The Correlation Between Ad Investment and Growth: Here’s What We’ve Found

In today’s article, we’ll examine how effective advertising is for fueling growth. Is it required? Is it effective? 

We’ve worked with dozens of B2B founders and today we’re piecing together what we’ve noticed:

• Ad investment goes hand-in-hand with overall growth. They typically rise at the same time – up and to the right. 
• Your ad budget should grow as revenue grows.
• PPC advertising is highly successful when a startup’s niche has a decent level of keyword search volume. 
• If you’re budget-constrained, PPC advertising is highly successful when you first focus on bottom-of-the-funnel marketing. 
• Advertising is an integral part of the total investment needed to break into a market.

Let’s take a closer look with examples: 

Ad investment goes hand-in-hand with growth

We’re seeing this with our long-time client, Uplisting:

Of course, revenue growth is usually caused by several activities that are going well:

• Paid ads
• Organic content / SEO
• Partnerships and affiliates
• Sales team if applicable 
• Onboarding and Activation 
• Strong product

Investing in paid ads is just one piece of the puzzle, but it’s an important one.

Your ad budget should grow as revenue goes 

Once you attain revenue growth, then what? 

It depends on your goals, but for most B2B SaaS companies, the next logical step is to increase your budget as revenue grows. This will ensure your growth trajectory continues to have the fuel required to reach the targets.

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Keep in mind, your ads have a much larger effect than what can be numerically recorded. For example, customers typically need to hear about a brand seven times before they are ready to purchase. Your ads might be just one touchpoint on their journey before deciding to hop on board.

The Harvard Business Review says advertising is not a short-term sprint, but rather a continuous “capital investment with sales revenue generated like a stream over time.” It can be hard to pick apart the 1:1 relationship. As they say, it’s more like a stream over time! 

Your ad strategy will depend on your niche’s keyword search volume 

If you're a bootstrapped business or constrained by a tight budget, it's often best to focus your budget on the highest ROI advertising. In most cases, this tends to be affiliate marketing or search ads. 

For search ads, in particular, startups are successful when their niche has a decent level of keyword search volume. For example, one of our clients is in the payments niche. There are a lot of strong keywords being searched every month in that space. As we’ve worked on their paid ads, we know that search ads will yield results given the search volume of the keywords in their space. 

There are other startups, however, like Notion or Coda, who are creating a new niche. People aren’t necessarily searching for a tool like theirs with obvious keywords. As a result, these companies need to generate demand first through top and middle of the funnel marketing. These types of businesses require a large marketing budget upfront to first create the category.

If you're trying to grow on a tight advertising budget with little to no search volume you will need to look other ways to reach your target audience. This could be through content you promote, PR, paid social advertising, and much more.

So before you run toward paid ads thinking it will always lead to growth, first take a look at your niche and keyword search volume. Research how your competitors are growing. If they have a paid ads program, you’ll likely need to follow suit to stay competitive. 

Advertising is an integral part of the total investment needed to break into a market 

Founders are well-versed in how capital helps fund the business, keep it alive, and help it grow. However, not every founder views their ad spend as an integral, ongoing part of the equation. The most successful founders, as we’ve seen it, view advertising as an integral part of the total investment needed to break into a market.

If a company is unsure if they want to invest in paid ads, it’s helpful to remember that it’s a necessary ingredient in gaining brand recognition. If you want to reach the same levels as your competitors, if not surpass them, then you likely need to have paid ads. 

You need ads to fuel your growth. We’re experts at getting the job done. 

We’ve helped brands like Uplisting, Spell, and Craft. If you want to fuel growth similar to them, fill out this quick form and we’ll send you a free proposal. No meeting required!