For startup founders, there is tremendous pressure to drive revenue quickly and never enough time to check off their full to-do list. To alleviate this, most founders jump straight to running paid ads. Suddenly, within a week or less, they have fresh leads and momentum to share with their investors. The campaigns require minimal oversight, and only a few weekly tweaks are needed to keep the growth engine humming at maximum efficiency.
However, while enticing, this strategy is very often a trap that founders only realize once it’s too late. In this article, I will discuss the perils of paid advertising for early-stage B2B startups and why prioritizing organic brand building is a smarter strategy.
The perils of paid ads for early-stage startups
Many founders use paid ad tests this way, analyzing the feedback from ad clicks and cost-per-lead results to guide key decisions for their business. But there are several issues with this approach:
1) Paid ads are not a good way to learn about your ICP
For founders with a few potential audiences that could be a good fit for their product but aren’t yet sure who their ICP is, paid ads experiments are often used to gain greater clarity.
But this is a costly and inefficient approach. To obtain a critical mass of data, you will have to spend thousands (or even tens of thousands of dollars). Still, genuine learning about your ICP will be minimal.
If you are able to drive clicks to your landing page but are unable to drive form submissions or downloads, you don’t have a clear “why” as to what is wrong. It is far more effective to conduct user interviews with prospects and ask them directly for feedback.
User interviews are far more effective
If one of your ad campaigns is successful, it is often the case that you don’t get a lot of insight into the audience itself. You might get 5% of them to fill out a form or take the next step in your funnel, enabling you to get more information, but for the 95% who clicked and then ghosted, you are left in the dark.
2) Learnings from paid ad experiments can be misleading
Founders don’t realize that what they learn from their ad experiments is rarely straightforward and can easily lead to wrong conclusions. For example:
- CTR is often not a great predictor of CAC. Frequently, they have an inverse relationship (i.e., your messaging may produce a tepid response to a broad audience (high CTR but weak CAC) versus a passionate response from your core ICP (low CTR but strong CAC).
- Your landing page may be too slow or have a poor UX.
- Your product messaging may not be landing.
- Your product might not be effectively solving the user’s problems.
3) Paid ads can mask bad messaging
By placing ads directly in front of potential prospects, you substantially increase the chances they will engage, but this can be misleading. Is the messaging actually effective, or are you just getting clicks because of the additional reach provided by paid ads? Similar to how only 20% of Groupon customers returned to restaurants when discounts were not offered, you might find that only a tiny percentage of customers are interested in your message when you’re not paying for their attention.
Don’t fool yourself
4) You’ll get hooked on paid ads and never build an organic engine
Once you hop on the paid ads carousel, it will be hard to get off. The leads and sales you get from your paid engine feel much more effortless than the longer organic process, and once your team and investors expect numbers to keep accelerating, it will be hard to pump the breaks. But, if you don’t build a strong organic engine, your paid performance will eventually degrade, and you won’t have anything else to fall back on.
Why you should lead with organic brand building
With paid ads off the table, most founders are at a loss when deciding where to focus their marketing efforts. Identifying where their target customers spend time online and engaging with them directly (which I refer to as organic brand building) is seen as too slow and too time-consuming.
The two primary reasons that most founders are hesitant to embrace organic brand-building boil down to the following:
1) Organic brand building is too time and resource-intensive
Paid ads can be turned on at the flick of a switch and start generating leads with minimal oversight. Organic brand building requires a much more significant time commitment and is less straightforward.
For most founders, this is enough to scare them away. I think this apprehension is more of a question of perceived value versus the actual costs involved (i.e., the belief that with organic brand building, the juice isn’t worth the squeeze). However, the key thing here is to expand one’s perspective from “I’m spending time social media posting” or “I’m working on marketing” to “I’m gaining insights about my audience and building relationships that can benefit my entire business.”
For starters, organic brand building provides user insights that can be directly applied to improving your product. B2B thought leader Adam Robinson provides this example to highlight how Clay.com went from a small startup with 20 customers to a titan valued at $1.125 billion in just a few years. The key was GTM co-founder Arun Anand’s willingness to speak directly to prospects and engage in relevant communities, listen to feedback, and feed that to the product team to improve the product.
Clay’s revenue really started to take off when Varun joined in 2021
Next, organic brand building has a clear and obvious marketing benefit. This might not translate to sales immediately, but the goodwill will inevitably bear fruit and pay off in spades. A good example of this is Gong. Founded in 2016, Gong poured tremendous energy into organic LinkedIn content and community engagement, an unconventional strategy for a B2B SaaS company. Leadership fostered a culture where nearly every “Gongster” posted sales insights on LinkedIn, with many posting 15+ times per week. By consistently sharing valuable sales tips and data findings, Gong built massive trust and buzz among sales professionals, ultimately hitting a valuation of over $1 billion.
Gong’s growth exploded through sharing useful sales stats from their clientbase
Recruiting high-quality talent is another benefit of effective organic brand building. Notion recruited Ben Lang to be its Head of Community since he was one of the most active power users of the product and a hardcore evangelist. Clay has a similar track strategy and actively hires the most active and enthusiastic members of its community.
Finally, organic brand building is also highly likely to produce some sales, since by engaging with prospects and offering value upfront, you build trust and spread awareness of your solution.
2) Organic brand building is too slow
It’s understandable for founders to feel the pressure to drive results immediately. The rapid surge of leads from paid ads feels highly satisfying, and the siren call is too sweet for many founders to resist. But the long-term benefits from organic brand building far outweigh the slower pace.
By leading with an organic strategy, Deel went from $0 to $300 million ARR in 3 years. They did this by responding to relevant discussions in online communities to offer value-driven answers, with the primary focus being Reddit and Quora.
Organic brand building doesn’t need to be slow
Twilio, another well-known brand, hired technical evangelists who attended hackathons, gave demos, wrote tutorials, and fostered local dev communities – effectively inserting Twilio into the developer zeitgeist. They paired this with top-notch documentation and a frictionless trial experience for developers. This approach drove massive adoption of Twilio’s APIs via word-of-mouth among engineers. Twilio grew from a startup in 2008 to $400M in revenue by 2017, and then to $2.8 billion in revenue by 2021, largely on the strength of its developer-driven uptake.
These examples show that while organic brand building may not bring in a flood of leads in the first week like paid ads, a well implemented strategy can produce exponential gains when compounded over time.
Conclusion
The value of founders leading organic brand building goes far beyond what most realize. The time invested pays off exponentially, creating growth opportunities that far surpass the linear results of a paid ad strategy. Moreover, many of today’s most successful startups have thrived by prioritizing an organic-first approach, proving the power of this strategy.
