With rising costs, GDPR regulations, and the quest for efficiency, startups need to rethink their reliance on paid search. Here’s how performance marketing is evolving and why you should diversify your strategy for long-term scalability.
1. Paid Search Costs Are Skyrocketing
The cost of paid search, especially Google Ads, has become unsustainable for many startups. In 2024, the average cost per lead (CPL) has surged across industries, with some verticals seeing increases of up to 40%.
For B2B startups, this presents a tough challenge: high costs, combined with limited budgets, lead to diminishing returns on investment.
Impact of GDPR: The introduction of the General Data Protection Regulation (GDPR) has further increased the complexity and cost of paid search. GDPR-compliance means more cautious data use, limiting some targeting options and reducing the overall efficiency of paid campaigns.
Tip: Use remarketing and customer segmentation to refine targeting and reduce wasted spend. Optimize landing pages to improve conversion rates, making every click count
2. Branded Paid Search: A Costly Redundancy
Another issue plaguing performance-based marketing companies is the ineffectiveness of branded paid search. Many brands are paying for clicks they would have otherwise received organically. According to Search Engine Journal, this cannibalization can hurt both budget and visibility.
The last time I can find a Google study into brand bidding is from 2011 - when the digital landscape and the SERP (Search Engine Results Page) were both very, very different.
Startups relying on branded terms often fail to assess whether these paid clicks are truly incremental - Paid search can provide value, but it’s crucial to understand that many branded searches could have converted through organic channels.
Tip: Conduct tests to measure the incrementality of paid branded campaigns by pausing them for short periods and analyzing the impact on overall traffic.
3. Understanding Incrementality in Performance Marketing
Incrementality is the holy grail of modern performance marketing services. It refers to measuring the actual lift that paid efforts create. More companies are realizing that paid search doesn’t always drive incremental growth; instead, channels like content marketing, influencer outreach, and organic SEO are better suited for long-term brand awareness.
Startups must assess the value of each marketing channel holistically. PPC ads provide short-term results, but if these efforts aren’t adding incremental value, they’ll eventually become cost burdens. SEO and content, on the other hand, build authority and drive organic growth over time.
Tip: Consider working with a performance marketing consultant to test the true incrementality of each channel and allocate budget accordingly.
4. PPC: An Addictive but Unsustainable Growth Model
For early-stage companies, paid search can deliver rapid results—instant traffic, clicks, and conversions. However, relying solely on PPC is like building a house on quicksand. Once the budget dries up or ad costs inflate further, growth can stagnate overnight.
Performance marketing agencies (and marketing consultants like me) are now advising startups to blend paid efforts with long-term growth strategies like SEO, email marketing, and community-building to prevent reliance on PPC. Diversifying channels ensures scalability and builds a more sustainable growth model.
Tip: Explore SEO and email marketing for sustained engagement.
5. The Role of Paid Search: Still Relevant but Not the Hero
There’s no denying that paid search remains an essential tool in the performance marketing toolkit. However, it should not be your only tool. Paid search is particularly useful for specific goals like launching new products, driving time-sensitive campaigns, or remarketing.
While a performance-based marketing agency can help optimize PPC strategies to deliver solid ROI, startups must look beyond immediate clicks to long-term value.
Tip: Use PPC strategically, not as a crutch. Prioritize campaigns with clear, measurable goals, and balance them with organic growth channels for sustained success.
Key Takeaways for Startup Founders & VCs:
Paid search costs are rising and becoming unsustainable for many startups.
Branded paid search can often cannibalize organic traffic—test incrementality before scaling.
Diversify marketing efforts to include SEO, content marketing, and community-building to prevent over-reliance on PPC.
Paid search is still relevant, but startups should avoid using it as their sole growth engine.
For expert advice on navigating the future of performance marketing, consider consulting with an experienced performance marketing consultant or exploring performance marketing services tailored for your startup.
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