of the right audience, many B2B companies bid on search terms that are superficially related to their offering but don’t actually indicate any relevant search intent.

Unfortunately, the wrong keywords drive the wrong traffic… and the wrong traffic never converts.

For example, remember that B2B company I mentioned earlier? The one that wasted $150,000 on paid search?

Well, $60,000 of their ad spend went towards search terms related to the keyword “translate” — which averages more than 150 million searches per month.

monthly searches in Adwords

That’s a lot of potential traffic, right? The problem is, most of the time, the more searches there are for a keyword, the less specific the search intent is.

And, if the search intent isn’t very specific, most of your traffic probably isn’t a good match for your landing page.

In this company’s case, none of the traffic was a match.

Not surprisingly, most searches that include keywords like “translate” don’t indicate a strong interest in a B2B company.

As a result, they got a lot of clicks, but their traffic wasn’t interested in their product, so no one ever converted.

Less is more

On the other hand, here’s what happens when you identify the specific keywords that your customers are using:

Adwords clicks vs. conversions graph

If you notice, click volume quickly falls off while the number of conversions stays about the same.

Eliminate irrelevant clicks and you eliminate their associated cost.

That frees up a lot of budget you can use to identify additional relevant terms and build your traffic volume back up — only this time, that traffic comes with more conversions. And, all of a sudden, paid search makes a lot more sense.

In this particular case, the client is now spending 48% more than when they started with us, but they are producing 9x more leads!

Cost per conversion graph
Now, instead of driving a ton of irrelevant traffic, paid search is their biggest source of leads and sales!

By the way, to see which keywords are working, all you have to do is pull a Keywords report.

Open AdWords, set the date range to anywhere from three to six months and click the Keywords tab.

Adwords campaign

Now, click the Filter drop-down menu and click “Create filter.” Create your filter.

Here, I’ve selected “Conv. rate > 2%”, but depending on how you measure success, you can choose to filter for the metrics that make the most sense for your business.

With your filter in hand, you can very quickly identify which keywords are producing value and which are budget black holes.

Speak to the pain point

In addition to targeting the wrong audience, many B2B businesses struggle to communicate their message effectively.

A lot of businesses assume that everyone cares about the specifics of their offering. After all, they put a lot of work into all those features.

The problem is, most people aren’t looking for a list of features — they are looking for solutions!

Your target audience doesn’t click on your ad because they want to know all about your product. They click because they think you can solve their problem.

To get people to convert, you need to identify the problem that triggered their search and speak directly to that pain point in your ad and landing page.

Unfortunately, many companies think that their landing page needs to address every possible question or scenario.

They’re wrong.

Highlighting all of the features of your product is your sales team’s job. The goal of a landing page is to show how your offer solves their problem.

If your ads are properly targeted, 90% of your traffic will come to your page with some version of the same pain point in mind. A landing page that speaks to that pain point will win their business!

So, does paid search work for B2B marketing?

Done right, paid search is one of the most effective ways to market your B2B business. It allows you to get in front of your audience at the exact moment when they are looking for your solution.

Done wrong, paid search is also a great way to lose a lot of money.

For B2B companies, paid search campaigns succeed or fail depending on how well they understand the differences between B2B and B2C advertising.

By utilizing what makes B2B marketing unique, you can leverage the strengths of B2B to create a killer marketing-sales cycle.

You’ve heard my two cents, now I want to hear yours. How have you seen paid search succeed or fail for B2B marketing?

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About Jacob Baadsgaard
Jacob Baadsgaard is the Founder & CEO of Disruptive Advertising, a Utah-based PPC agency that uses PPC, CRO and ROI-focused analytics to grow businesses. When Jacob's not working, you'll find him hanging out with his beautiful wife and three daughters or on the river fly fishing. Connect with him on Twitter or LinkedIn.
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