Paid Search and Paid Social: Advertising is More Nuanced than You Think

The importance of paid advertising in scaling businesses

Paid advertising can be the cornerstone for increasing how you scale growth for your business. It works extremely well if:

1. You are currently building a product or a Minimum Viable Product (MVP is an early version of a product that’s functional) and want to test out the viability of the product in the market. This helps understand Return on Investment (ROI) expectations through Return on Ad Spend (ROAS) and Customer Acquisition Cost (CAC).
2. You’ve nailed Go-To-Market (GTM), achieved Product-Market Fit (PMF), and now want to scale towards a healthier pipeline with more relevant leads.

The most important factor when it comes to paid advertising is that it serves as the top of the funnel for your brand—from discoverability to conversion. You’re reaching out to people who can benefit from what you have to offer and if what you’re offering is truly solving a critical problem in their lives, it’s only waiting to be discovered. Leads essentially move through the funnel almost on their own, cutting down conversion time and effort tremendously. Iterating, retargeting, and optimizing ads through observing user behavior and ad performance can further improve ROI and scale your business without hitting a plateau.

However, paid advertising, on its own, is an umbrella term that trickles down into various verticals which have only diversified with the advent of social platforms, websites, and search engines. Two of the most prominent and widely-used (and widely misunderstood) subsets of paid advertising are paid search and paid social.

Let’s talk about paid search

Paid search is one of the fastest ways to grow by paying for advertising your brand on SERPs like Google and Bing. This is a form for PPC (Pay per click) advertising where you pay for user interactions.

An example of paid search could be sponsored search ads on Google SERP when you search for ‘paid advertising’.

What makes paid search one of the most potent channels for acquisition is search intent, relevance, and targeting. Paid search has become increasingly more nuanced as well as intricate, allowing users such as yourself to selectively advertise based on targeted keywords and interest, which helps improve CTR (Click-through rate) and eventually, conversions.

Say you’re a research assistant and have a paper to publish before summer break. You search for ‘AI research tool’ on Google, and an ad pops up. You click on the ad, explore the website, and try out the product. It turns out, this is exactly what you were looking for. You quickly get a monthly subscription to start work on your project.

This example gives a complete picture of what discovery and conversion look like from the user’s point of view.

Why should you go for paid search?

• If you have a product or a service that’s widely used or well-known, paid search is great because there is a large pool of keywords to choose from.
• It’s the quickest way to reach a relevant audience and capitalize on search intent which is extremely high for search ads.
• Great intent leads to faster conversions and maybe even quicker ROAS.
• Since the leads you get through paid search have high intent, time to conversion can potentially be lower i.e. faster conversions.
• Gives you a competitive edge in your market by finding keyword opportunities with feasible search volume, identifying gaps, and optimizing ads for your budget for best results.

Now, let’s talk about paid social

Social media has become the primary source for content creation and consumption. Everyone with access to a digital device also has access to social media accounts where personal preferences can be leveraged to show targeted ads to users. These ads can be in various formats - creatives, videos, text, etc. - and are displayed to users based on relevance. These ads are great for reaching more people in your target audience and creating brand awareness early on.

Say your interest lies in arts and crafts. As a result, you interact across platforms with art content, search for art supplies, and participate in art-related communities. While swiping through Instagram, you come across a company that sells canvases or specific art stuff you’re interested in. Although, at that moment, you weren’t going to buy anything, the ad made you aware of a new brand that sells what you’re looking for.

Why should you go for paid social?

• The most effective way to reach a large audience and improve brand awareness.
• If you have your target audience figured out, paid social is great for retargeting to keep your audience engaged with your brand.
• If your product has a long purchasing cycle, retargeting with social media ads can be great for nurturing leads through the funnel.
• Great for early brands looking to make a first impression.
• Low-effort brand marketing: create social accounts and begin branding efforts without delay or much help.
• Great for driving engagement and running campaigns for efforts other than just branding. Example: workshops, projects, events, community, etc.
• Improved probability for word of mouth and viral marketing since you’re reaching a larger audience.

Paid search vs. Paid social: A quick look

Table below compares the main characteristics of paid search and paid social:

How do you know what’s best for you?

It can be difficult to choose between paid search or paid social to begin with and budget constraints further limit your decisions. But there are some questions you can ask that can help you out -

• What are your short and long-term plans when it comes to scaling your company?
  • Do you want instant results or do you have room to experiment and learn about the intricacies of advertising? Paid search is more result-driven while paid social is more about putting yourself out there and seeing how the audience interacts with your brand.
• Do you want to see quick results or have room to experiment?
  • If generating leads and straightforward ROI is your primary goal then paid search ads can be right for you whereas paid social can be better for building brand awareness.
• If you’re planning to go ahead with paid search, what are the keywords you’re targeting?
  • Paid search relies entirely on keyword targeting. Not landing on the right keywords or not being able to figure them out can be a sign to not go ahead with it. If however you do find the right keywords, observe and iterate for better results.
  • If the targeted keywords have low search volume, you will not see many impressions, let alone conversions. What’s more, targeting broader keywords to compensate for search volume will only result in irrelevant and lower intent traffic. In this case, your best bet is to opt for paid social to reach a larger, relevant audience.

Here’s some advice

Realistically, any form of advertising requires time to understand and optimize. At least 3 months’ worth of time and budget is necessary for any sort of efficient ROAS and you have to have the patience and appetite to endure through that phase.

Paid search and paid social can be expensive, and allocating a small budget might mean that you don’t put enough capital to understand how ads are working for you. If the budget is too low, for example, you won’t see enough results to have any concrete proof of whether or not paid media worked for you. In fact, the results at the end of the 3rd month might be irrelevant to the 1st month because the patterns are not comparable or even coherent. On the other hand, if you allocate a lot of budget in a short time then the results can be biased because of seasonality or external factors that are not great indicators of reliable pattern.

Not sure about your budget? Get an estimate of the required budget, conversions as a result of that, and the customer acquisition costs for running ads → Try this template

Where your target audience lies in their customer journey is also a critical factor. An audience that’s already solution-aware already knows what they’re looking for and does so by searching with relevant keywords. You need to find these keywords that lie at the intersection of what your audience is looking for and what are you precisely offering.

On the other hand, a lack of research (of keywords, target audience, ad expectations, competitors, etc.) can lead to bad performance despite having a good budget. This is a waste of your capital and plausibly a strong reason for you to permanently lose trust in advertising.

What we would recommend

We recommend to start by conducting in-depth research on your market, audience, keywords, competitors, and timelines in order to come up with a decent advertising plan. If the search volume for keywords is lower than 500 per month, it might mean you’re catering to a new category or there’s low product awareness. Consider paid social as an option to generate some traction in this case.

Also, try and experiment with both paid search and paid social but only as much as your appetite allows. Do not expect immediate results without optimizing campaigns and be curious enough to learn from your mistakes and reiterate. If done well, a good balance of paid search and paid social can work wonders.

How to optimize your ad campaigns?

• Don’t be afraid to experiment. Run A/B tests—try different ad creatives, copies, landing pages, etc., to see how they impact important metrics like CTR, CPC, Conversion rates, and CAC.
• Campaigns that worked regularly might stop working for reasons like changes in industry trends or competition. Listen closely to how your ads are performing over time and react accordingly—don’t be afraid to make changes whenever necessary.
• As you try out different ad channels and campaigns, understand what’s working better and invest more towards those channels.