How to grow your SaaS with Paid Ads? The Complete Guide (2023)

How to grow your SaaS with Paid Ads? The Complete Guide (2023)

Are you a SaaS founder who is looking to explore paid ads for your SaaS growth?
Note: SaaSwrites is a curated growth marketing hub and resource built to help SaaS founders grow their products. We sincerely thank all our experts for their constant value addition to this world.

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What are Advertisements?

Ads or Advertisements are an approach to reach people and make them aware of your product.
It’s a medium to help people interact with your business.

Why does your SaaS need to run ads?

A lot of B2C, B2B or B2B2C SaaS products have their end-users on social media channels.
Ads can help you reach your target audience in an instant.
I have a few videos on running ads, but they're more focused on info products. But maybe I should go more into details about running ads for SaaS as well 😁 ~ Simon Høiberg, Founder of FeedHive

How can ads help your SaaS?

Many founders and makers do not have a very strong love relationship with ads. A lot of focus is on organic growth and content. However, ads are great to leverage your short-term goals in your journey. You can use ads in many ways.
How Ads can help your SaaS with market validation, product awareness, early adopters, and scaling your SaaS.
How Ads can help your SaaS with market validation, product awareness, early adopters, and scaling your SaaS.

Ads are a great method to perform Market Validation for your SaaS

A lot of makers and founders perform their validation through ads. It’s a great way to save time by leveraging some funds to run your ads.
Build a landing page, have a well-written copy, and push it through to your target audience.
One cost-effective way to see if your startup SaaS is viable is to launch a single phrase PPC campaign. Whatever you think is the most qualified phrase. Mine was “zip code database”. Google Ads gives you a $500 credit after spending $500. You can get ~500 clicks for $500. ~ David

Ads can bring you product awareness of your SaaS

Your product might require traction. Running ads can get you started with much-needed product awareness and build you a small community.
If you are building a tool like Canva, having a small community of designers would do wonders for your brand. You can bring product awareness to your target audience.
Mission-centric SaaS products can attract their target audience easily through targeted ads.

Ads can bring you early adopters to grow your SaaS

Ads can bring you your freemium
SEO, content marketing, and email lists seem to be on the "must-do" list for most SaaS startups. I don't disagree. But there's an opportunity we talk about way too little: 👉 Paid ads. Believe me, you can get incredible growth results from running effective ad campaigns! ~ Simon Høiberg, Founder of FeedHive

Ads can help you scale your SaaS

When your product is validated and achieved product-market fit, you can run ads to scale your Monthly Recurring Revenue (MRR).
Here is a path boring SaaS guy suggests:
Build SaaS with basic plan >$25/mo 👇 Scale SaaS to 1K MRR with Twitter, cold email, and LinkedIn 👇 Identify the core ICP and USP 👇 Use all profits to scale with ads to $10K/mo

Wait, is ads really an effective way at the start for a SaaS?

Justin Jackson towards the end of 2020 asked:
I've done dozens of ad experiments (Facebook, Twitter, LinkedIn, Reddit) for multiple SaaS companies over the years. Reasonable budgets + tracking. I've yet to see a decent ROI from these types of ads. Is anyone in SaaS seeing good (statistically relevant) results?
Here are some of the answers to the above question:
Tejas Rane replied:
Viddoyze - Animated Video Maker SaaS has scaled up crazily using PPC. They focused on YouTube Ads, Facebook, and Affiliates. Invested $80k, Revenue $3M
It works for some and it does not work for a lot.
Depends on what you are after, but we had incredible social media ad success back at an Ed startup for university students. The problem is if you don’t sink a lot of time into understanding the platform and niche targeting, you end up with subpar results
Bottom line: It’s important to understand and know what you are doing.

Your SaaS can leverage two types of ads targeting:

  • Behavior: Serves ads to people searching for your product. Better for conversion, but audience size is limited to ppl searching for you.
  • Profile: Uses social profiles/engagement to serve ads. Conversion is lower, but audience size is less restricted.

You also need to understand where your buyer is in the journey

  • Top of funnel: This is only a prospect and can have a big wide audience. It’s great for educating and product awareness.
  • Middle of the funnel: Get your target audience to sign up, spread the word, and drive traffic to the site to build a remarketing audience.
  • Bottom of the funnel: Retarget ads to aim at conversion.

