Paying-per-click? Pros and cons for startups
Updated: Jul 19, 2021
“Organic growth is great but PPC is fast.”
When the entrepreneur has access to the niche market and target audience, organic user growth strategy is the most effective method to acquire new users and convert them into paying customers. This sustainable approach also helps the runway as startup is not only a sprint, but also a marathon.
However, if without access to the niche market, pay-per-click ("PPC") would be the next better option to acquire new users, as compared to hiring a sales team in the early days of a startup. PPC although comes with a price tag, it can be used effectively to target users of different demographics, locations and interests, and deliver quick results.
While PPC can be effective in delivering clicks to your site, it is important to remember that foot traffic does not equate to user sign ups, where the sign up rate is usually 5-20% of that.
Let's assume a marketing objective to acquire 1,000 new users, estimated at 10% sign up rate with every PPC at $1, the startup would have to spend $10,000 to get 10,000 clicks into the site in order to have 1,000 users signed up. The Cost-Per-Acquisition will be $10 per user.
Customer-Acquisition-Cost ("CAC") is often the killer for tech startups because most are not able to turn on revenue quick enough, thus the startup failed even when it is a promising one. Other factors such as drop off rate, conversion rate and customer lifetime value should also be considered when planning a marketing campaign.
TenTract's CMO-as-a-Service allows entrepreneurs to launch agile marketing strategies with a small budget and pivot accordingly to the measurable results, without a full time marketer on your payroll.