In this article, we’ll discuss 3 major and compelling reasons why SaaS & Tech firms need PPC ads to multiply their number of users and revenues.
It’s essential for software companies to, first, attract users and, second, convert them into paying customers.
Unfortunately, there’s intense competition in the market. Although the software market is valued at a whopping $145.5 billion in 2021, there also were more than 15,000 SaaS companies just in the United States. In February 2020, there were already 8.9 million mobile apps for users to choose from, and for desktop apps, there were over 35 million apps on the Microsoft platform alone as early as 2018.
The Importance of Churn Rate to SaaS and Tech Companies
Besides this evident cutthroat market, there’s another major challenge that every SaaS and tech company must grapple with. It’s how they can retain their customers. Based on several studies, the average churn rate (or simply churn)—for SaaS companies is between 10 to 60 percent, although the exact number depends on several factors.
Churn is such an important metric because it is the percentage of customers who cancel their recurring subscriptions to your software product. Obviously, without money coming in through subscriptions to your software or app, your business cannot survive in the long run. To be successful, SaaS businesses are advised to have an average churn rate of only between 3 to 8 percent.
However, we believe that churn is only a secondary challenge. The first (and more immediate) challenge is getting a lot of people to sign up to use your software or app. After all, a high churn rate doesn’t matter much if you have millions of users, compared to a moderate or low churn rate if you have only a few hundred users. So the first thing you need to do is get as many people as possible to use your software or app. Keeping them active (and paying) month after month will come after.
Luckily, pay-per-click (PPC) advertising can help you deal with the first challenge. PPC ads help SaaS and tech companies find their target audiences online, drive a lot of traffic to their page, and convert those website visitors into actual customers. In these types of ads, you need to pay based on the clicks you get, which means that they can give you a lot of bang for your buck. Furthermore, feeding back your customer data to your PPC campaigns can not only bring more customers but also higher-value ones.
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There are several things that your SaaS or tech business can gain from using PPC ads. Here are the top 5 ones:
Why SaaS & Tech Firms Need PPC Ads - Reason #1: More Traffic, Which Means More Sales
PPC advertising uses digital ads on any of the various advertising platforms (Google, Facebook, and so on) to drive more people to your website (whether your homepage or a dedicated landing page). Naturally, the more people see your ads, the more people are likely to end up visiting your website and signing up for your software. Ultimately, this increase in traffic can lead to an increase in your sales numbers.
According to industry knowledge, a good conversion rate is between 2 to 5 percent, but for SaaS companies, the average PPC conversion rate is around 7 percent. Of course, the keywords factor in, but regardless, it’s worthwhile to invest your ad budget in some PPC ads for your SaaS or tech firm.
And here’s the kicker: a study by Google found that businesses that use Google Ads experience a 10% increase in visits to their brick-and-mortar shops, so the benefits of these digital ads are not online!
Why SaaS & Tech Firms Need PPC Ads - Reason #2: Greater Competitive Advantage
You already know how competitive the tech world is, and as a result of the pandemic, more people are using the web to find, choose, and buy products and services.
Running PPC ads will allow your software company to gain a competitive advantage over your rival firms because PPC ads will give your website a higher likelihood of being visited by your target customers compared to websites that depend on being in the organic or non-paid search results. A study by WordStream has shown that the top 3 paid ad spots on Google get at least 2 in every 5 clicks on that page.
Why SaaS & Tech Firms Need PPC Ads - Reason #3: Ads That Are Targeted to The Right People
Last but not least, more than just showing your ads in a prominent spot on whatever PPC platform you’re using, PPC ads allow you to target who actually sees your ads on the web. You can target users from select locations, of certain demographics (certain ages, job titles, income levels, and so on), and who have specific interests. These would likely be based on the characteristics of your Ideal Customer Profile (ICP). In short, your ads are not just seen by random people who may never be interested in your software; rather, they are shown to users who have the highest chance of converting.
In PPC advertising, you need to bid on certain keywords that you consider important to your business. For example, if your SaaS firm creates money management apps, you can target people of working age (e.g., those aged 22 to 60) and exclude students (aged 21 and below) and retirees (aged 60 and above).
Conclusion on Why SaaS & Tech Firms Need PPC Ads
As a form of digital advertising, PPC ads are a powerful and cost-effective way to market your SaaS or tech company to a lot of people who are likely to sign up and pay to be your customer. Although PPC campaigns have multiple benefits, setting up and managing them can be very tiresome and confusing. It’s easy to blow your advertising budget if you don’t have the expertise in PPC ads.
If your tech or SaaS business needs help with your PPC advertising campaigns, an experienced PPC advertising agency like Zero Company can be of help. As a trusted PPC management agency, we’ve been setting up and managing PPC campaigns and offering a variety of other online marketing services for over 20 years.
Book a free consultation with our PPC advertising experts today!