How to get started with ads?

It’s best to hire an expert when you got the funds. In case you don’t, feel free to leverage some resources to run paid ads for your SaaS.
If you are a SaaS startup and want to start with ads, I would recommend first doing: 1. Google search for your company and competitor names 2. Facebook retargeting for site visitors Everything else will take a lot more effort to have a reasonable payback period ~ Jeff Chang
Skills you need to effectively run ads for your Saas.
Skills you need to effectively run ads for your Saas.

You need the following skills to effectively run ads:

  1. Copywriting
  1. Graphic Design
  1. Video Editing

Here are steps to effectively run ads for your SaaS:

  1. I've tested several channels to understand what works for my business. I tested Google ad platforms (keywords and display), Facebook and Twitter. For me, Google Ads brought the best results, especially KW. Display with fewer conversions, but still significant.
  1. I've found that using custom segments based on what categories of apps people use makes Google better recognize interests and targeting. I think that if a person downloaded a competitor's app, they really are a customer of that company and not just a curious visitor to a website
  1. I need to frequently analyze the search terms to identify that the keywords are not conflicting with other subjects. On @getuserforever KW “survey” showed my ads for “paid surveys”, which is not the focus of the product.
  1. Check that there is no overlap of KW that represent the same thing. It is vicious to be looking for new KW that can potentially impact more audience, but sometimes it ends up adding keywords that are very similar, this makes the KW optimization harmed and not effective
  1. Placing conversions as deep in the funnel as possible, preferably after the basic use of your product (at @getuserforever after creating a survey), I believe is a way for the platform to really understand who is engaged with your product and not just curious
If you are a SaaS startup and want to start with ads, I would recommend first doing:
  1. Google search for your company and competitor names
  1. Facebook retargeting for site visitors
Everything else will take a lot more effort to have a reasonable payback period
In our experience with SaaS, ads made using screen recordings outperform other video ads.
Tips to make video ads for your SaaS.
Tips to make video ads for your SaaS.
How to make them great:
  1. Explain why your product is awesome within the first 5 secs.
  1. Demo the most valuable parts of your product.
  1. Use closed captioning.
  1. Keep videos under 45s.

Terms associated with Ads

CPC - cost per click
CPM - cost per 1000 impressions
CTR - click-through rate
ROAS - return on ad spend
Frequency - the average times each person saw your ad
Impressions - the number of times your ads were on screen
Reach - the number of people who saw your ads at least once
Landing Pageviews - The number of times a person clicked on an ad link and then successfully loaded the website
Post Engagement - The total number of actions that someone took involving your ads

Ads are mostly run on social media channels and on google search.
You can run ads in many social media channels. Let’s look at what channel would work best for your SaaS.
These Top channels are ordered by average cost/click for U.S. audiences (LinkedIn being the most expensive)
1. LinkedIn 2. Twitter 3. Instagram 4. Facebook 5. Google Ads 6. Pinterest 7. Snapchat 8. Banner ads

1. How do LinkedIn ads work for SaaS?

LinkedIn offers uniquely granular company and employee targeting (firmographic targeting). Clicks are expensive. Most companies won't be able to afford LinkedIn ads.
Good fit: B2B companies earning thousands per customer.
Poor fit: anyone earning < $10,000 USD in LTV

Experiment w/ LinkedIn's ad units:

  • Text Ads: Typically only work for retargeting & brand marketing.
  • Sponsored Content: Focus on these. Decent CTRs but saturate quickly due to small audiences.
  • InMail: Generally avoid. The response rate is poor compared to good cold emailing.

2. How do Twitter ads work for SaaS?

Twitter ads let you target users who follow a particular topic or person. That's unique.
Best for 2 scenarios:
  • Companies targeting niche audiences that can ONLY be identified based on who they follow.
  • Enterprises running brand marketing. They "buy" followers through ads.

Downsides compared to Facebook/Instagram:

  • Twitter ads usually cost 2x more/click.
  • Conversion is usually lower.
  • Audiences saturate quickly bc there are fewer engaged users.
Better use case: If your profit margins allow, run Twitter ads to get sales leads that you close via email/phone.

