Pouring money into a paid ad campaign that's destined to fail isn't a sound growth strategy. Time and again, companies breaking into online ads don't see success due to the same issue: they aren't known to their audiences. There's no trust, no recognition, and so the cost per click remains high and rising.

In this edition of Whiteboard Friday, Rand identifies the cycle many brands get trapped in and outlines a solution to make those paid ad campaigns worth the dollars you put behind them.

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Video Transcription

Howdy, Moz fans, and welcome to another edition of Whiteboard Friday. This week we're chatting about the number one reason so many paid ad campaigns, especially from new companies and companies with new products or new ventures that they're going into, new markets and audiences they're addressing, fail. They just fall apart. I see this scenario play out so many times, especially in the startup and entrepreneurial world but, to be honest, across the marketing landscape.

Here's how it usually goes. You've got your CEO or your CMO or your business owner and they're like, "Hey, we have this great new product. Let's spread the word." So they talk to a marketer. It could be a contractor. It could be an agency. It could be someone in-house.

The marketer is like, "Okay, yeah, I'll buy some ads online, help us get the word out there and get us some traffic and conversions."

Then a few months later, you basically get this. "How's that paid ad campaign going?" "Well, not so good. I have bad news."

The cycle

Almost always, this is the result of a cycle that looks like this. You have a new company's campaign. The campaign is to sell something or get exposure for something, to try and drive visits back to a web page or a website, several pages on the site and then get conversions out of it. So you buy Facebook ads, Instagram ads, maybe LinkedIn and Twitter. You probably use the Google Display Network. You're probably using AdWords. All of these sources are trying to drive traffic to your web page and then get a conversion that turns into money.

Now, what happens is that these get a high cost per click. They start out with a high cost per click because it's a new campaign. So none of these platforms have experience with your campaign or your company. So you're naturally going to get a higher-than-normal cost per click until you prove to them that you get high engagement, at which point they bring the cost per click down. But instead of proving to them you get high engagement, you end up getting low engagement, low click-through rate, low conversion rate. People don't make it here. They don't make it there. Why is that?

Why does this happen?

Well, before we address that, let's talk about what happens here. When these are low, when you have a low engagement rate on the platform itself, when no one engages with your Facebook ads, no one engages with your Instagram ads, when no one clicks on your AdWords ad, when no one clicks on your display ads, the cost to show to more people goes up, and, as a result, these campaigns are much harder to make profitable and they're shown to far fewer people.

So your exposure to the audience you want to reach is smaller and the cost to reach each next person and to drive each next action goes up. This, fundamentally, is because...

• The audience that you're trying to reach hasn't heard of you before. They don't know who you are.
• They don't know, trust, or like you or your company product, they don't click. They don't click. They don't buy. They don't share. They don't like.

They don't do all the engagement things that would drive this high cost per click down, and, because of that, your campaigns suffer and struggle.

I see so many marketers who think like this, who say yes to new company campaigns that start with an advertising-first approach. I want to be clear, there are some exceptions to the rule. I have seen some brand new companies that fit a certain mold do very well with Instagram advertising for certain types of products that appeal to that audience and don't need a previously existing brand association. I've seen some players in the Google AdWords market do okay with this, some local businesses, some folks in areas where people don't expect to have knowledge and awareness of a brand already in the space where they're trying to discover them.

So it's not the case always that this fails, but very often, often enough that I'm calling this the number one reason I see paid ads fail.

The solution

There's only one solution and it's not pretty. The solution is...

You have to get known to your audience before you pour money into advertising.

Meaning you need to invest in organic channels — content or SEO or press and PR or sponsorships or events, what have you, anything that can get your brand name and the names of your product out there.

Brand advertising, in fact, can work for this. So television brand advertising, folks have noticed that TV brand advertising often drives the cost per click down and drives engagement and click-through rates up, because people have heard of you and they know who you are. Magazine and offline advertising works like this. Sometimes even display advertising can work this way.

The second option is to...

Advertise primarily or exclusively to an audience that already has experience with you.

The way you can do this is through systems like Google's retargeting and remarketing platforms. You can do the same thing with Facebook, through custom audiences of email addresses that you upload, same thing with Instagram, same thing with Twitter. You can target people who specifically only follow the accounts that you already own and control. Through these, you can get better engagement, better click-through rate, better conversion rate and drive down that cost per click and reach a broader audience.

But if you don't do these things first, a lot of times these types of investments fall flat on their face, and a lot of marketers, to be honest, and agencies and consultants lose their jobs as a result. I don't want that to happen to you. So invest in these first or find the niches where advertising can work for a first-time product. You're going to be a lot happier.

All right, everyone. Look forward to your comments. We'll see you again next week for another edition of Whiteboard Friday. Take care.

Video transcription by Speechpad.com