3. How do Facebook and Instagram ads work for SaaS?

Facebook (FB) and Instagram (IG): The best profile targeting channels.
Good fit for: Mobile apps/SaaS, eCommerce.
Poor fit: Most enterprise products.
IG ads generally convert better than FB. Use IG to target the 18-24 y/o audience that DOESN'T use FB.

Use the Facebook and Instagram ads 80/20 rule for your SaaS:

  • FB and IG have a ton of users. If you get ads to work, they'll sustain a higher daily spend than other social channels.
  • Best for product discovery.
  • Start broad, then niche down. It's the one channel where you can really lean into the algorithm.

4. How do Google ads work for SaaS?

The best behavior targeting channel: Reach people who are actively searching for your product.
Good fit: Products that solve known, high-volume problems
Bad fit: Products people don't search for because they don't know they exist. e.g. cutting edge technology.
There are 10+ great ways to get web traffic, but Google ads is king. They’re scalable, predictable, and give you hot traffic instead of cold! Jackson Blackledge

Use the Google ads 80/20 rule for your SaaS:

  • Balance specific vs broad: Use exact match keywords on the "money" keywords, and add a broad match modifier (e.g. women, summer, hats) to capture long-tail keywords.
  • Add negative keywords to filter out things that aren't suitable.

5. How do Pinterest ads work for SaaS?

Pinterest ads combine profile (interest) targeting with behavior targeting (search)
Best for:
  • Selling fashion, food, or furniture.
  • Products that lend themselves to pretty, eye-catching imagery.
  • Predominantly targeting women (70%+ of Pinterest's audience).
  • B2C eCommerce

Best Practices for Pinterest ads for your SaaS:

You don't want users to click your ad by accident.
  1. Ads can't look so obvious that people reflexively ignore them.
  1. But, make them look enough like ads that those who click do so purposefully.
Blend in, but don't mislead.

6. How do Reddit ads work for SaaS?

Reddit ads work best in two scenarios:
  • If your product appeals very broadly (e.g. underwear, credit cards).
  • If you earn a lot per customer AND your niche is active in a subreddit.
If your product fits within a large subreddit category, try subreddit targeting: Running ads within niche subforums. You can get them to run profitably, and large subreddits take longer to saturate than small ones.

7. How do Snapchat ads work for SaaS?

We've seen snapchat ads work for 2 company types:
  1. Consumer-facing mobile apps or games with a free trial.
  1. Retail businesses that lend themselves to impulse purchases (e.g. restaurants)—You can target users near your store and capture them as they walk by.

8. How do Banner ads work for SaaS?

Banner ads are best for:
  • Cheap brand marketing: Advertising not to get clicks, but to stay top of mind.
  • Retargeting: Showing ads to your site's visitors to get them back.
If you do run display ads, do it through Google Display Network—It provides the most granular targeting.

When to reset your ads for SaaS?

There are instances where your ads might not give you the desired results.
You might want to work on resetting your ads.

7 actions to reset your Ad sets

  1. A change to your ad set optimization
  1. You change the audience you are targeting
  1. Having your ad set paused for more than 7 days
  1. Adding in a new ad under your ad set
  1. Editing your ad
The next actions are a little more complicated. The first 5 actions are pretty straightforward in the sense that if you do those things the ad set's learning phase will reset.

Your ad reset depends on how big of change or "Significant Edit" was made.

However, the last 2 actions don't necessarily reset the learning phase.
  1. Changing the bid cap
  1. Changing the budget amount
There's no exact answer that I've found for exactly what constitutes a Significant Edit for a budget change. But, in a traditional ad set, you can stick to 10-15 budget increases. A CBO campaign gives you much more freedom.

What’s our take on using ads to grow your SaaS?

Here’s our take on ads for early SaaS founders or makers:

Ads are great for product validation:

If you got the funds to test out the market based on the initial product validation

Ads are great for scaling your SaaS:

After having an organic growth to say $7.5k-$10k, it might be a good idea to explore ads and scale. This will help you understand your product and target market better to create good conversions.

Ads are not easy to implement and find success

Ads are difficult. It requires a lot of psychological, sales, and copywriting skills to work. You need to run a lot of experiments too.

Ads are not great for margins unless you are making ROI

It’s good test, and good to scale. But relying on constant growth with ads is not the best way.